Not surprisingly a decent part of yesterday’s earnings call for Delta Air Lines was focused on the carrier’s operational meltdown the week prior. A series of storms in Georgia served as the catalyst for nearly four thousand flight cancellations during one of the busier travel weeks of the year (Spring Break). The company believes the event will hit its top-line revenue to the tune of $125 million dollars. Which makes me question CEO Ed Bastian’s comments during the call when asked about the failures, specifically on the IT side of things.
It wasn’t a question that the IT didn’t work. It actually worked and it was worked as they designed – it got overwhelmed by the volume of broken rotations and cancellations and diversions. All of which needed to be put together on the fly at a level, an unprecedented level of volume that overwhelmed the systems a bit. So, the systems are working throughout. It was the size and the magnitude and the volume that we are experiencing that caused the delay.
Turns out the initial flight diversions and cancellations left far too many crew members out of position and the system responsible for rebuilding those pairings was crushed under the load. Of course, that could be the designed plan. Undoubtedly the system was originally designed when Delta was a much smaller airline. It is feasible that the system was never designed to handle the current level of operations. Alas, airlines seem too busy returning equity to shareholders (DL to the tune of $350mm last quarter) to focus on investments in their internal systems. At least not in a proactive manner.
Now that the company got burned to the tune of $125mm it will invest in updating the crew scheduling systems, those same systems that were working as designed during the meltdown. And, for good measure, Bastian calls it an industry-wide issue, deflecting blame from Delta’s troubles.
The big changes we are making is around technology investment. And getting better crew tracking and this is an issue that’s not just the Delta issue this is an issue for the industry as to how to minimize disruptions when they occurred.
I do give Delta some credit here. When we see a systems failure it usually is a dramatic one. Just like the power outage last summer.
Maybe lead the answer with “Our system needs to be rebuilt to keep pace with our strong current and growing operations” rather than “It actually worked and it worked as designed” next time. Because this just sounds silly.
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