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Southwest Airlines melted down over the holidays, affecting around two million travelers and costing the airline around $825 million. And now the airline gets the Saturday Night Live treatment.
SNL cast promote the new, reformed Southwest airlines. First on the agenda is upgrading their IT to 2008 Dell computers.
Former co-host of “Good Day L.A.” and entertainment show “Extra” Lauren Sanchez, dating Amazon founder Jeff Bezos for the past four years, was rejected by Southwest Airlines when she tried to become a flight attendant.
It seems like tattoos is something that might come up during a flight attendant’s initial interview, rather than waiting until training to be kicked out over it. It’s also an odd place for Southwest to make a stand, considering the informality of their crew compared to some other airlines. However flight attendants with certain tattoos may find a more welcoming home in training with other carriers.
Southwest Airlines did a bad thing. It cancelled flights affecting around two million passengers over the holidays. Southwest has talked about its IT issues for years, but never said ‘and we might wind up cancelling travel on two million people costing $825 million. Therefore investors were misled about the business’s prospects. Everything is securities fraud.
Southwest Airlines expects the cancellation of 16,700 flights over the holidays to cost them up to $825 million though the exact amount depends on how much passengers seek reimbursement for after having to find other means of travel – and how much Southwest actually approves in claims.
While the Department of Transportation is pressuring Southwest not just to provide the refunds, but also to do so quickly (noting that credit card payments must be refunded within 7 days), the sheer volume of requests is taking time to work through and also invariably means that some passengers get stuck in a Kafkaesque bureaucracy.
Southwest Airlines had a remarkably bad holiday period. As a result perhaps two million people had their travel interrupted, and the airline will report a loss for the fourth quarter. Their operations have recovered, but they have the daunting task of investing to make sure such a long tail event doesn’t repeat itself, and to convince customers to return.
Return they will, in part because there are things that Southwest Airlines does incredibly well, something that’s easily forgotten in the fog of how bad the last week and a half of 2022 was for the carrier and its customers. In fact, there are 8 reasons you should still fly Southwest Airlines.
A confluence of events, from weather to staffing to technology, combined to drive the meltdown which will cost Southwest more than more investment would have, in other words it’s a story of management error more than greed. Management lost free cashflow rather than increasing it.
It’s a tragedy for people whose holidays were ruined, but it’s not an easy story about industry consolidation (this didn’t happen because Southwest bought AirTran) or ‘financial capitalism’ (until the meltdown Southwest was the story of a company that’s highly unionized with a great culture). Trying to make it an allegory for a hobby horse doesn’t work when the facts aren’t there.
It’s time to get aggressive marketing the ways in which Southwest is better, and making it easy and rewarding to do business with the airline.
The airline has described ‘millions’ of passengers effected, though the number is over a million and likely around two million. The costs to the airline are staggering, and they are now expecting to lose money for the fourth quarter of 2022 as a result of lost revenue (they didn’t earn ticket revenue for the flights they cancelled) and higher expenses (reimbursing and compensating passengers).
Just how big of a deal was this?
The explanation of technology for Southwest’s woes, while true, also exposes a gap in people. They didn’t have enough people to rebuild their schedules by hand and were taking volunteers from within the company. There’s also a knowledge deficit.
There’s going to be a lot of IT spending ahead, and also a lot of work on culture ahead, for Southwest. Passengers will forgive them. But capital spending and culture are harder. And around a fifth of employees don’t have a long-term experience with the company against which to judge recent unpleasantness, including being stranded away from home for some time.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
