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Southwest begins to rebuild reputation after cancellations

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

DALLAS. Flights operate approximately according to the usual schedule. Southwest Airlines is now looking to repair its damaged reputation after canceling 15,000 flights over the Christmas period and leaving holidaymakers stranded.

CEO Robert Jordan said Thursday that Southwest has processed about 75% of refund requests it has received. The airline also returned most of the lost bags to their owners and hired a third-party firm to review refund requests for things like hotels and meals that stranded passengers paid out of their own pockets, he said.

The massive disruption began on Dec. 22 with a winter storm and snowballed when Southwest’s ancient crew scheduling technology was overwhelmed, leaving crews and aircraft unable to fly. It took the airline eight days to recover.

Jordan said in a brief interview that Southwest is still looking into what went wrong and he doesn’t want to make changes to the technology until this review is done. He expressed optimism but gave few details about how to avoid another crash.

Southwest is providing 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 fly her family of four home to Illinois after their flight was canceled in Albuquerque, New York. Mexico. Even if she ends up getting the money, it may not be enough for her to try Southwest again.

“It would take an airline a long time to prove to me that they can fix whatever technology they use to get flight crews and planes where they need to go. It’s just not worth the hassle I had to go through,” Zanin said. She said she plans to return to flying with American Airlines, even if it costs more.

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

“Blank outs tend to have a short half-life, perhaps as little as a month, given that many reports indicate that Southwest is very generous in reimbursing not only airfare, but other out-of-pocket expenses” and is serious about rectifying the situation . technological flaws that exacerbated the crisis, said Robert Mann, a New York-based airline consultant.

Retaining loyal customers is critical if Southwest is to limit the financial damage from the crisis. The company has yet to reveal how much money it has lost due to flight cancellations – Jordan promised to provide more information before Southwest reports quarterly results on January 26.

Raymond James airline analyst Savanti Seeth estimated that the hurricane would cost Southwest approximately $585 million in lost revenue plus higher costs. Mann thinks it’s between $500 million and $600 million in cash, vouchers and frequent flyer points.

Airlines, including Southwest as recently as October 2021, have recovered quickly from previous crises caused by bad weather, crew shortages, IT outages or other factors. The number of passengers, if decreased, quickly recovered.

“Reputational damage only matters insofar as consumers can deal with it,” said Michael Mazzeo, who teaches strategy at Northwestern University Business School and studies airline competition. “There is virtually no competition from Southwest in many markets. When there is no outlet for consumers, the damage 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 major airlines but has gradually become more like them, has a particularly large presence in some major states, including California, Arizona and Texas.

Southwest remained relatively calm for several days even after it became clear it was struggling as other airlines recovered from a winter storm and after it was repeatedly criticized by consumers, media reports and the Secretary of Transportation Pete Buttijiga.

As canceled flights piled up day by day, Southwest reported little news and turned down requests for interviews with key executives. On December 27, he posted a video of Jordan’s apology, followed a day later by a video with another executive. Company executives didn’t speak to the media at all until Dec. 29, when they announced that Southwest would resume normal operations the next day.

“The company was in no hurry to move forward in terms of corporate PR communications until the government was harassing them, the secretary (of transportation) called the CEO directly and demanded that they hurry up to take care of these people,” said Larry Yu, a spokesman for George Washington. University professor studying crisis management in the tourism industry. “In the short term, that’s a lot of damage.”

But Yu also noted that Southwest has been known for decades for relatively low fares and good customer service. He praised the airline for promising refunds, refunds and frequent flyer points.

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

Jordan said Southwest has good technology, but he said the airline will re-prioritize IT once it better understands how the December crash unfolded.

The fiasco also brought Southwest to the attention of lawmakers in Congress.

Senator Richard Blumenthal, D-C, said Wednesday he will re-introduce a “passenger bill of rights” that failed to become law in the last Congress.

“The Southwest disaster creates a moment when the forces that advocate this kind of consumer protection measure can prevail,” he said in an interview.

The Senate Commerce Committee said this week it would hold hearings on the Southwest crisis. Blumenthal said executives from Southwest and other airlines should be among the witnesses.

“This problem (flight disruption) is hardly limited to the Southwest, this is hardly the first air travel crash, and it is hardly unforeseeable,” Blumenthal said. He said it’s unclear 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 that his department is closely monitoring Southwest and will take responsibility for treating customers fairly.

Consumer groups are ambivalent about the Department of Transportation’s oversight of airlines. They saw the Trump administration as a low point, and few enforcement actions were taken against airlines, despite record consumer complaints. Last year, the Biden administration fined Frontier Airlines and several foreign carriers for late refunds to travelers whose flights were canceled in the early months of the pandemic, but supporters were disappointed that none of the top four US airlines were fined.

The Department of Transportation has the burden of enforcing consumer protection laws designed to protect air travelers. Several consumer groups are calling on Congress to allow government officials and individuals to sue airlines to enforce these laws, an attempt that has so far been unsuccessful.

“Airlines will actively lobby for as little regulation as possible, but with every crash it becomes more and more clear that real change is needed,” said John Breyolt, vice president of public policy for the National Consumer League.

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