Southwest Airlines' disastrous operational meltdown over the Christmas holiday canceled thousands of flights and left tens of thousands of passengers stranded at airports across the US. The airline was operating an antiquated computer crew-assignment software called "SkySolver," which couldn't match crew members and flights due to the magnitude of the disruption sparked by a winter storm.
Southwest's software wasn't designed to solve large flight disruptions. And that's why Chief Executive Officer Bob Jordan announced Tuesday morning that the airline budgeted $1 billion to upgrade the computer system to ensure this mishap never happens again.
"We are currently budgeted to spend more than $1 billion of our annual operating plan on investments, upgrades, and maintenance of our IT systems. The recent disruption will accelerate our plans to enhance our processes and technology as we continue to focus on adding capabilities to bring rapid improvements for you, our valued Customers," Jordan wrote in a statement.
He continued: "We fell short of your expectations and the high standards we have of ourselves, and for that we are deeply sorry. It is our steadfast commitment to making the necessary changes to address the issues we faced and to regain your trust and confidence."
Here is Jordan's complete statement:
Jan 17, 2023
Dear Valued Rapid Rewards® Members,
During the week between Christmas and New Year's Day, our Customers and Employees–including some of you–endured operational issues that greatly disrupted holiday and end-of-year plans. We want you to know that we are making every effort to prevent that from happening again.
Emerging from some of the most challenging days in our Company's history, we are highly focused on our Customers, our recovery, and our plan going forward. Our immediate task has been to stabilize our operation, and we are pleased to report that since the disruptions, we've operated our expected flight schedule with the Southwest® Reliability that we've upheld for 51 years.
Taking Care of Customers: We've worked with great urgency to take care of the Customers directly impacted by the disruption by returning their bags, processing refunds and expense reimbursements, and offering those most significantly impacted 25,000 Rapid Rewards points as a gesture of goodwill for their inconvenience. As of the end of last week, we have returned virtually all of the bags we had on hand from the event, have processed nearly all refunds, and are processing tens of thousands of reimbursement requests a day.
Immediate Actions: Following the disruption, we moved swiftly to put mitigation elements in place to further reduce the risk of future operational disruptions that could impede Customer travel plans. Some of those efforts already in progress include:
- Establishing supplemental operational staffing that can quickly mobilize to support Crew recovery efforts
- Enhancing our Crew engagement technology to efficiently communicate with large numbers of Crew Members during frequent schedule changes
- Updating and upgrading our Crew recovery system to not only solve current and future schedules, but also provide the ability to optimize established schedules as we revise them during irregular operations
Going Forward: While we have mitigated risks in the short-term, we are taking additional steps to review the events and make thoughtful recommendations on future actions.
- We've engaged a third-party global aviation consulting firm, Oliver Wyman, to complete an assessment of the event and make recommendations of additional mitigation elements for us to consider.
- Our Board of Directors appointed an Operations Review Committee that is working with management to understand the events and help oversee the Company's response.
- We commit to keep you updated as we make progress on these efforts as well as additional steps to prevent an event like this from happening again.
Southwest has a long history of innovation and continuous improvement. We are currently budgeted to spend more than $1 billion of our annual operating plan on investments, upgrades, and maintenance of our IT systems. The recent disruption will accelerate our plans to enhance our processes and technology as we continue to focus on adding capabilities to bring rapid improvements for you, our valued Customers.
We fell short of your expectations and the high standards we have of ourselves, and for that we are deeply sorry. It is our steadfast commitment to make the necessary changes to address the issues we faced and to regain your trust and confidence. We will continue down our path of providing you the exceptional service you expect and deserve from us. It's a passionate and personal pursuit for our entire Southwest Family, and we look forward to welcoming you onboard one of our flights very soon with the Heart and Hospitality we've been famous for delivering for 51-plus years.
President & Chief Executive Officer
Southwest's meltdown might push forward some desperately needed modernization of its outdated and ineffective operating systems.