“Wanna get Away? Yesterday, we sure did,” Southwest Airlines (NYSE:LUV) spokesman Chris Mainz wrote in Wednesday’s “Nuts About Southwest” blog after two separate systems glitches snarled the airline’s computer systems on Tuesday, hurting customers ability to access frequent flier accounts and book tickets.
Although the problems were resolved, customer frustration over the incident forces one to question whether listing Southwest fares on external systems could have helped insulate the airline from bad publicity
Unlike most other airlines, Southwest sells tickets only on its own website. Competitors Delta Air Lines (NYSE:DAL) and United Continental (NYSE:UAL) list tickets on online travel sites such as Orbitz Worldwide (Nasdaq:OWW), Expedia (Nasdaq:EXPE) and Sabre’s Travelocity unit.
Even AMR Corp.’s (NYSE:AMR) American Airlines, which is pushing its own direct connect technology, has cut a deal with Priceline.com (NASDAQ:PCLN) to make the airline’s flights available on its site.
Southwest has three reasons for taking a different approach: 1) It costs more to sell tickets externally because the airline must pay fees of about $3.50 a flight segment (that’s $7 for a one-way ticket with a connection); 2) The airline builds brand loyalty by driving customers to its website; and 3) It somewhat mitigates the problem of commoditization by showcasing differences that extend beyond ticket prices, such as the airline’s famous “Bags Fly Free” campaign.
But when things go wrong, its harder to pass the buck. Technical problems surrounding the launch of Southwest’s second-generation Rapid Rewards program snarled the airline’s computer systems on Tuesday, impairing customers’ ability to access frequent flier accounts and book tickets. A separate 90-minute telecommunications outage further complicated the situation by interrupting the airline’s ability to connect to its nationwide call centers and some airports, which ended up delaying some 300 flights.
Frustration over the snafus boiled over into social media, as customers complained on Facebook and Twitter about missing flight credits and long hold times at the airline’s reservations centers. “After trying to book online, I called customer service this morning — was on hold for 45 minutes,” one person wrote. “When I finally talked to a rep, I was told they were unable to book my Rewards flight due to system issues and I would have to call back. Just to wait on hold? No thanks!”
The perception by some customers that Southwest had gone to ground in the midst of the outage was an unwelcome PR hit to the airline, which takes pride in its proactive communication with customers. Although Southwest shares slid to $11.57 on Wednesday from $11.92 before the outage to close at $11.57, the drop was related primarily to the fuel price worries that have bedeviled the entire sector — not the computer glitch.
On Thursday, amid a broad market, rally Southwest shares were up 2.3% to $11.84.
Bottom Line: In the immortal words of Yeats, “Things fall apart”. And in the airline industry, carriers are often defined not only by how well they handle the problem, but how well customers perceive them to be handling the problem. Because all roads lead to Southwest’s website, consumer annoyances like this week’s technical glitch have the potential to stick to the brand longer.
