Southwest Airlines was set to return to normal operations Friday, the carrier said, after days of widespread cancellations left masses of stranded travelers and piles of luggage at Midway Airport as the airline cut some two-thirds of its scheduled flights.
The headaches aren’t necessarily over for the thousands of passengers whose flights were canceled during a busy holiday travel period. And restarting service won’t allow the company to avoid fallout entirely over the next few weeks.
But, eventually, Southwest’s reputation is likely to fully recover from the meltdown, analysts said.
“This is a company with an incredibly strong brand reputation built up over 50 years,” said Mike Arnot, a Toronto-based industry analyst. “And that is not going to be eroded in any major way by even this debacle.”
Southwest’s challenges came to the forefront earlier this week, even as other airlines recovered from winter storms the weekend before.
Dallas-based Southwest said Tuesday it would operate about one-third of its schedule for “several days” in an attempt to catch up, after the storm left thousands of flights canceled and crews and planes out of place. Analysts said Southwest’s situation was the culmination of a series of challenges, capped off by what the pilots union described as scheduling technology that couldn’t keep up with the airline’s complex flight network once the weather-related cancellations started.
At Midway Airport, the combination of the storm and schedule cuts led to more than 1,850 Southwest flights being canceled between Dec. 22 and Thursday. The airline canceled some 260 flights during the same time frame at O’Hare International Airport, according to flight-tracking website FlightAware.
But by Thursday afternoon, Southwest had scheduled cancellations for just five Friday flights at Midway, and none at O’Hare, according to FlightAware.
Midway is a major center of operations for Southwest, where it is the dominant carrier and employs more than 5,700 people. The company expanded its Chicago service to O’Hare last year, seeking to win away business from larger rivals such as Chicago-based United Airlines and American Airlines.
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This week’s cancellations prompted responses from politicians including Illinois Gov. J.B. Pritzker and Chicago Mayor Lori Lightfoot, who both urged Southwest to communicate with customers.
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“Southwest remains a key partner at Chicago’s airports and a key employer in our region,” Lightfoot said in a statement Thursday. “I made it abundantly clear to Southwest there is still a tremendous amount of work they must undertake to do right by travelers and take ownership of this issue.”
Southwest also drew the attention of the U.S. Department of Transportation. Secretary Pete Buttigieg reiterated in a Tweet on Thursday that the department was investigating, “and we are enforcing customer service standards.”
Unlike airlines that operate in and out of major hub cities under a hub-and-spoke model, Southwest flies a point-to-point network, meaning crews can be scheduled to fly from one destination to another, and then on to another.
The system has benefits, but as winter weather rolled across the country over Christmas weekend, it meant that crews and planes were out of place and couldn’t easily pick the schedule back up when the weather cleared, the pilots union vice president, Mike Santoro, said earlier this week.
Then, scheduling technology lost track of pilots, flight attendants and planes, Santoro said. The system to reschedule crews became overloaded, and pilots couldn’t get through to be put on the paperwork necessary to fly planes, he said.
The technology “is just not adequate enough for the size that we are as an airline now or the complexities of the network,” said Santoro, whose union is in negotiations with Southwest over a new contract.
Industry analyst Robert Mann has said the scheduling technology issue was the one in a series of events that contributed to the cancellations, including increasing reliance on mandatory overtime for staffers to meet the flight schedule.
In a video posted online Tuesday evening, Southwest CEO Bob Jordan apologized to customers and employees. He said the airline’s tools mostly work, but “clearly we need to double down on our already existing plans to upgrade systems for these extreme circumstances so that we never again face what’s happening right now.”
Jordan faces a crisis just 11 months after he became CEO, replacing longtime leader Gary Kelly. Southwest had 88 planes and 7,000 employees when Jordan joined 35 years ago. Now it has more than 700 planes and more than 60,000 employees.
Speaking to reporters a month ago at Southwest headquarters in Dallas, a relaxed and jocular Jordan spoke in glowing terms about the airline’s culture and customer service. He outlined five priorities, including modernizing the airline’s technology for scheduling pilots and flight attendants.
Under Southwest’s system, which dates to the 1990s, when crew members are reassigned to a different flight or even change hotels, “somebody needs to call them or basically in the airport chase them down and tell them what their reroute looks like,” Jordan said.
“I do think the scale and the growth of the airline got ahead of the tools that we have,” he said. “No fault of anybody — takes investment — and we’ll get all this done.”
The cancellations left scenes of chaos at Midway in recent days, as travelers struggled to find rental cars or affordable flights on other airlines. Some waited in long lines to try to claim suitcases, as luggage piled up at the airport’s baggage claim.
Southwest said Wednesday all suitcases in the Midway baggage claim would be removed and secured by the end of the day, then would continue on to their final destinations. By Thursday morning, baggage claim was clear, the Chicago Department of Aviation said.
Southwest did not provide a time frame for when all bags would be reunited with their owners, but said employees were “working as quickly as possible to move bags given the volume,” and referred passengers to luggage information on its website.
Lightfoot said in her statement that Southwest reported “significant progress” in returning bags to passengers.
Travelers can apply for refunds from Southwest for flights canceled between Dec. 24 and Jan. 2. For canceled or significantly delayed flights, the carrier will also reimburse “reasonable” expenses for items such as meals, hotels, rental cars or tickets on another airline, according to the carrier and CDA.
Jordan said it was too early to say how much the company will lose in revenue and incur in extra costs because of the current crisis. Jordan told reporters that events of the last week will likely cause Southwest to reexamine priorities and spending levels for technology improvements that were already underway, but he offered no specifics.
“This has been an incredible disruption, and we can’t have this again,” he said.
Southwest lost $75 million during a much smaller disruption in October 2021 that resulted in about 2,000 canceled flights over a four-day stretch.
Refunds and reimbursements will be an immediate cost for the airline, but they likely won’t be a major blow to a company the size of Southwest, Arnot said.
Bookings could take a hit over the next several weeks, he said. But travelers are price sensitive, and Southwest is known for lower-priced fares. That will likely make it attractive to passengers, especially in markets where there are no ultra-low-cost carriers, such as Spirit or Frontier
Months from now, travelers likely won’t remember which airline had a meltdown, or when or why, he said.
“If it’s Southwest today, it might be a different airline tomorrow for different reasons,” he said. “So I do think that, that brand equity that Southwest has built up does not get eroded.”
Investors cheered signs that Southwest might finally be getting a handle on the crisis. The company’s shares rose nearly 4%, but were still down nearly 8% for the week.
Southwest has been the most profitable U.S. airline so far this year, earning $759 million in net income through September.
Raymond James airline analyst Savanthi Syth said Thursday that she still expects the company to post a small profit in the fourth quarter, but that some consumers are likely to switch from Southwest to other airlines over the next few months when booking travel.
Another airline analyst, Colin Scarola of CFRA, said he too didn’t expect the “Christmas week fiasco” to have a lasting impact because Southwest often has lower fares than its three largest rivals: American, United and Delta.
“History shows customers tend not to permanently ditch an airline even after an awful experience due to the commodity-like nature of the product,” he wrote in a note to clients.
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In a statement Thursday, Southwest executives acknowledged work remained.
“We have much work ahead of us,” they said. “Including investing in new solutions to manage wide-scale disruptions.”
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