Southwest Airlines executives expect bookings in the spring to remain strong despite the airline’s widespread cancellations in December, which likely had some effect on business at the start of the year.
The carrier expects business travel to hit 2019 levels in March for the first time since the start of the COVID-19 pandemic, said Dave Harvey, Southwest’s chief sales officer who also oversees the business division, in an interview with the Tribune in Chicago.
He outlined steps the company has taken to address the issues that led to the December meltdown, which left masses of stranded travelers and piles of luggage at Midway Airport. A broader upgrade to scheduling technology that contributed to the airline’s challenges is underway, he said.
“We’re applying a lot of the learnings,” he said. “I feel very confident that the outcomes would be different today.”
Southwest slashed nearly 17,000 flights nationwide during the busy December holiday travel period, as it struggled to catch up after a winter storm left thousands of flights canceled and crews and planes out of place. The airline faced a series of challenges that hindered its recovery, capped off by scheduling technology that couldn’t keep up with the airline’s complex flight network once the weather-related cancellations started rolling in.
At Midway, a major center of operations for the carrier, the combination of the storm and later schedule cuts led to more than 1,850 Southwest flights being canceled between Dec. 22 and 29. About 260 more were canceled at O’Hare International Airport, where Southwest expanded operations in 2021 as it sought to win business from larger rivals such as Chicago-based United Airlines and American Airlines.
The cancellations cost Southwest $800 million, the airline reported in a January earnings call, which led to a $220 million loss in the last quarter of 2022. The carrier said it could lose $300 million to $350 million in revenue at the start of the year tied to the December disruptions, but executives said they expected the fallout to be mostly limited to January and February.
The U.S. Department of Transportation said in late January it was investigating whether Southwest deceived customers by knowingly scheduling more flights in late December than it realistically could handle. Harvey said the carrier was confident in its schedule, echoing previous comments from Southwest executives who said there were no signs of schedule challenges at other recent times and they would cooperate with the government inquiry.
“Yes, it was a realistic schedule,” Harvey said. “Yes we were staffed. It was just the event, and then trying to recover from the event.”
As Southwest contended with the thousands of flight cancellations, the carrier had to reunite bags with their owners, issue refunds for canceled flights and reimbursements for items such as meals, hotels, rental cars or tickets on another airline. The carrier brought in staff from other departments to help sift through luggage, and trained nearly 3,000 employees who don’t usually handle refunds and reimbursements to help with the process, Harvey said.
The carrier finished reuniting luggage with its owners in recent weeks and finished processing all refunds for the flight cancellations in recent days, spokesman Dan Landson said. The airline has nearly finished issuing reimbursements, Harvey said, but a small number remained this week.
Southwest has hired consulting firm Oliver Wyman to review the meltdown, and expects the results of the report in the coming weeks.
An upgrade to Southwest’s scheduling technology is underway, and the fixes are currently being tested, Landson said. The scheduling software worked as designed in the aftermath of the storm, Harvey said, but it couldn’t keep up with the vast number of cancellations taking place so close to scheduled flight times.
The airline also learned it needed more engine covers during the December storm, as plane engines froze overnight, removing the aircraft from service. Among other changes to technology and practices, the airline is working on enhancing an early-warning dashboard addressing staffing and operation levels, that can reveal hot spots that might need to be addressed in the network or places the airline can put extra staff on standby.
Southwest plans to spend at least $1.3 billion on technology, upgrades and maintenance this year, up from a typical annual technology spend of about $1 billion, Harvey said.
Recent events, such as an hourslong halt by the Federal Aviation Administration on all flights in mid-January and winter weather in Texas tested the system, and the airline came through, he said.
“You don’t look at something like what happened in December as a good thing,” Harvey said. “But we’re already applying learning to help us run a cleaner, more reliable operation.”
The Associated Press contributed.