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OM in the News: Airlines Still Mastering the Role of Technology

August 10, 2016
A Delta employee hands out snacks to passengers waiting to check in at Newark airport this week

A Delta employee hands out snacks to passengers waiting to check in at Newark airport this week

Just as we have seen rapid advances in technology in the manufacturing sector (see Ch. 7), so do we see the critical role of technology in services. This week, for example, a power outage at Delta Air Lines grounded thousands of passengers, wreaking havoc on the carrier’s reservations system and drawing attention to antiquated technology that has plagued many airlines. The outage canceled hundreds of flights and snarled Delta’s efforts to alert passengers to the problems via its apps and on airline flight-information displays.

When departing flights can’t take off, tie-ups at hub airports follow because gates aren’t available for arriving flights. Further delays arise because planes and crews are out of position to follow the published schedule. It can take days for a carrier to recover and get all of its passengers to their destinations.

The technical problems will cost Delta millions of dollars in lost revenue and damage its hard-won reputation for reliability, reports The Wall Street Journal (Aug. 9, 2016).  The meltdown highlights the vulnerability in Delta’s computer system, and raises questions about whether a recent wave of U.S. airline mergers that created 4 large carriers controlling 85% of domestic capacity has built companies too reliant on IT systems that date from the 1990s. Delta merged with Northwest Airlines 8 years ago.

These IT systems—which run everything from flight dispatching to crew scheduling, passenger check-in, airport-departure information displays, ticket sales and frequent-flier programs—gradually have been updated but are still vulnerable. Following the loss of power, some critical systems and network equipment didn’t switch over to Delta’s backup systems. Delta aimed to limit customer backlash, but customers unleashed their frustration with 43,000 social media complaints.

Classroom discussion questions:
1. What did Delta do wrong IT-wise?

2. Why is a technology error more damaging in an airline than in a restaurant or university?

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