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What Airline Chaos Looks Like From the Inside -- WSJ -2-

The Wall Street Journal · 01/06/2023 10:59

As with Spirit, I'm sure this meltdown will prompt reflection at Southwest. There is no denying the overwhelming success of its longstanding corporate culture, where change comes slowly, on the reasonable theory that "if it ain't broke, don't fix it." Things rarely break at Southwest, and it has been consistently profitable. But Southwest has been flying the same aircraft type for almost 50 years, and the company is famous for promoting from within, with the goal of lifetime employment for its employees. Even great companies run the risk of complacency, and Southwest may have to reconsider some of its old ways. Innovation is hard.

Spirit had nothing like the reputational or financial resources that Southwest can fall back on today. We managed to survive a very harrowing news cycle thanks to giving prompt refunds and vouchers for free round trips to the most distressed customers. We lost customer confidence, particularly in the New York area, but Spirit for once benefited from its small size and market share. When the chaos cleared, the absolute number of affected passengers was relatively small.

What feels different today for Southwest is not just the vastly larger number of passengers affected but the internet-based media vortex. Airline practices get a lot of media coverage for reasons that mirror the very character of commercial aviation. Passengers soar miles above the earth at near supersonic speeds, entrusting their lives to machines they cannot understand and human beings whose skills they cannot assess. Airlines provide the safest and most reliable mode of travel by a wide margin, but when there are major problems with machines or crew, the results are dramatic and newsworthy, with coverage that can drag on for weeks, months or even years.

The scale and visibility of airline operations also make it perfect click bait. To deal with the millions of interactions each day between passengers and employees, airlines empower staff with enough discretion to deal with unexpected problems but not so much as to undermine a culture based on rules and manuals that have the force of law. This balance has been honed over decades, but it inevitably fails from time to time. Missteps and mistakes that seem trivial compared to Southwest's recent fiasco, like long tarmac delays or airport police removing a passenger from a plane, are broadcast worldwide and often go viral within hours.

It's no surprise that Southwest's travails have elicited calls for additional consumer protection rules, such as the mandatory refund and penalty regime of the European Union. But no rule or bureaucrat could have prevented the failures of Spirit or Southwest or contributed to their solution. Taxpayers do not want government regulators to supervise the upgrading of airline software or to dictate a particular business model for carriers.

By the same token, it is reasonable for society to ask whether the price of stronger consumer protection to ensure mandatory refunds in the case of flight cancellations and delays is worth the benefits. In principle, public policy should make perpetrators internalize the costs of market failure, but that is easier said than done. Ryanair, the largest European airline by passengers, assessed a 2% ticket surcharge to fund compliance with EU rules.

It's certainly worth having such debates about regulation. While Southwest promises to "take care" of its victims, its precise remedial steps remain unclear for now. We at Spirit did our best, even if not fully appreciated at the time. Given similar challenges, other airlines may or may not rise to the occasion.

--Mr. Kahan is a senior counsel with HCH Legal in Washington, D.C., where he specializes in aviation law, and adjunct professor in the department of government at American University.

(END) Dow Jones Newswires

January 06, 2023 10:59 ET (15:59 GMT)

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