The People Deficit That Contributed To Southwest’s Meltdown – And May Continue To Drag Them Down

The primary explanation for the Southwest Airlines meltdown over the holidays has been technology. And that’s certainly a key part of what made the carrier’s cancellations spiral, and what kept them from fully recovering from so long. They didn’t have full track of their crews, were communicating individually by phone (and people couldn’t get through on the phone lines), and rebuilding schedules and crew pairings by hand when SkySolver failed at the task.

But I think the story is more complicated than this. For Southwest to enter this operational mess a lot of things had to go wrong. The IT capital deficit wouldn’t have mattered if everything else didn’t go wrong.

It started with weather that exposed some employee shortfalls, for instance they didn’t have enough rampers in Denver and even had a Tampa to Denver flight turn back around because they had no one on the ground to meet it at the start of the holiday. They had more sick calls than usual, and weather meant they needed more rampers than usual (in extreme temperatures they can’t be outside as long).

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.

  • The airline hired 15,700+ new employees in 2022
  • 18% of their workforce was new since January.

Now, that’s across the whole company and involves a lot of flight attendants not just operations people. But there’s a lot of institutional knowledge that was lost during the pandemic.

In the midst of the meltdown, the Washington Post‘s Megan McArdle offered,

How did it come to this? If I had to pick only one factor — one hole in the cheese — it would be staffing. That’s hardly Southwest’s only problem, but it’s probably the one problem that made all the others worse.

The operational efficiency and brand loyalty that made Southwest a case study were built on a foundation of human capital. You can’t run a finely tuned productivity machine with disgruntled, undertrained employees who are phoning it in; you need teams that work together well and solve problems on the fly. …Companies that are good at getting the best out of their employees sometimes underinvest in other aspects of the business, because they can get away with it, relying on their workforce to patch any holes in the system.

The airline, like other airlines, was shedding staff voluntarily through buy outs while taking payroll support funds specifically designed to keep existing employees connected to the company. Some institutional knowledge was lost here. (Southwest is very much not alone in this, and I believe it helps explain some of Delta’s operational challenges over the past two years, their ops guru Gil West left. Delta’s poor holiday operations were undercovered because they were trumped by Southwest’s mess.)

Lack of experience and lack of systems hit a perfect storm of bad weather, insufficient staffing redundancy, and sick call outs (tripledemic! Plus holidays when nobody wants to work in bad weather!) and it all snowballed.

While Southwest has managed to hire new people, who haven’t yet built up experience, they’ve lost people with decades of context. And airlines generally, not just Southwest, have difficulty in hiring the best and brightest. The ability of an employee to be as productive in the airline industry as they can be in other industries is limited. The airline industry is ossified, there’s very little creative destruction.

That’s partly because of regulation (for safety, everything is highly constrained, but also every element of travel is bureaucratized from airports to air traffic control to distributing hand sanitizer to passengers) and partly because of protection from competition (bans on foreign ownership, slot controls, lack of access to gates at government-owned airports heavily influenced by incumbent carriers).

But it means that talent won’t change as much, create as much value, as in other industries. It means low margins. And it means therefore not paying talent as much. (As wages rise elsewhere due to productivity gains, airline wages have to go up to compete for staff who aren’t in a position to generate as much value at an airline as they might at other companies. Wages go up to attract talent that is in more demand elsewhere not because they’re doing more each year for the airline’s bottom line. This is known as cost disease, or the Baumol effect.)

Brian Sumers covers the inability to attract top talent with low pay in his Airline Observer,

If Southwest offered better pay and improved perks, might it have had employees who understood the problem with the crew scheduling system and the risk it posed, who realized they would have to fix it immediately, regardless of the cost? People who might have marched into Gary Kelly’s office and demanded a budget to fix things? Maybe. Regardless, Southwest needs them now, and let’s hope other airlines are doing some self-examination too.

The extent to which each driver of Southwest’s troubles mattered more than others will take some time to sort out. But it’s not just the ‘point-to-point’ nature of Southwest’s schedule, which was the explanation for Southwest’s fall 2021 meltdown, when Jacksonville ATC issues snowballed because around half of Southwest aircraft touch Florida on a given day.

It took interminably long for Southwest’s CEO Bob Jordan to speak publicly. He wasn’t out doing interviews. He blamed weather. So did the airline’s spokespeople. It took public comments by DOT for the airline to say they’d cover costs for travelers that were stranded. Even internally there had been limited communication, with the CEO sending a brief note early in the debacle telling employees to expect to hear from Jordan again ‘in a few days.’

The airline does a lot to maintain its culture. They hire for personality, and the airline actually sends welcome kits, swag, to new hires before they start training. When a class completes training, the whole company comes out into the corridors of headquarters to welcome them and cheer them with music blasting as they walk a red carpet.

Front line people from gate agents to flight attendants at Southwest Airlines usually seem to like their jobs, which can be a contrast from other carriers. And it’s notable in the context of being heavily unionized. But Southwest’s people were beleaguered. They weren’t been able to reach the airline (lots of screen shots in social media of 12 and 15 hour wait times for *crew* to get through).

There’s going to be a lot of IT spending ahead, and also a lot of work on culture ahead, for Southwest. I suspect 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.

About Gary Leff

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 »

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Comments

  1. Gary, regarding the bride who missed her wedding due to a canceled SWA flight, did the FAs not show up due to crew mis-positioning or due to simply not showing up?

  2. The way Southwest handled the rampers in Denver (and I believe Providence and elsewhere), by threatening termination rather than incentives to show up is also super telling about their culture shift.

    The best ways to incentivize people to come in during bad weather around the holidays is to increase holiday pay. Airlines raise fares around this time of year as soon as the schedule is released for December/January (ie this year when WN/AA/etc started selling flights for the holidays, the initial prices were already 2x-3x the normal fares for september). The airline is making extra cash because they know its a demand crunch. They should tack on better holiday pay bonuses, with secondary bonuses for bad weather.

    In other words, the airlines seem to love “dynamic” fares and redemptions. How about they embrace dynamic pay as well?

  3. Jon, over the past few years, other airlines did exactly what you’re recommending.

    It should be embedded in contract negotiations.

  4. It would be very hard to staff up manual routing and assigning people to flights for the few occasional meltdowns. Juan Browne (a pilot for AA) showed what I presume to be his time restrictions after a recent flight to Australia. There were about 5-6 restrictions on legal flying time ranging from rest time, duty day, and daily flying time. Union contracts and return to base restrictions add more complications, but possibly can be ignored during an emergency. To manually calculate that for building a schedule for any non-significant number of flights is hard, that’s why they use computers. But, even calling all of the crew to tell them about their new assignments would be taxing, even without phone system meltdowns. And, when a crew gets sick, someone else has to be pulled from the job they were doing.

    Pretty much every flight crew I’ve seen recently has a smartphone with their companies software on it. Unfortunately, crew scheduling still has some work which can’t be done from those phones, and that had caused problems at multiple airlines. In addition to improving the speed of rerouting crew and airplanes during irregular operations, extending crew scheduling functionally to crew phones needs to happen, including making hotel reservations for crew. Some of this is also apparently tied into union contracts on how this may be done. Perhaps even crew scheduling is unionized, and computerization of their jobs may be subject to negotiations.

    This isn’t going to be an easy or cheap job. Additionally, there will be temptations to “never let a crisis go to waste”, and add other work that has been deferred into the program, further complicating and delaying delivery.

    If I was responsible for this, the first thing I would do is find a way to reduce the time it takes to recalculate the schedule, and to not lose track of where people are. Concurrently, I would increase the capacity of the phone system. The second thing would be to send people their new schedules, even via email, when things change. If someone has to call into crew scheduling to get a new assignment, something is wrong. There is still room for people in crew scheduling to make manual adjustments when someone is sick, for example, as the scheduler will not be able to recalculate and optimize once per minute without more major changes. Other things, like automatic booking of hotels and rides during IROPS would have to wait, as would better integration of crew scheduling into the smart phone interface.

    I’m available and in the area if Southwest needs further advice.

  5. @Jon H
    You clearly know nothing about crew scheduling and probably wouldn’t even make it out of training.

  6. The fact that all the airlines took millions in government money to keep paying employees and then shed employees should be criminal. The government aka the taxpayers, should demand all that money back.

  7. It’s probably because all these companies forced a vaccine to keep their job, and low and behold the people denied being coerced into it thus causing staffing issues.

    (I know you, Gary, are pro vax as i’ve had my comments deleted when debating the topic), but it makes a lot of sense. Now with people dropping dead, maybe, just maybe it wasn’t the best idea for companies to do that.

  8. > It took public comments by DOT for the airline to say they’d cover costs for travelers that were stranded.

    Thank goodness that the regulators were there for the taxpayers this time around.

    And great article by the Washington Times; they really seem to be doing some great work lately.

Comments are closed.