Southwest begins to repair reputation after cancellations

DALLAS (AP) — With its flights operating on a more-or-less normal schedule, Southwest Airlines is now turning its attention to repairing its damaged reputation after canceling 15,000 flights around Christmas and blocking holiday travel .

CEO Robert Jordan said Thursday that Southwest has processed about 75 percent of the refund requests it has received. The airline also returned most lost bags to their owners and hired an outside company to review claims for things like hotels and meals that stranded passengers paid for out of pocket, he said.

The massive outage began Dec. 22 with a winter storm and exploded as Southwest’s antiquated crew scheduling technology was overwhelmed, leaving crews and aircraft unable to operate flights. It took the airline eight days to recover.

Jordan said in a brief interview that Southwest is still investigating what went wrong and doesn’t want to make any changes to the technology until the review is complete. He expressed optimism but offered few details on how to avoid a repeat crisis.

Southwest is awarding 25,000 frequent flyer points to customers whose flights were canceled or significantly delayed between Dec. 24 and Jan. 2 and appears to be making progress on refunds, but executives acknowledge it will take many weeks to process refund requests.

Danielle Zanin is still waiting to hear if Southwest will cover the $1,995.36 she spent on a four-day odyssey to bring her family of four home to Illinois after their flight was canceled in Albuquerque, New Mexico. Even if he gets the money in the end, it might not be enough to try Southwest again.

“It would take a long time for the airline to show me that they can fix whatever technology they use to get flight crews and airplanes where they need to go. It’s not worth what I spent,” Zanin said. He said he plans to return to flying American Airlines, even if it costs more.

Southwest hopes that refunds, refunds and loyalty points will persuade people not to switch to other airlines, known in the industry as “booking away.”

“Book-away usually has a short half-life, perhaps as little as a month, because by many accounts Southwest is very generous in refunding not only the airfare but also other out-of-pocket costs” and is serious about about correcting the technology deficiencies that exacerbated the crisis, said Robert Mann, an airline consultant in New York.

Building customer loyalty is essential if Southwest is to limit the financial damage caused by the crisis. The company has not yet said how much money it lost on the canceled flights: Jordan promised more information before Southwest reports quarterly results on Jan. 26.

Raymond James analyst Savanthi Syth estimated the storm will cost Southwest about $585 million in lost revenue as well as higher expenses. Mann estimates it’s between $500 million and $600 million in cash, vouchers and frequent flyer points.

Airlines, including Southwest through October 2021, have recovered quickly from previous crises, whether caused by bad weather, staff shortages, IT outages or other factors. Passenger numbers, if they fell at all, quickly recovered.

“Reputational damage is about as relevant as consumers can make it,” said Michael Mazzeo, who teaches strategy at Northwestern University’s business school and has analyzed airline competition. “In many markets, there is little or no competition in the Southwest. When there are no outlets for consumers, the harm is more limited.”

Southwest, American, United and Delta control about 80% of the domestic air travel market. Southwest — which began 50 years ago as a low-cost competitor to the big airlines but has gradually become much more like them — has a particularly large presence in several large states, including California, Arizona and Texas.

Southwest remained relatively quiet for several days, even after it became clear it was struggling as other airlines recovered from the winter storm and after it was repeatedly criticized by consumers, according to reports in press and Transportation Secretary Pete Buttigieg.

As the canceled flights piled up each day, Southwest offered few updates and declined requests for interviews with key executives. He posted an apology video with Jordan on December 27, followed a day later by a video with another executive. Company executives did not generally speak to the media until Dec. 29, when they announced that Southwest would resume normal operations the next day.

“The company was slow to come forward in terms of corporate PR communication until the government followed suit, the (transportation) secretary called the CEO directly and asked him to move quickly to take care of these people,” Larry said Yu, a George Washington. University professor studying crisis management in the tourism sector. “In the short term, it’s a big detriment.”

But Yu also noted that Southwest has a decades-long reputation for relatively low fares and good service you can count on. He praised the airline for promising refunds, refunds and frequent flyer points.

“They have to do something to win back their customers,” Yu said. Now, he added, Southwest must deliver on its promises to improve its technology, “because you don’t want to equate low-cost with low-tech.”

Jordan said Southwest has good technology, but said the airline will review IT priorities once it has a better understanding of how the December bankruptcy played out.

The disaster also focused attention on the Southwest among Congress lawmakers.

Sen. Richard Blumenthal, D-Conn., said Wednesday he will reintroduce a “passenger bill of rights” that did not become law in the last Congress.

“The Southwest debacle creates a moment where the forces in favor of this type of consumer protection measure could prevail,” he said in an interview.

The Senate Commerce Committee said this week it will hold hearings on the crisis in the Southwest. Blumenthal said witnesses will include executives from Southwest and other airlines.

“This problem (of flight disruptions) is pretty much confined to Southwest, it’s not the first crisis in air travel, and it’s not at all unpredictable,” Blumenthal said. He said it’s surprising why Southwest hasn’t improved its crew scheduling technology after it failed during previous outages in the summer and fall of 2021.

Buttigieg has repeatedly said his department is closely monitoring Southwest and will hold it accountable for treating customers fairly.

Consumer groups have cast mixed votes on the Department of Transportation’s oversight of airlines. They saw the Trump administration as a low point, with little enforcement action taken against airlines, even in the face of record consumer complaints. The Biden administration fined Frontier Airlines and several foreign carriers last year for failing to promptly pay refunds to travelers whose flights were canceled in the early months of the pandemic, but supporters were disappointed that none of the largest US airlines she was fined.

The Department of Transport is charged with enforcing consumer protection laws aimed at protecting air travelers. Several consumer groups are urging Congress to allow state officials and private parties to sue airlines to enforce these laws, an effort that has so far been unsuccessful.

“Airlines will push for as little regulation as possible, but with each passing crisis it becomes more apparent that real change is needed,” said John Breyault, vice president of public policy at the National Consumers League.