How Southwest Tanked Its Operational Performance… And Then Took a Year to Fix It

In early 2013, Southwest realized that demand was strong. Faced with a set number of airplanes, it had two choices. It could keep flying its existing schedule or it could push itself and squeeze more flights into the system. It chose the latter, and it incredibly failed to understand how badly that would drag down the operation. Beginning in August of last year, Southwest’s operational performance tanked. Due to issues unique to Southwest and its archaic technology, it wasn’t until last month, a full year later, that on-time percentage returned to normal.

While at Southwest media days last week, I spoke with EVP and Chief Operating Officer Mike Van de Ven. He explained in detail what went wrong, why it took so long to fix, and how the operation is now back on track. This is the story of Southwest’s bad year.

[Disclosure: Southwest paid for my flight to Dallas and hotel]

An Aggressive Schedule
In January of 2013, the operations group looked at past performance and told the network team that it could make a tighter schedule work. With demand strong and fares good, the network team wanted to take advantage. When the schedule was agreed upon, Southwest was going to operate the equivalent of 16 new airplanes’ worth of flying without increasing its fleet at all.

To achieve this, the airline had to make changes in two areas. First, it cut down on its turn times. Those are the times scheduled in between flights; or the time it takes the “turn” the airplane around. At the same time, it trimmed its block times. Block time is the amount of time scheduled from departure from one gate until arrival at the next.

The ops team looked at performance during 2012, a relatively good weather year, and it figured it could make this work. Southwest had run an aggressive schedule like this before, but the airline somehow failed to realize that this wasn’t the same old Southwest. The new schedule went into place in August of 2013 and things immediately went south.

Southwest On Time Performance Versus Industry

August 2013 wasn’t a great weather month, so the team cautiously bet that this was just a temporary problem due to worse than expected conditions. As you can see above, that bet didn’t pay off.

Identifying the Problem
By November and December of 2013, it was clear that this was a systemic problem. Though the airline could operate its schedule well on a day where nothing went wrong, those days were few and far between. Weather got ugly, airplanes broke, and the airline fell behind on a regular basis. The schedule Southwest had operated in 2012 was no longer a schedule it could run. But why?

The increase in weather issues had an impact, of course. Southwest found itself flying around weather more frequently, and those tightened block times weren’t enough. But that was just the tip of the iceberg.

It turned out that a lot had changed since 2012 in the way Southwest operated, and incredibly, the airline didn’t quite realize how much of an impact that would have. To begin, Southwest had gone through a process of adding a row to most of its 737-300s and all of its 737-700s. That meant capacity increased by 6 seats from 137 to 143. At the same time, Southwest began taking delivery of 175-seat 737-800s, further adding seats into the system.

All those extra seats, however, only made it tougher to turn an airplane quickly if there were people in those seats. That was the next issue. Beginning at the end of 2013, Southwest saw its load factors increase significantly.

Southwest Year Over Year Change in Load Factor

Lastly, baggage transfers became an issue. As Southwest developed bigger and bigger hub-style operations in cities like Chicago and Denver, it begun transferring a lot more bags. It found that even when people could make the connection in time, airplanes had to wait for bags to make it.

With turn and block times under pressure, on-time performance crumbled. In general, the day would start ok, but flights would often end up being 3 to 5 minutes late. It didn’t seem like a lot, but after 3 or 4 flights, the rest of the day for that airplane would run late under the government’s definition that flights arriving 15 minutes after schedule would show as delayed. By the end of the day, flights could be 45 minutes to an hour late just due to the cumulative mini-delays through the day.

Southwest hadn’t run more than 75 percent of flights on time since last year, but it wanted to be running an airline in the 83 to 85 percent range. To get back to that level, each aircraft line would need about 25 minutes more slack in a day.

A Small Band Aid on a Major Wound
You would think that once this problem had been identified, Southwest would have implemented a fix as soon as possible. You would be wrong. Southwest’s ancient reservations system is so basic that it can’t handle schedule changes. If the airline were to make major changes to its schedule to right the ship, it would have to manually process every single change. That would have been such a herculean task that it wasn’t feasible. (Southwest’s new Amadeus Altea system is handling international flying now but won’t be ready for domestic operation for a couple more years at least.)

Instead, Southwest decided to use as many bandages as possible to try to lessen the impact on travelers. The airline created a program called “Strong Start” to put a big focus on getting every airplane out on time on its first flight. Those were precious minutes that weren’t under pressure due to block and turn time issues.

The airline also put a higher priority on making sure all maintenance issues were dealt with quickly and proactively. In other words, Southwest had to run a perfect airline just to keep its head above water under the tight schedule it had created.

Performance still struggled, so Southwest decided that all it could do was deliver the best customer service possible. It held a lot of airplanes for late connections. It compensated travelers where appropriate. Apologies flowed freely. The end result was that while Southwest sat at the bottom of the pile when it came to on-time performance, it still maintained an extremely low complaint rate with the Department of Transportation.

Finally, a Real Fix
Early this year, when time came to plan the schedule for travel beginning in August 2014 (last month) the real problem could finally be fixed. Southwest reverted back to a schedule with more slack in it to account for the airline’s systemic changes.

On its 737-300s and 700s with 143 seats, the standard turn time became 35 minutes. In the last schedule, Southwest had about 60 percent of its flights turning in under 30 minutes. In the new schedule, that dropped to only 28 percent. All 20 minute turns have been eliminated. The larger 737-800s had been largely scheduled to turn in 45 to 50 minutes, but Mike noted that the latter is more appropriate. Block times were also lengthened a bit so that the airline wasn’t always playing catch-up.

Perhaps most interesting was a decision to increase the minimum permitted connecting time. Historically, Southwest had allowed itineraries with as little as 25 minutes between connecting flights. Beginning this August, that has been increased to 35 minutes. And in key connecting airports like Chicago/Midway, Baltimore, and Denver, it’s now 45 minutes.

That means that connections that used to be legal are no longer permitted. As you can imagine, that will end up hurting revenue, but Mike insists that it wasn’t significant. Besides, fixing the bloated costs of running a delayed operation will offset or surpass any potential revenue losses.

It’s Working
Just how is this new schedule working? Quite well. The new schedule went into place on August 10 and there was an instant impact. The airline really hit its stride beginning August 24. According to masFlight, from then through September 11, it has run on-time 83.5 percent of the time. That’s still behind Delta and US Airways but well ahead of United and American which are both under 80 percent.

In the past, many airlines have used schedule padding to run an on-time operation as a corporate priority. Mike says that’s not what’s happening here. The airline is simply adjusting to a different operating environment. These changes, though not helpful for an airline trying to keep its costs down, aren’t temporary. I still just can’t believe how long it took to fix.

The airline is now working on its schedule beginning April 2015. Mike says that with more 737-800s and the possibility of even higher load factors, the airline may have to add a little more to turn times still.

Will we ever see a return to a tighter operation? In the future, Southwest may look at having different turn times during different days of the week. After all, a jam-packed Friday night flight to Vegas will take more time to turn than a less full flight on Tuesday night. But as always the airline is cognizant of the potential customer impact on not having consistent schedules, and I didn’t come away feeling confident that we’d see that happen.

For now, the airline is going to be paying much closer attention to make sure it doesn’t have a repeat of the last year. It may cost a bit more to run the operation this way, but as Robert Isom, Chief Operating Officer at American says, there’s nothing more expensive than running a bad operation. Let’s hope that Southwest’s miserable year is over, and it’s done running that most expensive kind of operation.

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42 Comments on "How Southwest Tanked Its Operational Performance… And Then Took a Year to Fix It"

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SEAN
Guest

Over the past several years AA, DL, CO, UA, NW &US were increasing turnaround times at most of there hubs. It went from under an hour to as much as an hour & a half. This was do in part to an increased use of plane changes for continued travel. NW & US employed that tactic the most. Meanwhile, WN gets planes in & out in under half the time & that’s still with an operation with serious challenges.

noahkimmel
Member

Some of that has to do with switching from rolling hubs to banked hubs. In a banked methodology, it matters less how quickly you can turn. What matters is how to get planes to land and take off at similar times so you can optimize connections, not optimize aircraft utilization. WN supposedly does not bank its hubs and routinely offers connections in non-hub cities, so it should be turning faster.

David SF eastbay
Member

“””””Southwest’s ancient reservations system is so basic …..”””””

Sounds like the opening of a joke which it really is. They should have known years ago as they began to grow bigger and spread out across America, that they needed to improve their system. Instead of spending loads of money to repaint airplanes and change signing over the years, that money should have gone into a new computer system instead of just trying to patch it up. Very stupid on there part.

frumby
Member
Considering that Southwest is spending $0 on their new livery, your point is invalid. It is cost neutral considering that it is normal routine maintenance for corrosion control. Secondly, I imagine going from a pure domestic carrier developing into an international carrier is a difficult task considering Southwest was 3 times the size of Air Tran at the point of acquisition. Considering that Southwest will have an infusion of 50 new 737’s in the next few months, their reservation system has to be capable and have the flexibility caused by rapid growth. Luckily, the industry analysts don’t share your myopic… Read more »
Nick Barnard
Member

They had to pay someone to develop and design the new livery. I’m sure that had a nice price tag on it.

Most of the industry analysts are happy to drink Southwest’s cool aid and look past failures in leadership because they have strong management.

jskyz81
Member
that ridiculous! there new leary and branding will cost money in the long run. reprinting and resignage of all airport stations including double resignage at existing airtran stations and double repanting of former airtran aircraft. complete redesign of employees uniforms and distribution labor In changing and redesigning the current logo and eliminating the old from all software systems powerpoints, res. systems, kiosk software system displays, est. all have some kind of cost involved regardless if it is written off as capital improvement cost to the system. normally an aircraft is repainted every D check inspection (normally in some cases) but… Read more »
Nick Barnard
Member

Planedoc, excellent point. This is yet another sign of Southwest managing well, but leading poorly.

They should’ve evaluated their brand needs at the Airtran merger time, and considered rebranding then, if you’re going to have to paint planes, might as well repaint them in a new livery. Same with all the ground equipment and airport signage.

frumby
Member

By their own admission, Southwest stated they had 40 different logos within the company. By rebranding to one logo, they become cost neutral as they finish the supplies of the old brands and rebrand to one. This rebranding is slated to be completed within 7 years and not overnight which is what will lead them to neutrality.

Nick Barnard
Member
They had to have spent something on this, it might’ve been near what they were already planning on, but they spent something. Southwest usually doesn’t do a media day and fly out folks like CF. They had costs preparing the additional videos. They’ll additional costs because they’ll need to repaint the planes they’ve been holding back on painting at a faster clip than they they’d do without doing this. They’ll probably end up having to refresh airports a bit before they would’ve. Unless you’re an accountant at Southwest you don’t know the costs and neither do I. Southwest is saying… Read more »
JohnG
Guest

IIRC, Southwest is still using Branif’s old reservation system SAS.

JohnG
Guest

IIRC, Southwest is still using Branif’s old reservation system SAS.

Grichard
Guest

Brett, how can it require multiple years for them to change their reservation system? Airlines have completed mergers start-to-finish in less time than that. I don’t know enough to argue the point, but it just beggars belief that a system that is handicapping the company to this degree can’t be phased out more quickly.

Chase
Guest
PSS migrations take a very long time and in Southwest’s case, need many customizations to fit their business model. Amadeus hosts most of the world largest carriers, which happen to be full-service international airlines with very different needs than Southwest. For example, prior to Southwest, Amadeus’ Altea did not support Southwest’s ‘style’ of open seating (A, B, C, 1-52, etc), they only supported true first-come, first served open seating. So that’s one change to the system that needed to be coded before Southwest went live. If you think about that and how many other differences there are in Southwest’s business… Read more »
Steve-D
Guest

Amadeus is written in TPF. Not exactly a mainstream technology with lots of programmers to choose from.

noahkimmel
Member

Virgin, JetBlue, Westjet all took over a year to change their reservation systems. It really is a big deal to “change the engine while the car is driving.”

There is a lengthy proposal process (6 months), lots of system requirements to write (6 months – 1 year), business processes to adjust (included), coding (few months), and planned release which means transferring reservations, tons of new equipment, training, and adjusting schedule / loads to minimize impact. It is a huge deal that takes a lot of leadership and perseverance to accomplish.

Don Murray
Guest
I worked in the airline industry for 4 of my 43 years in computer technology. I still cannot figure out why it is taking WN SO LONG to implement a modern system. Taking two more years to integrate their new international system for domestic use seems strange. I know there is a lot of testing and training required and that takes time, but they really need a new system if the current one can’t properly handle sched changes which should be able to be implemented quickly to respond to changing situations. I remember going over to a nearby terminal to… Read more »
Nawt Sayen
Guest

Consider that their choice to remain on SAAS might not be a technical one.

Perhaps they have a sweetheart deal that gives them the lowest GDS/CRS cost per booking of any airline, bar none, on that platform?

So, then, switching to anything else, whether it be PSS, Amadeus/Altea, etc, involves a massive increase in costs.

What you might see, if that were the case, would be a lot of “feet dragging” until the costs of remaining on the old platform (for example, the lost opportunity outlined in this article) outweighed the costs of moving off of the sweetheart deal.

Nick Barnard
Member
This just looks bad on Southwest’s leadership, and to an extent on their management. After the spectacular IT failures that I’ve heard rumored about the CEO should’ve pulled a Bethune and threatened to shoot the CIO if the new system wasn’t up by a certain date. I really wonder if Southwest is being managed into a mess by a thousand cuts, and sticking too close to the knitting. A leader would’ve looked at the risks of not upgrading the IT system and prioritized it. They keep wanting to do the same thing as they move into new markets. They’ve failed… Read more »
Stewart
Member

Good informative article, and well written.

jskyz81
Member
has anyone on here worked an 737-800 rampside on here? my gosh I don’t care what people think of there reasoning for the position of the rear cargo door on that plane but someone needs to be SHOT TWICE for putting the darn thing waaaay to the rear of the plane instead in the mid section like the 727-200. even if the door moves at least 4 stations forward of the existing location that could at least help out in loading operations of that aircraft. but anyway enough with my gripping I honestly believe that more focus is needed in… Read more »
Jason G
Member

AS went through the exact same debacle around 2007. Thankfully they got wise and by 2009 things were back to normal. I am surprised WN didn’t look at the history of their competitors before making this move.

Darin
Guest

Did anyone from Operations or Network get fired or demoted?

1js7371
Member
Mr. Cranky…..Great article on Southwest’s operational problems. Good that WN acknowledges their errors and is implementing a recovery strategy. I read your complaint that it took too long for them to initiate their operational turn-around; that it took over a year to fix the problem. Yet you also state that Southwest remained near the top of the DOT ratings for fewest complaints during that prolonged operational meltdown. Since the problem manifested for over a year, why do you think WN’s customers did not complain more to the DOT? If the offending carrier had been UA, AA, or DL, the complaints… Read more »
Ben Brooks
Member
Cranky – nice analysis of the operational issues. A very thorough look at the many contributing factors to the cluster that is airline operations. Having worked on on-time performance as a consultant to airlines in a past life I can attest it is both difficult to get humans from all walks of life (employees, contractors, and customers) to behave/act consistently around the world thousands of times a day, every day, in order to run a reliable operation. When Continental went through bankruptcy TWICE in the mid 90’s they realized that operational reliability was CORE to running an airline. Just like… Read more »
Tatum
Guest

Cranky, do you have a love/hate relationship with SWA? It seems like you laid it down on them in this article….

I usually fly the first flight in the morning that SWA offers, so that explains why they’re usually either early or on time.

IO
Member

Cranky – you posted this for a while but i was wondering if you heard anything about where the capacity that will serve int’l destinations out of houston will come? if i recall correctly, southwest’s capacity has been flat for quite a while, so i’m wondering if they’ll reduce domestic flying, tweak their schedule (as you’ve noted in this post), extend the life of their existing aircraft, or induce new aircraft?

thanks,

Industry Outsider

frumby
Member

Industry Outsider, Southwest has 50 newly purchased used -700’s which will come into their fleet by February 2015. Couple that with new aircraft deliveries and they will be able to expand their schedule without impacting their regular schedule. Aircraft retirements will be limited until 2017 when Max jet launches.

steve
Guest

I flew Southwest multiple times during this period and endured lengthy delays. I no longer fly Southwest. I may fly San Francisco -> Dallas next Spring, and I will probably fly Virgin America, even if they charge more and have fewer flights than “Slow-West”.

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