Jet Blue prided itself on its “paperless processes. ” Stable’s investment in information technology enabled the airline to turn a profit by running its business at 70 percent of the cost of larger competitors. At the same time, Getable filled a higher percentage of its seats, employed non-union workers, and established enough good will to score an impressive customer retention rate of 50 percent. Initially, Getable flew only one type of plane from one vendor: the Airbus AWAY. This approach enabled the airline to standardize flight operations and maintenance procedures to a degree that exulted in considerable savings.
CIO Jeff Cohen used the same simple-is- better strategy for Stable’s information systems. Cohen depended almost exclusively on Microsoft software products to design Stable’s extensive network of information systems. (Stable’s reservation system and systems for managing planes, crews, and scheduling are run by an outside contractor Using a single vendor provided a technology framework in which Cohen could keep a small staff and favor in-house development of systems over outsourcing and relying on consultants.
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The benefit was stable and focused technology spending. Getable spent only 1. 5 percent of its revenue on information technology, as opposed to the 5 percent spent by competitors. Stable’s technology strategy helped create a pleasing flying experience for passengers. As president and chief operating officer Dave Barge put it, “Some people say airlines are powered by fuel, but this airline is powered by its IT infrastructure. ” Getable consistently found itself at the top of J. D. Power and Associates customer satisfaction surveys.
Getable believed it had learned to work lean and smart. The big question was whether Getable would be able o maintain its strategy and its success as the airline grew. By the end of 2006, the company was operating 500 flights daily in 50 cities and had $2. 4 billion in annual revenue. Along the way, Getable committed to purchasing a new plane every five weeks through 2007, at a cost of $52 million each. Through all of this, Getable remained true to its formula for success and customers continued to return. February 14, 2007, was a wake-up call.
A fierce ice storm struck the New York City area that day and set in motion a string of events that threatened Stable’s sterling reputation and its stellar customer legislations. Getable made a fateful decision to maintain its schedule in the belief that the horrible weather would break. Getable typically avoided pre- canceling flights because passengers usually preferred to have a delayed arrival than to camp out at a terminal or check into a hotel. If the airline had guessed correctly, it would have kept its revenue streams intact and made the customers who were scheduled to fly that day very happy.
Most other airlines began canceling flights early in the day, believing it was the prudent decision even though passengers would be inconvenienced and money would be lost. The other airlines were correct. Nine Getable planes left their gates at John F. Kennedy International Airport and were stranded on the tarmac for at least six hours. The planes were frozen in place or trapped by iced-over access roads, as was the equipment that would De-ice or move the aircraft. Passengers were confined inside the planes for up to ten and one-half hours.
Supplies of food and water on the planes ran low and toilets in the restrooms began to back up. Getable found itself in the middle of a massive dual crisis of customer and public relations. Getable waited too long to solicit help for the trained passengers because the airline figured that the planes would be able to take off eventually. Meanwhile, the weather conditions and the delays or cancellations of other flights caused customers to flood Stable’s reservations system, which could not handle the onslaught.
At the same time, many of the airline’s pilots and flight crews were also stranded and unable to get to locations where they could pick up the slack for crews that had just worked their maximum hours without rest, but did not actually go any. Veered. Moreover, Getable did not have a system in place for the rested crews to call n and have their assignments rerouted. The glut of planes and displaced or tired crews forced Getable to cancel more flights the next day, a Thursday.
And the cancellations continued daily for nearly a week, with the Presidents’ Day holiday week providing few opportunities for rebooking. On the sixth day, Getable cancelled 139 of 600 flights involving 11 other airports. 276 Part l: Information Systems in Hits Digital Age Getable the Turbulence Stable’s eventual recovery was of little solace to passengers who were stranded at the airport for days and missed reservations for family vacations. Overall, more than 00 flights were cancelled, and Getable lost $30 million.
The airline industry is marked by low profit margins and high fixed costs, which means that even short revenue droughts, such as a four-day shutdown, can have devastating consequences for a carriers financial stability. Throughout the debacle, Stable’s CEO David G. Melanin was very visible and forthcoming with accountability and apologies. He was quoted many times, saying things such as, “We love our customers and we’re horrified by this. There’s going to be a lot of apologies. ” Melanin also admitted to the rues that Stable’s management was not strong enough and its communications system was inadequate.
The department responsible for allocating pilots and crews to flights was too small. Some flight attendants were unable to get in touch with anyone who could tell them what to do for three days. With the breakdown in communications, thousands of pilots sand flight attendants were out of position, and the staff could neither find them nor tell them where to go. Getable had grown too fast, and its low-cost IT infrastructure and systems could not keep up with the business. Getable was accustomed to saving money both from streamlined information systems and lean staffing. Ender normal circumstances, the lean staff was sufficient to handle all operations, and the computer systems functioned well below their capacity. However, the ice storm exposed the fragility of the infrastructure as tasks such as rebooking passengers, handling baggage, and locating crew members became impossible. Although Melanin asserted in a conference call that Stable’s computer systems were not to blame for its meltdown, critics of the company pointed out that Getable lacked systems to keep track f off-duty flight crews and lost baggage.
Its reservation system could not expand enough to meet the high customer call volume. Navigate, headquartered in Minneapolis, hosts the reservation system for Getable as well as for a dozen other discount airlines. The Navigate system was configured to accommodate up to 650 agents at one time, which was more than sufficient under normal circumstances. During the Valentine’s Day crisis, Navigate was able to tweak the system to coordinate up to 950 agents simultaneously, but that was still not enough. Moreover, Getable could not find enough qualified employees to staff its phones.