Loading summary
Transcript74 lines
- [00:00]
David Brown
Wondery subscribers can binge all episodes of Business the AOL Time Warner Disaster early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. It's December 2022 in Denver. A wave of frigid Arctic air crashes into the Rocky Mountains and cascades down onto the Great Plains. Out on the vast expanse of Denver International Airport, winds gust up to 60 miles per hour. At Southwest Airlines gates, shivering ramp agents work through the cold, loading planes with bags and fuel even as their hands go numb. A worker perched in the cherry picker uses a hose to blast the planes with hot de icing fluid. The process is slow going, and as some Southwest planes wait their turn, they're getting stuck on the ground. Literally. Plane tires are freezing to the tarmac. By midnight, when wind chills have nosedived to 40 below zero, Southwest and other airlines have delayed 700 flights and canceled nearly 200. And the worst is yet to come. The storm's freezing air blows from the Rockies to the Atlantic, snarling traffic across much of the country. It's a rapidly intensifying weather system known as a bomb cyclone. The storm has blown up operations in two of Southwest's most important cities, Denver and Chicago. A quarter of the airline's flight crews are based in those spots. That's having a devastating ripple effect on the rest of Southwest's flight network. On Christmas Eve, three days after the storm first hit, the airline cancels almost 40% of its flights. Christmas Day isn't looking any merrier. Other airlines are recovering from the impact of the storm, but Southwest isn't. To get its planes back in the air, Southwest CEO Bob Jordan has brought all hands on deck inside Southwest's network operations center at its Dallas headquarters. The facility, which everyone at Southwest calls the NOC after its initials, NOC, resembles NASA's mission control. Big overhead screens display the position of every plane in Southwest's fleet alongside the national weather forecast. But the software Southwest uses to navigate out of weather disruptions, a tool called SkySolver, was only programmed to fix smaller scale disruptions. So Southwest staffers in the NOC are frantically sorting through crew records. They need to manually find available crews and match those crew members with available planes. The process is a mess. In airports across the country, Southwest flight attendants show up for work and hustle the gates only to find there is no plane available. At other gates, pilots find they have a plane but no flight attendants. Back at the nock in Dallas, phone lines are jammed with flight crews calling in to get new assignments. Many are put on hold. Some are left there for hours amid the Christmas Day chaos, one Southwest staffer is tasked with making outgoing calls. He's desperately looking for a Dallas pizza parlor that's open and can feed everyone in the nock. The pizzas will arrive, but Southwest's planes won't. Southwest cancels nearly half its flights on Christmas. The next day, five days after the storm arrived, even more cancellations are on the way that day. An ABC News reporter heads out to cover the chaos and talk to stranded passengers at Chicago's Midway Airport.
- [03:54]
Tara Anderson
The Southwest rebooking line a five and a half hour wait. Tara Anderson and her family stranded here since yesterday, unable to connect to their destination and unable to go back home to the East Coast.
- [04:05]
Passenger
So my daughter lives in the St. Louis area. She's in school, so she's coming to pick us up and we're just going to drive all the way to Virginia tomorrow.
- [04:13]
David Brown
This Christmas, Southwest has played the Grinch. As the wave of cancellations continues to crash over the airline, it threatens to wash away the goodwill and reputation of friendliness and reliability that Southwest had built over five financially successful decades. And the holiday meltdown isn't the only turbulence Southwest will encounter. Southwest, along with other budget airlines that have styled themselves in Southwest's image, airlines like Spirit, JetBlue, Allegiant and Frontier will soon find themselves navigating through skies where costs are soaring and passengers are acquiring a taste for higher end travel. The question now is can Southwest and its low fare brethren chart a smooth course through that changing landscape or are they all headed for a tailspin? After telling hundreds of stories about business battles throughout history, I've learned one constant truth. Having the right support systems in place can make or break a new venture. Trust me, it was a battle even I faced on my business journey. That's why AT&T business makes so much sense for entrepreneurs today. When you're building something from scratch or even just at the point where you're ready to grow, you need a provider that makes things easy. With AT&T business, you you can have reliable, protected Internet connection you can count on, so you do not miss a beat. Building your dream might take time and a lot of work, but that doesn't mean it can't be a little easier. Wake up to the power of ATT business and turn your vision into reality. Business.att.com you know that person in your.
- [05:59]
Southwest Flight Attendant
Life who just can't stand Mayo? Call them traumatized. Call them closed minded. We get it. They're stuck in their ways. But here's the thing they just haven't tried. Hellman's Flavored Mayo. We're talking bold flavors that will flip even the biggest skeptics. Spicy mayo that adds the perfect kick to your burger. Garlic aioli that transforms ordinary fries into something extraordinary. Chipotle mayo that turns your basic wrap into a smoky sensation. So to all the mayo haters out there, yes, we're looking at you. It's time to eat your words. Because with mayo this flavorful, any hater is just a mayo lover waiting to be convinced. Hellman's Flavored Mayo get ready to eat your words.
- [06:46]
David Brown
From wondering I'm David Brown, and this is Business Wars. Buckle up the story of Southwest Airlines recent challenges is gonna be a bumpy one. Southwest sent its first flight barreling down the Runway at Dallas's Love Field back in 1971. It dubbed itself the Love Airline and built its early brand on free in flight booths served by flight attendants clad in Gogo boots and hot pants. Southwest leveraged its early Love branding alongside its operational excellence, offering frequent, short hop on time flights to turn its first profit in 1973. It's been the most consistently profitable major US airline ever since. While other carriers bled red ink through oil embargoes, wars in the Middle east, terror attacks and global financial crisis, Southwest stayed firmly in the black. It did so by keeping its costs in check and its service reliable and friendly and sometimes funny. Some of Southwest's flight attendants have gone viral for their wacky in flight announcements, but no one was laughing when the pandemic arrived and cratered air travel demand. That event in 2020 prompted Southwest's first unprofitable year since 1973. And although the airline got back in The Black in 2021, it's still been a topsy turvy time for Southwest. Since the pandemic subsided, costs have skyrocketed, slicing into profit margins. Other low cost carriers who modeled themselves after the early Southwest operations are also experiencing ballooning costs and dipping profits. We're going to explore why those rising costs have clipped the wings of budget airlines like Southwest. And as you'll see, higher costs are but one reason the budget airlines have been less able to undercut the big legacy airlines on fair prices the way they did once upon a time. And there's another problem, too. A lot of flyers these days don't seem to be as price sensitive as they used to be. Some flyers seem more than willing to pony up plenty for premium seats with extra legroom or for very high dollar overseas flights. No frill Southwest, which has long touted its in flight meals as being nothing more than a bag of Peanuts, ended 2022 with no premium offerings, no first class, no rows with extra legroom. In recent years, that approach sandwiched Southwest between the legacy carriers who have all the frills. You know, carriers like American, Delta and United States, including first class service, international flights, partnerships with foreign airlines and so called ultra low cost carriers like Spirit, who routinely beat Southwest on price but lack Southwest's expansive network. Now some industry watchers believe Southwest's business model has aged about as well as outfitting flight attendants in hot pants. To keep up with the times and the competition, Southwest may need to change just about everything if it doesn't want to get stuck in the middle. Question is, will passengers go along for that ride? This is episode one, Hard Landing. It's 1993 in Dallas. Southwest Airlines is just ranked first among U.S. airlines in the U.S. department of Transportation's rankings for on time performance, baggage handling and customer service. Southwest decides to market that achievement as the Triple Crown and it keeps on winning that triple Crown for years to come. Southwest may be number one, but it isn't alone in the low fare market. Its success has spawned a copycat movement of airlines who promise point to point service and low fares. Just like Southwest in 1992 came Spirit, in 1993, AirTran. In 1997, Allegiant 1998, JetBlue. One eyewitness to that evolution is Bob Jordan. He joined Southwest in 1988 as a 27 year old computer programmer and he's been climbing the corporate ladder ever since. Jordan has kept his eye not only on low fare startups, but on the efforts to copy Southwest. United and Delta both launched airline within an airline, models that aped Southwest's style. In 1994, United took off with Shuttle by United, which landed for good in 2001. Delta followed with a Southwest clone called song from 2003 to 2006. And United tried again from 2004 to 2009 with a concept it branded as Ted. Yep, really. In each case, the idea was to create a sort of subsidiary airline that like Southwest, could save money by flying only one type of aircraft with only one class of service. No first class, no meals. United and Delta also tried to lower costs and thereby fares by staffing their subsidiaries with pilots and flight attendants who were on the lower end of their pay scales. All of which is to say that but as Bob Jordan's career progresses, the Southwest way becomes the way much of America flies. And that will continue to be the way into the 21st century. But a global pandemic is about to change all of that. And that change will shoot Southwest's budget business model right out of the sky. Foreign It's May 2021 in the air over Southern California. A Southwest Airlines Boeing 737 has begun its descent into San Diego International Airport. And today, one Southwest flight attendant is going to have one of her toughest days ever.
- [13:24]
Passenger
Ladies and gentlemen, in preparation for landing in San Diego, be certain your seat back is straight up and your seatbelt is fastened. Please secure your carry on items, stow your tray table and pass any remaining service items and unwanted reading materials to the flight attendants. Thank you for flying Southwest Airlines.
- [13:44]
David Brown
A Southwest flight attendant heads to the back of the cabin. She notices a female passenger who is yet to buckle her seatbelt. The passenger is also wearing a surgical mask around her chin and not over her nose and mouth. The COVID 19 pandemic has been raging for more than a year, and federal regulators require passengers to wear masks in flight unless they're actively eating or drinking. Some passengers hate these rules, but flight attendants have been tasked with enforcement that's made their already tough job even tougher. The flight attendant orders the passenger in the last row to buckle up and wear her mask properly. Suddenly, the passenger leaps to her feet. She swings a fist at the flight attendant, catching the side of her head. More blows follow. The flight attendant is nearly knocked to the ground. Blood streams from her face. A male passenger jumps up and pushes the female passenger backward, ending the assault. The brutal encounter has left the flight attendant not only bloody and bruised, but with three chipped teeth. And it's just one of more than 5,700 incidents involving unruly passengers that the FAA will report in 2021 alone. That has airline workers stressed out at a moment when they're also feeling overworked. As 2022 begins, flyers slowly return to the skies. But in the face of that new demand, the airlines, like many other businesses, experience labor shortages. There aren't enough flight attendants or gate agents or ramp workers, those folks you see tossing bags into planes or driving around with those little tow tractors. There aren't enough of them to meet the demand. And even if there were, there aren't enough pilots. When the pandemic first idled much of the industry, many pilots took buyouts or retired early. One analysis found that about 9,400 pilots left the skies from 2020 to 2021, about 10% of all certified pilots. That's creating some Big headwinds for Southwest and some other airlines. It's February 2022 at Dallas's Love Field Airport. The captain of A Southwest Airlines 737, 700 pushes the throttle forward. The plane barrels down Runway 31 left, soaring into the sky. To his left, the captain can see Southwest's modern massive corporate headquarters. There, a group of employees is taking a break on a rooftop deck. They wave as the plane goes past. Inside the building though, Southwest's new CEO Bob Jordan is hard at work. Jordan is now a silver haired 61 year old executive and today is the 34th anniversary of his very first day working for Southwest. The airline had 7,000 employees in a fleet of 90 jets on Jordan's first day as a computer programmer in 1988. Now on his first day as CEO, there are about 65,000 people on staff and more than 700 planes in the fleet. Where Southwest was once a quirky regional carrier, today it carries more domestic passengers than any other US airline. Problem is, Southwest doesn't have enough workers to transport all the passengers it would like. Jordan figures he needs to hire 25,000 more employees by the end of 2023. Jordan heads over to Southwest's marketing department where he plans to discuss the labor shortage in a remote live shot for cnbc.
- [17:32]
Bob Jordan
Getting staffed is the key. Right now, I would tell you we probably have 35 to 40 aircraft that we are unable to operate simply because we're unstaffed. So our key to getting back to being efficient is getting staffed. And we are just absolutely laser focused on that.
- [17:47]
David Brown
But while Jordan is putting his focus on hiring thousands of new workers at Southwest, he's also facing even more discontent from his existing staff, especially those worn out flight attendants. And those labor issues are going to begin hurting Southwest's profits.
- [18:13]
Passenger
What do you think makes the perfect snack?
- [18:15]
David Brown
Hmm, it's gotta be when I'm really craving it and it's convenient.
- [18:18]
Passenger
Could you be more specific?
- [18:20]
David Brown
When it's cravenient. Okay, like a freshly baked cookie made with real butter, available right down the street at am, pm or a savory breakfast sandwich I can grab in just a second at am, pm.
- [18:29]
Passenger
I'm seeing a pattern here.
- [18:30]
David Brown
Well, yeah, we're talking about what I.
- [18:32]
Passenger
Crave, which is anything from am, pm.
- [18:34]
David Brown
What more could you want? Stop by AMPM where the snacks and drinks are perfectly craveable and convenient. That's cravenience. Am, Pm too much good stuff.
- [18:43]
Lindsey Graham
In 1925, 18 year old Howard Hughes inherited a fortune and he wasted no time putting it to use with a million dollars. Burning a hole in pocket, he headed west, determined to conquer America's booming new capital of entertainment, Hollywood. Hi, I'm Lindsey Graham, host of Wondry show Business Movers. We tell the true stories of business leaders who risked it all, the critical moments that define their journey, and the ideas that transform the way we live our lives. In our latest series, Howard Hughes clashes with Hollywood's power players as he fights to see his name in lights. But Howard has deep pockets and even deeper ambitions, and he revolutionizes the movie business by breaking rules and spending big. Because for Howard, the best way to level Hollywood's playing field is to explode the entire industry. Follow Business Movers on the Wondery app or wherever you get your podcasts. You can listen to new episodes of Business Movers early and ad free right now by joining Wondery Plus.
- [19:47]
David Brown
Foreign 2022 at Phoenix's Sky Harbor Airport, off duty Southwest Airlines flight attendants have set up a picket line outside the airport terminal. They're protesting the way that Southwest has treated them in recent years. Similar pickets have been set up at nearly two dozen airports across the country, but this one has drawn local news coverage that includes an interview with the vice president of the union representing Southwest's flight attendants.
- [20:21]
Passenger
Chance in cheers. This is what could be heard today from Terminal 4 at Sky Harbor. With dozens of airline workers turning to the picket lines for change, it's been.
- [20:32]
Lindsey Graham
Wrong for way too long. It's time for Southwest Airlines to make it right.
- [20:35]
Passenger
Members of the union that represent flight attendants are demanding new contracts after experiencing many complications due to the pandemic, including rude passengers.
- [20:44]
David Brown
That unruliness is directed at flight attendants because we are the face of the airline. And during the pandemic, the face of the airline sometimes took a beating. Hey, remember how during our Starbucks series, baristas were deemed essential workers and ended up facing the wrath of customers because of masking policies? Flight attendants got the same kind of abuse. Some Starbucks baristas eventually unionized and demanded better working conditions. And late in the pandemic, unionized airline workers made the same plea at JetBlue. Workers balked back in March 2022 when executives suggested that the airline wasn't flying a complete schedule because flight attendants continued to refuse assignments. A month later, flight attendants at Spirit picketed in Orlando, Dallas and Las Vegas after the airline canceled about a third of its flights, leaving flight attendants stranded. Across the country, flight attendants at United Airlines and Delta have picketed too, but for low cost carriers like Southwest, JetBlue and Spirit, the problems are a little different. Union Leaders allege that budget airlines, which compete mainly by offering the lowest price, are locked in what they call a race to the bottom. The unions accused the budget carriers of treating workers less like people and more like robots, all in the name of saving a buck. And by the fall of 2022, budget carriers like Southwest are feeling serious pressure to pinch pennies. You know what, as your friendly flight attendants might say, this might be a good time to sit back and relax because we're going to try and understand a little bit about why costs matter so much in the airline world and why they became so much harder to control after the pandemic. Let's begin this brief journey with a little terminology, shall we? In the U.S. the airline business consists of three types of carriers. Basically, you got your legacy airlines, that's American, United, and Delta. Some would also add in their Alaska. Then you've got your low cost airlines, that's like Southwest, and some of the airlines that copied aspects of the southwest model, like JetBlue. After that, you've got a group that has even lower costs, they offer even lower fares. They're called ultra low cost carriers. That group includes Spirit, Frontier, and Allegiant. The key to the low cost and ultra low cost model, well, that's keeping costs low. I mean, duh, right? One way to keep costs low is to keep productivity high. In other words, you're doing more with less. Now, Southwest was really good at that for a very long time. Back in 93, for example, Southwest had an average of 81 employees per aircraft. Look at that same year, United and American, those legacy carriers, they employed almost twice as many people per plane. Few Years later, in 1996, Southwest planes were in the air for more than 11 hours each day on average, while the rest of the industry averaged just eight hours of flight time per day. You see how this is sorting out, right? In the name of efficiency, Southwest flies only one type of aircraft, the Boeing 737, and has open seating instead of assigned seats, which costs more and can slow down boarding. These things along with a productive workforce and fleet, it's all added up to a robust bottom line for Southwest. While they racked up profits, the competition went boom and bust. After deregulation in 1978, major carriers like Eastern Airlines and Braniff went under. In the 1990s, Alaska Airlines lost money, in part because of fare wars with southwest. In the 2000s, JetBlue swung from big profits to big losses. And by 2012, United, American and Delta had all declared bankruptcy. Then came the pandemic. When Air travel cratered. In 2020, Southwest posted its first annual loss in 47 years. And it also broke the hole that low cost carriers once had on the business, in part because their costs have gone up a lot. Now, maybe you've noticed it takes more money these days to gas up your car, right? Well, it costs more to gas up a plane, too. And just like we're all paying more in the grocery store, airlines are paying more for just about everything they buy. Add to that, stressed out airline employees who've demanded higher pay and better working conditions. All of which comes at a cost at Southwest. As Bob Jordan's first year as CEO heads to a close in 2022, his airline's costs have risen by nearly 30% compared to 2019. There's another problem, too. Remember, the key to success as a low cost carrier is to be highly efficient, right? Getting more out of each person in each plane in the fleet. In airline lingo, they call that the aircraft utilization rate. And in 2022, Southwest's utilization rate is 40 minutes less per day than it was in the year before the pandemic. Why? Well, in part because Southwest doesn't have enough people to fly its planes as often as it would like. Other low cost carriers like JetBlue and Spirit are also being hurt by understaffing. They're heading to the end of 2022 with either lower profits or net losses. Now, maybe you're wondering whether the cost creep has also hurt legacy carriers like American. It has for sure. But legacy carriers aren't as hurt by lower aircraft utilization rates as low cost carriers are. And one reason for that is you and me and a whole lot of other people. After months of lockdowns, we the flyers seem to want something very different in the skies. We don't just want a cheap seat, though. Legacy carriers have gotten a lot better about offering those through basic economy fares. What we're looking for are premium seats and services and destinations. And it looks like we're willing to pay for all that. Flyers today are plonking their cash down for seats in a good location, seats with extra legroom, seats with lie flat beds. We're also paying plenty of cash to get to dreamy destinations like Buenos Aires and Barcelona, kinds of places where low cost Southwest and bargain basement Spirit don't fly. So what's a low cost airline supposed to do when costs are headed up, profits are headed down, and passenger tastes are moving in a direction where the low cost airlines don't even go? At Southwest, one answer has been to hold off on seriously big purchases. That'll include putting off an overdue multi million dollar upgrade to Southwest's ancient cruise scheduling software. And that will be a huge and costly mistake. It's November 2022 at Dallas Love Field. At a media event, Southwest Airlines CEO Bob Jordan is in a good mood. The company has just reported strong travel demand in the third quarter. It collected $6.2 billion in revenues this past quarter. That's the most money Southwest has made in a third quarter in its 51 year history. But there is a big problem. Southwest's profits are in a steep descent, falling to half what they were in the third quarter of 2019. Plus nine months into Jordan's tenure as CEO, the airline is still locked in bitter contract fights with its pilots and flight attendants. They've both raised concerns over the 1990s era system that Southwest uses to reassign crews to flights or to rebook them in hotels when flight plans change. Jordan has committed to upgrades, but so far he hasn't put the airline's money where his mouth is. It's not the first time Southwest has resisted calls to invest in better tech. For Southwest to afford fares as low as 19 bucks one way, it had to develop an almost maniacal focus on keeping costs low. Keeping the operation as simple as possible was key to keeping a lid on costs. That's one reason why, when Southwest first started flying in the go go 70s, its tickets weren't tickets at all. They were receipts dispensed from what Southwest called love machines. Those machines were just like the cash registers you'd find at a grocery store, except the back of the receipt read this is a ticket. Those tickets were eventually replaced with reusable plastic boarding passes, and Southwest declined to replace those pieces of plastic until security changes after September 11, 2001 required them to do so. The airline similarly refused to pay for the kind of tech that would allow it to do things it had never done before, like assign seats or fly scheduled red eye flights to international destinations. It didn't agree to do any of that until its hand was forced by the 2011 acquisition of AirTrans, which had red eyes in international flights and assigned seats. Still, the 500 million dollar upgrade Southwest made in 2017 to its reservation system did not include putting any cash into the skysolver system Southwest uses to recrew its flights. Asked about that by the reporters at Love Field, Jordan chuckles. He explains that the old software system Southwest uses requires a Southwest crew scheduler to call crew members by phone or even to literally chase them down inside of an airport. Pressed on the issue, though, Jordan admits that Southwest's growth over the years has made its current crew scheduling tech look obsolete, and he has no idea how right he's about to be proven foreign.
- [31:10]
Nick Cannon
It'S your man, Nick Cannon and I'm here to bring you my new podcast, Nick Cannon at Night. I've heard y' all been needing some advice in the love department, so who better to help than yours truly? Nah, I'm serious. Every week I'm bringing out some of my celebrity friends and the best experts in the business to answer your most intimate relationship questions. Having problems with your man? We got you catching feelings for your sneaky link. Let's make sure it's the real deal first. Ready to bring toys into the bedroom? Let's talk about it. Consider this a non judgment zone to ask your questions when it comes to sex and modern dating in relationships, friendships, situationships and everything in between. It's gonna be sexy, freaky, messy. And you know what? You'll just have to watch the show. So don't be shy, join the conversation and head over to YouTube to watch Nick Cannon at night or subscribe. Subscribe on the Wondery app or wherever you get your podcast. Want to watch episodes early and ad free? Join Wondery right now.
- [32:07]
Passenger
Hey grown ups. I'm Mindy Thomas.
- [32:09]
Tara Anderson
And I'm Guy Raz and we're the.
- [32:11]
Passenger
Host of the number one podcast for curious kids wow in the World.
- [32:15]
David Brown
Ah, Mindy.
- [32:16]
Tara Anderson
Can you believe we have our very own wow in the World stem toys?
- [32:21]
Passenger
I totally can't believe it. Guy Raz. Eight years ago when we started making wow in the World, we were on a mission to spread the latest WOW discoveries in science and technology and innovation. And now we get to help kids discover these wows right at home.
- [32:37]
Tara Anderson
That's right. From the ultimate high flying air rocket to the light up terrarium, there's something for every Wowzer in your world to play and tinker with.
- [32:47]
Passenger
Grown ups. You can find WOW in the world STEM toys available now at select WOW. Walmart locations or online@walmart.com shop the WOW. Now.
- [33:16]
David Brown
It'S December 26, 2022 in Chicago. The massive winter storm, the bomb cyclone that arrived in Denver on December 21st has moved east. It's now walloping one of the busiest air corridors in the country, and it's crippling Southwest Airlines fleet. Southwest's outdated and underpowered crew scheduling software has left planes and people out of position. It couldn't battle the storm early on because it lacked the right Weapons, including de icing trucks. In Denver, United has twice as many de icing trucks per flight as Southwest. And United was mostly back to flying the friendly skies over Denver just a day after the storm arrived. Meanwhile, Southwest is making enemies out of loyal customers. Hundreds of thousands of Southwest passengers are stranded and separated from their luggage, which ABC News finds out firsthand at Chicago's Bidway Airport.
- [34:15]
Tara Anderson
Adding to frustrations, many passengers whose flights were canceled now can't get their bags back.
- [34:20]
Southwest Flight Attendant
Even though we're not going to two Fort Lauderdale, our bags will apparently. Then they have to turn around and come back. And eventually they will tell us when our bags are back here.
- [34:28]
David Brown
The colossal scale of the December 2022 meltdown spurs a Department of Transportation investigation. Two days after Christmas, with Southwest's flight network still in shambles, Transportation Secretary Pete Buttigieg hits the airwaves to call out Southwest on its failures.
- [34:46]
Southwest Flight Attendant
It's a shocking and unacceptable level of disruption combined with passengers being unable to get anybody on the phone to help them and the airline indicating that they're actually not able to fully keep track of where their own flight control crews.
- [35:02]
David Brown
Are that same day. Now, six days after the storm began in Denver, and with many passengers still unable to get to their destinations, Southwest CEO Bob Jordan has chosen this as the moment to publicly apologize and try to explain the problem.
- [35:20]
Bob Jordan
You know, our network is highly complex, and the operation of the airline counts on all the pieces, especially aircraft and crews remaining in motion to where they're planned to go. With our large fleet of airplanes and flight crews out of position in dozens of locations, and after days of trying to operate as much of our full schedule across the busy holiday weekend, we reached a decision point to significantly reduce our flying to catch up, we're focused on safely getting all of the pieces back into position to end this rolling struggle.
- [35:54]
David Brown
What Jordan means by that is that Southwest is going to end its rolling struggle by effectively shutting down to passengers anyway. As stranded passengers look on, Southwest loads crews into empty planes and sends them to new destinations. The airline accounts for almost 90% of all US flight cancellations. As it reboots, Southwest will soon be taking passengers back into the skies. But will it ever get back to normal? It's January 2023. In Dallas. Southwest Airlines pilots are pushing back against the company's poor performance. The pilots union has just called for its members to vote on whether they want to authorize a strike against the airline. At Southwest, which launched a profit sharing plan in the 1970s that made millionaires out of many employees, that level of Strife is unprecedented. No union at Southwest Airlines has ever voted in favor of a strike. But Southwest's pilots are angry about the airline's recent meltdown. They're especially mad that management didn't heed the pilots warnings that Southwest outdated technology might lead to disaster. Union president Captain Casey Murray talks to one local news station. We work hard and we want to.
- [37:21]
Southwest Flight Attendant
Make sure that these inefficiencies aren't the.
- [37:24]
David Brown
Norm and they can't be the norm.
- [37:25]
Southwest Flight Attendant
For the continued survival of Southwest Airlines.
- [37:29]
David Brown
Days later, appearing live on cnbc, while inside the maintenance facility at Southwest's Love Field headquarters, CEO Bob Jordan tries to to fix the airline's reputation.
- [37:41]
Bob Jordan
I just got to start with a huge apology to our customers and to our employees. We really messed up that week. And you've got my sincere apologies and you got my full commitment. It's on me. You've got my commitment to do what it takes to fix our issues.
- [37:55]
David Brown
Jordan then turns to CNBC's camera and stares directly in the lens when he explains that an upgrade is also coming to Southwest's much criticized cruise scheduling software. Jordan's message must have been heard loud and clear on the broadcast end of that lens, because just two days later, live from New York on Saturday night, Southwest's upcoming fixes get skewered. On Saturday Night Live. Cast members dressed as Southwest gate agents, flight attendants, pilots and baggage handlers all promise changes are coming to Southwest. Southwest is also modernizing our environment. Air traffic control network.
- [38:33]
Passenger
No more pen and paper. Our air traffic specialists will now be using our old IBM ThinkPad laptops with.
- [38:39]
David Brown
A little red nipple in the middle.
- [38:41]
Southwest Flight Attendant
Now I get a proper flight schedule instead of finding out where I'm going 15 minutes before takeoff.
- [38:46]
David Brown
And now we're streamlining check in but not having one at all.
- [38:49]
Southwest Flight Attendant
We're just trying to fill up the plane and go.
- [38:51]
Passenger
You showed your ticket at security, right?
- [38:53]
Southwest Flight Attendant
You good?
- [38:54]
David Brown
The pre taped skit savages Southwest for a full two minutes. And it ends on a less than apologetic note.
- [39:02]
Passenger
Here at Southwest, mistakes are made, and that's on us. Mostly, some of it's on you.
- [39:08]
David Brown
Hey, man, let's keep it real. You bought the ticket again.
- [39:11]
Passenger
You bought a Southwest ticket. You obviously don't respect yourself, so why should we?
- [39:19]
David Brown
SNL's getting laughs at Southwest's expense, but regulators and legislators in Washington don't think the airline's failures are a laughing matter. And they're about to call Southwest to the carpet.
- [39:35]
Passenger
You're here today and I very much appreciate it. Your CEO.
- [39:38]
David Brown
It's February 2023 in Washington D.C. just days before Valentine's Day. The U. S. Congress is showing no love for the love airline. A Senate panel has called Southwest executives and pilots to testify about what went wrong over the holidays. The chair of the committee, Senator Maria Cantwell from Washington state, where Boeing makes the 737's southwest flies. She also wants something else. She's asked Southwest pilots to testify today, but she also wants to talk to Southwest's CEO Bob Jordan. Jordan, however, is not in the nation's capital. Instead, Jordan has sent an underling, Southwest's chief operating officer Andrew Waterson, to sit in the hot seat. Cantwell is not pleased that Jordan dodged her invitation. So she grills Watterson instead.
- [40:31]
Passenger
So people want to know, are these guys going to invest in the technology that will make this system operational so this will never happen again?
- [40:40]
David Brown
Thank you, Senator. We need to invest in technology, but also in our operational systems outside of.
- [40:45]
Southwest Flight Attendant
Technology because the winter operations were too much for us.
- [40:50]
David Brown
Watterson tells the committee that the airline is spending a pretty penny to fix its problems. It's forking over $1.3 billion on tech overhaul in 2023 and will spend additional millions on things like new de icing trucks. Plus it's finally upgrading its crew scheduling software. That's not good enough for some of the senators. Some suggest management changes are needed because Southwest's leaders failed to heed multiple warnings from flight attendants and pilots that the crew scheduling software was insufficient. Senator Ben Ray Lujan rattles Waterson by asking whether the December 2022 meltdown was more a failure of technology or of Southwest's management. Southwest considering changes to the management structure and decision making process to ensure the voices of your frontline workers are heard and prioritized as part of Southwest decision making process. Thank you, Senator. I think with certain of our work groups, our relationship has maybe atrophied and I've committed in my position to re engage and work with their elected union officials to develop a better relationship, maybe a return of a better relationship with those work groups. That's a yes to the question. I believe the Senator, maybe I misunderstood the question. After Lujan explains himself two more times, Watterson says the airline will listen more closely to its unions as it implements operational changes. But Captain Casey Murray, the president of Southwest's pilots union and a witness before the committee, is not buying that. As he tells the senators, we have.
- [42:28]
Southwest Flight Attendant
Been trying to draw attention to the.
- [42:30]
David Brown
Chaos that all of our pilots have to deal with every day.
- [42:34]
Southwest Flight Attendant
And so I am concerned moving forward.
- [42:38]
David Brown
That we're not going to be addressed or any of the frontline employees are going to be addressed as true partners. And that has to be done. Perhaps because of the pressure from Washington, Southwest invites its unions to help it revamp its winter operations. The airline spends all spring and summer not only upgrading its crew scheduling software, but also beefing up its winter countermeasures. It buys 30 new de icing trucks and deploys them in Denver, Chicago, Nashville and elsewhere. It also buys hundreds of thousands of gallons of propylene glycol, the main ingredient used in de icing fluid, and 16 high powered heaters that can keep planes from freezing to the tarmac. Southwest also runs drills in winter countermeasures for thousands of employees. And back at the noc, the network operations center in Dallas, the airline engages in what it calls war games. Using computers, it simulates its response to big storm events. All of that mostly goes well. But computerized games and drills, that's one thing. Real storms are another. And as summer gives way to fall in 2022, Bob Jordan and Southwest's leadership team hold their collective breath. They don't know for sure if the airline can avoid another disaster. All they do know is this winter is coming. On the next episode, a new storm descends. And as Southwest stumbles financially, an activist investor arrives, forcing some big changes from Wondery. This is episode one of Can Southwest Airlines Survive for Business Wars? A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said at the time. No scenes or dramatizations, but they're based on historical research. I'm your host, David Brown. Joseph Buento wrote this story. Sound design by Josh Morales. Fact checking by Gabrielle Jolais. Voice acting by Chloe Elmore. Our managing producer is Desi Blalock. Our senior managing producer is Callum Plews. Produced by Tristan Donovan of Yellowant and Kate Young. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louie For Wonder.
- [45:29]
Tara Anderson
How hard is it to kill a planet? Maybe all it takes is a little drilling, some mining and a whole lot of carbon pumped into the atmosphere. When you see what's left, it starts to look like a crime scene.
- [45:40]
David Brown
Our Are we really safe? Is our water safe? You destroyed our tap.
- [45:44]
Tara Anderson
And crimes like that, they don't just happen.
- [45:47]
Passenger
We call things accidents. There is no accident. This was 100% preventable.
- [45:54]
Tara Anderson
They're the result of choices by people. Ruthless oil tycoons corrupt politicians, even organized crime. These are the stories we need to be telling about our changing planet. Stories of scams, murders and cover ups that are about us and the things we're doing to either protect the earth or destroy it. Follow Lawless Planet on the Wondry app or wherever you get your podcasts. You can listen to new episodes of Lawless Planet early and ad free right now by joining Wondry plus in the wonjry app, Apple Podcasts, or Spotify.