it seemed manageable at first
on the Monday before Christmas as winter
storm Elliott began to build Southwest
Airlines management huddled up to
formulate a plan
the following day it went into motion
after internal deliberation and after
informing the pilot Union Southwest HQ
began canceling flights in advance of
the strengthening storm the notice first
directed customers at these airports to
check if their flight had been disrupted
then the list of airports began to grow
so the airline started the process of
canceling flights by the hundreds as the
winter storm worsened that call proved
worthwhile in fact with the benefit of
hindsight they didn't go far enough but
the assumption that undergirded the
decision to cancel that they could
process the cancellations early enough
for customers to Pivot plans and Crews
to reposition for new routings proved
utterly devastatingly wrong you know the
rest of the story temperatures plummeted
thermometers across Denver plunged 37
degrees in a single hour foil travel
plans ruin holidays 5700 flights
Nationwide cancel before Christmas and
while other carriers staggered along
Southwest crumbled into crisis
ultimately canceling nearly 17 000
flights and losing out on an estimated
825 million dollars in the final 10 days
of the year it was the biggest meltdown
of its kind some blame the storm others
blame the carriers point-to-point model
While others still blamed the company's
culture But as time let the hot takes
cool a less exciting culprit came
forward a culprit that's hardly unique
to Southwest a culprits in fact that's
less a bug and more an inherent flaw
within the industry well the biggest the
Meltdown wasn't the first and while an
embarrassment to Southwest alone it was
hardly a crisis unique to the big
beloved Budget Airline for Southwest
winter storm Elliott may have set the
stage for the Meltdown but it didn't
cause it as much as anything Southwest
meltdown was a function of a legacy
Southwest made its name as the pioneer
of the low-cost business model through
quick turnarounds and point-to-point
Route networks while a typical Airline
will fly their plane out and right back
into their Hub a given day for a
Southwest aircraft might start in San
Diego then continue to Sacramento Denver
and Nashville before finishing up in
Tampa through this network structure
Southwest could offer non-stop flights
where competitors only had one stops and
by exploiting this Niche grew into the
world's sixth largest airline but while
efficient in perfect conditions the
system becomes a liability in the event
of a delay or cancellation Pilot's time
out Crews don't make it to their
expected destination for the evening and
planes aren't positioned in the right
place for the next day's flight but
weather and unforeseen circumstances as
they always have exist so Southwest has
tools for these situations one of which
is a GE aeronautic system called Sky
solver plug data into Sky solver on
irregular operations and its algorithms
will in the words of its brochure
execute flight schedule changes and
cancellations conduct aircraft routing
and Equipment swabs and make fixes to
crew assignments and pairings it means
that if a developing storm was to roll
over Denver and cause Southwest to
cancel this inbound flight from
Sacramento on account of the risk that
the plane and crew will stay grounded by
the weather it would call on Sky solver
to effectively stem the bleeding and
make sure that problems don't Cascade to
impact the rest of the routing after
arriving in Sacramento rather than
heading to Denver Sky solver might send
this plane on a passenger-less deadhead
to Nashville where the crew now nearing
the end of their work day could time out
and hand the plane over to the next of
course that's only the beginning while
finding the most cost efficient solution
is simple in the context of this single
routing it becomes orders of magnitude
more complicated when considering the
hundreds of additional Southwest flights
passing through like where to reposition
the 737 that normally would have been
running in and out of Denver all
afternoon that has both the space for
the plane and can begin running services
is the following morning or what to do
with the 737 that is running flights
between cities in the storm's path and
thus is at risk of getting stuck in a
snowed and airport and how to make sure
the later legs of this routing get flown
when the plane meant to run it won't
make it out of Denver that morning now
skysilver is powerful enough to run up
to 300 batches of cancellations in 20
minutes but it does have limitations
first it creates solutions to
cancellations on the Assumption of a
static Baseline for to figure out viable
Alternatives if half of Denver's flights
are canceled it needs to know that the
Sacramento to Denver flight has already
been canceled and if it doesn't or if
the flight is canceled while the
system's running Sky solver Solutions
become less tenable requiring reruns or
manual intervention second Sky solver is
also limited by the data input into the
system some of this data comes from an
internal tool of southwest's called The
Baker dispatch processes delays and
cancellations through the baker to
reconfigure routings for aircraft and
passengers before the information is
then plugged into skysolver crucially
with the baker's data lacks is crew
information who's available what where
when and for how long before they're
timed out now as the storm worsened and
the number of cancellations increased
the limitations of Southwest solver
collided resulting in a massive Tail
Spin with Crews left out of the equation
the algorithm's output provided what it
thought to be viable Solutions but
Solutions without pilots and attendance
once these flights had to cancel close
in to departure time when it became
apparent that they only had half of crew
everything else unraveled as these new
cancellations altered Sky solver's
Baseline assumptions effectively the
software's blind spot transformed the
expected difficulties of a winter storm
hundreds of flights canceled at least 24
hours out on the 20th and 21st into a
full-blown crisis where Southwest tools
abortion problems that it then tried to
fix only to worsen things further
through Christmas cancellations occurred
closer and closer to departure time as
Pilots arrived to planes with no flight
attendants while planes with no
passengers deadheaded uncircular
nonsensical routings like this as the
software essentially panicked
positioning and repositioning planes
only for the crew to time out and get
stuck once again finally blind as to
where their own Crews were and with
flawed programs providing flawed fixes
Southwest went manual training volunteer
staff at headquarters on how to process
pilot and flight attendant forums in
preparing for a hard reset in the four
days following Christmas Southwest would
cancel an incredible ten thousand seven
hundred flights all because the airline
failed to address a weak point that they
had already identified they had put too
much pressure and stacked up too much
complexity onto a fragile it system that
everyone already knew needed an overhaul
and yet as the calendar flipped as
Southwest began to stabilize and is more
detailed reporting on the Meltdown began
to emerge a new meltdown stole the
spotlight now it was the FAA that issued
a nationwide ground stop for 90 minutes
no commercial flights took off and for
the first time since 9 11 American
Commercial Aviation came to a complete
standstill all because a single software
update went sideways leading to
important pre-flight safety
Communications having to be relayed
manually until they could simply no
longer keep up with the morning Rush of
flights and the cycle began again upset
customers outraged press and promises
that the old technology that everyone
knew would fail would be looked into and
this pattern didn't start with Southwest
either it meltdowns hit British Airways
in 2017 then in 2019 then again in 2022
they forced Delta to cancel thousands of
flights in 2016 and 2017. they pushed
American Airlines to cancel over 1 000
Regional flights in 2018. all said they
do better the next time and yet all
still rely on outdated overstretched it
systems that were never designed to
handle the volume of Industry growth in
the decades since their initial
development but the problems of old
overstacked it systems don't stop at the
back end well customer facing systems
might look good on the surface the most
important one the very system that makes
it all possible was created as close in
time to the Wright brothers first flight
AS to today when a traveler sees this it
may look modern but what they're
actually looking at is a translation of
this behind the scenes Google flights
entered a query into the global
distribution system an interconnected
set of software is run by Amadeus saber
or travelport in fact specifically it
entered this A.D to initiate an
availability lookup zero eight Feb to
indicate the date then Den lhr to
specify Denver as the origin and London
as the destination this initiates a
query from the GDs system to another oag
which essentially acts as the definitive
source of Airline scheduling data
worldwide the GDs then comes back and
spits out two options one by British
Airways one by United the strings of
letters and numbers indicate
availability of across the different
Fair classes then the right side
provides most other data departure time
arrival time aircraft type and flight
duration but the fair data is still
missing for that Google flights needs to
pick up flights pick a fair class then
enter another query for its price but
the GDs doesn't have that data itself it
seeks the answer from the airline tariff
publishing company which similarly to
the oag was scheduling is the One-Stop
shop for pricing data used by
essentially every major airline globally
so once again the GDs will repackage
their response into this reiterating the
flight schedule then displaying the base
fare the carrier surcharge U.S passenger
facility charge security fee and
international departure tax to give a
total
630.20 one-way fare on the February 8th
British Airways Denver to London flights
this entire process is repeated for the
United option which gives Google flights
all the information necessary to
populate this screen but next up is
booking and that's even more involved
regardless of where a booking takes
place with some limited exceptions the
user interface is just a translation
tool to input a string of commands into
the GDs this sequence initiates the
process of creating a passenger name
record or PNR to which it will then
input a phone number the name of the
person making the booking then a
precisely formatted description of the
desired flight itinerary after
reconfirming availability and fair price
the GDs will then submit the PNR and
return with this the time limit for
actually paying for the booking at this
point the booking is confirmed that seat
is reserved and will stay reserved
unless that payment deadline passes
without payment well these days
customers typically pay immediately in
the background it's rarely required but
this delay deadline gives an online
travel agency like Expedia for example
time to process and verify payment from
the customer before actually paying for
the ticket themselves at which point it
might become non-refundable leaving the
company in a tricky spot if a customer's
credit card payment declines but even
before paying Expedia will close out the
transaction with the GDs therefore
sending the passenger name record to the
airline which will respond with a
modified version including a
confirmation number which is then
extracted and sent to the customer in a
flashy well-formatted email
the GDs and its Associated systems were
revolutionary for the airline industry
not only did they make reservations a
far less labor-intensive process they
made essentially every Airline
reservation system interoperable with
each other these days it's fairly simple
for Airlines to sell tickets involving
other airlines they're all using the
same GDs already so the way United's
internal systems interpret and modify a
PNR is the same way lufthansa's would
theoretically United could sell you an
itinerary connecting onto an American
Airlines flight they wouldn't because
they don't have a commercial partnership
with the airline but from a technical
perspective there's nothing stopping
them and if something goes wrong and
your United flight cancels the airline
can and occasionally will rebook flights
onto American Delta and others using
this system but while the GDs was
revolutionary it hardly still is today
in fact at airports around the world
when you step up to a reservations agent
chances are the other side of their
screen looks like this still today in
2023 the GDs has operated as a command
and line interface the way computers
worked before graphical user interfaces
were popularized in the 80s command line
interfaces aren't in and of themselves
an issue but in context the difficulty
is that using them requires legitimate
creativity and scale let's say for
example a customer is here in Denver
headed to Zurich and their 1 40 PM
flight to Chicago to connect onto the
710 overnight to Zurich just canceled
meaning they won't make their connection
a rebooking agent would start by
querying the GDs for the next available
itinerary between the two cities and
they would see there is a viable one
connecting onto a 720pm Swiss Air flight
out of LAX but the problem is that the
only two flights to La that would make
that at 136 and 355 are already oversold
meaning there's no seat available for
the stranded passenger so according to
the GDs it's impossible to get that
passenger on their way to Zurich until
the next day but just because the GDs
says it's impossible doesn't mean it
actually is for example an experienced
rebooking agent would know that United
also flies to to John Wayne Airport in
Orange County but an hour's drive from
LAX so if desperate the passenger could
fly to there take a taxi to LAX then
make their overnight flight to
Switzerland the GDs can't offer this as
an option because it's not one that the
airline would sell so it's not in the
system but with this knowledge an agent
could individually book seats for each
leg then string them together into an
itinerary in the PNR
also would know that United's 11 45 AM
LAX bound flight was delayed until 1 30
meaning this passenger could still take
that and make the connection it also
wouldn't suggest taking Americans for 10
pm flight to LAX as an option because
Swiss Air and American don't typically
ticket together but in this exceptional
circumstance United could buy the strain
of Passenger a ticket on American
through the GDs to continue their
Journey on Swiss and this is only the
tip of the iceberg there are endless
tricks to working with the GDs to solve
problems but experience is needed to
know the right technique the horrible
truth this presents for both passengers
and Airlines is that constantly
passengers are getting stranded when
they don't have to be it's down to the
luck of the draw is the rebooking agent
you're walking up to one that's worked
there for 30 years and knows the GDs
like the back of their hand or have they
just finished the limited required
training to complete those simplest
tasks for passengers this increases the
frequency of getting stranded on the
road and for Airlines this increases the
cost born from issuing wheel vouchers
booking accommodation and paying for
light compensation when passengers don't
get to their destination on time and the
limitations of the GDs not only create
additional costs but also prevent
potential revenue for example Air New
Zealand developed an Innovative product
where three successive economy class
seats can be transformed into a short
lie flat bed called Sky couch that means
that those seats can be sold
individually as usual or as a set of
three to one or two passengers this sort
of optionality breaks the GDs it doesn't
have a way of properly communicating or
reserving these sorts of transformable
seats so on the GDs Sky couch seats are
just displayed as occupied regardless of
whether they actually are in order to
book them one has to go directly to the
Air New Zealand website for the airline
this leaves plenty of potential revenue
on the table for example a huge portion
of the airline's traffic is ticketed
through United since United is a major
partner that feeds inbound traffic from
across the U.S to air New Zealand's
long-haul flights out of La San
Francisco Houston and Chicago those
passengers can book and check in
exclusively with United meaning they
would never have even had the chance to
hey Air New Zealand for a sky couch and
it's the same with passengers who booked
through other airlines or online travel
agencies Airlines have been complaining
about the GDs system for decades and so
there are an increasing number of
Technical Solutions and workarounds to
the gds's constraints but even those
have their problems for example Iota
introduced the new distribution
capability standard which allows for
more complex back-end communication but
rather than serving as the solution to
the gds's shortcomings it more so
demonstrates what's truly at the root of
the problem
162 airlines travel agencies system
providers and others are certified by
ayata as having properly integrated this
new standard into their systems or at
least part of it the core functions have
pretty good uptake for example 156 of
those have Incorporated the NDC standard
that allows for shopping for flights but
then you get to the more novel functions
shpan2 is a standard that allows for the
sale of increasingly common unbundled
ancilliaries like in-flight Wi-Fi lounge
access priority boarding and more more
meaning that theoretically it allows
someone booking through Expedia to buy
that in-flight Wi-Fi right in their
checkout flow but only 51 of the 162 are
certified on this capability and then
you get into the really specialized
stuff NDC has enabled Airlines to have
interoperable Dynamic pricing systems
meaning rather than working with the
constraints of the GDs and ATP Co which
only allow for Price updates a certain
number of times per day each fare will
be customized for each individual
consumer based on an algorithm's
estimation of their price sensitivity
but to date not a single Airline is
certified on this already existing
Revenue generating standard this is a
familiar refrain Airlines ask for more
advanced systems more advanced systems
are developed then Airlines don't use
the more advanced systems because they
decide the cost it would take to
integrate them isn't worth it and some
airlines are going further only failing
to implement new interoperable systems
but rejecting their use altogether for
example if you search on Expedia for an
itinerary between Denver and Long Beach
it'll tell you the best option is a
One-Stop trip through Phoenix on
American but there are actually three
non-stop flights a day on that route the
problem though is that their Southwest
flights and with limited exception
Southwest does not allow for booking
through the GDs meaning Expedia has no
way to book a customer a ticket on the
airline meanwhile on Google flights
which focuses on directing people where
to book rather than booking a self you
can find Southwest schedules which are
filed with oag but you can't find fares
with no GDs sales there's no reason to
distribute Fair information this all
means that nearly all Southwest bookings
are done on southwest's website but the
airline can customize and revenue
optimize the booking process as they
wish the upsells are everywhere before
confirming a fare one gets a pop-up
outlining the benefits of the next most
expensive fare class on the following
screens there's the same upsell again an
offer for a 200 Credit in return for
signing up for their credit card and an
option to pay for early check-in
guaranteeing one of the best boarding
positions these upsells matter in 2021
in ancillary fees made up more than 4
billion dollars in revenue for Southwest
and that ancillary revenue is raised
when customers book directly and are
offered all the upsells and in addition
to increased Revenue direct booking cost
less no paying for developers to
integrate their systems with others no
paying GDs fees no paying commissions to
Expedia and others following southwest's
lead GDs non-participation by budget
Airlines is downright common these days
and the full service network carriers
are increasingly working around it to
strike up Direct business and system
relationships with major sales channels
and partners but this is fragmenting the
industry airlines are innovating which
is exactly what the industry should be
doing but through this individual
Innovation or losing the collective
interoperability that has led to the
globally seamless travel experience that
customers have come to expect it's
almost analogous to a reverse tragedy of
the commons each individual node in the
system would grow their revenue by
investing in better interoperable
systems but only if every other node did
too if only one node invests you'll have
spent money to create interoperability
but still lack Partners to interoperate
with meaning no Revenue impact and a
negative cost impact so in this context
each node is actually incentivized to
reduce interoperability to push
consumers towards their own systems
which are better designed to increase
per customer Revenue than the
interoperable ones it's a strategic
stalemate and this can explain the
broader issue as well there's a
strategic I.T stalemate when every
airline's I.T is equally bad there's
little competitive incentive to improve
it why invest to improve to a level that
the public doesn't even know is possible
globally the airline industry has just
settled on a culture of good enough the
problem from our outside perspective is
that Airlines essentially act as public
utilities these days they are the only
practical means of long-haul travel and
are also the only practical means for
medium Hall travel in areas of North
America Russia Australia and other
larger less dense countries when
Airlines slow down people slow down and
therefore economies slow down the U.S
recognizes this fact by subsidizing the
construction and maintenance of airports
and even more strongly by subsidizing
Airlines to fly to Rural and remote
communities under the thesis that a lack
of air travel options would hold back
their economies and countries also
recognize this preemptively historically
treating the earliest Airlines as
government services and running them as
state-owned Enterprises but in the
century sense the trend has been
thoroughly towards privatization meaning
the only real obligation is to the
shareholder so this is one of those all
two common scenarios where there is a
start difference between what's good for
the shareholder and what's good for the
world therefore it's pretty simple
Regulators need to decide whether
Airlines I.T Antiquity is a problem for
the public and if so do something about
it
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