Southwest ’22 nightmare may not inflict long-lasting damage

Bloomberg

Southwest Airlines Co’s 2022 nightmare before Christmas is unlikely to inflict long-lasting damage to the carrier’s reputation if management compensates customers and makes good on vows of operational changes, communications and management professionals say.
In recent days, social media has been flooded by angry Southwest customers after storms and shaky computer systems forced the airline, the largest domestic carrier in the US, to cancel more than 13,000 flights. Chief Executive Officer Bob Jordan has issued multiple apologies while employees work overtime to clean up the mess, which officials in Washington vow to scrutinise.
Yet even a meltdown of this magnitude poses little long-term threat to Southwest. The carrier will need to prove it has remedied the technical problems that contributed the crisis and offer customers generation compensation. The first test for the airline, which didn’t respond to a request for comment, was expected to come on Friday, when it plans to resume normal operations.
“They’ve gone into the year with a lot of goodwill in the tank,” said Jay Sorensen, a former marketing executive at Midwest Airlines who is now president of IdeaWorksCompany, a consulting firm. “I don’t see long-term damage to Southwest Airlines unless they completely botch the recovery.”
Customer-service blunders like Southwest’s often spark a harsh public backlash and prompt corporate leaders to promise changes. But they are often forgotten. United Airlines Holdings Inc came under withering criticism in 2017 after a
69-year-old passenger getting dragged from a plane was caught in a video that went viral. The company reached a private, out-of-court settlement with the individual.
Aside from a lengthy run of bad press and public outcry, “none of that really had much of an impact” on United, said David Austen-Smith, a business professor at Northwestern University whose work includes corporate ethics and crisis management. “The bottom line is when people buy airline tickets they look for price and convenience. Southwest delivers price and convenience, and for the most part they’re reliable.”
That doesn’t mean the airline won’t suffer some fallout. Consumers are likely to book with other carriers into the first quarter of next year, though that will likely moderate in later months, according to Savanthi Syth, an analyst with Raymond James Financial Inc who recommends buying the stock.
Softness in bookings may last “until the half life of the anger is over and people are making spring-break plans,” said Andrew Davis, a former transportation analyst with T Rowe Price Group Inc, which is a long-term airline investor and currently Southwest’s fourth-largest shareholder.
“This time next year just as many people who were going
to fly on Southwest will again,” he said. Working in the industry’s favour is a paucity of alternatives to long-distance travel in the US. That makes it harder for customers to shun a carrier over shoddy service.
“That’s given the industry a certain level of confidence that they can get away with more than other industries, and they’re right,” said Eric Dezenhall, CEO of crisis-management advisory Dezenhall Resources.