Case Analysis: Northwest Airlines and the Detroit Snowstorm

Who is responsible, and why? Was the cause of this situation an act of God? (The weather) or some organization? If an organization was responsible, which was it? There was a snowstorm on Saturday, January 2nd, which was very serious and caused over 10 inches of snowfall. Northwest Airlines had been too late to halt the departure of their planes from other cities to Detroit, one of its largest hubs. They made the decision to let 30 planes land in Detroit on Sunday, neglecting those 14 inches of snow and the severe weather condition. Luckily, all the planes were landed successfully without any major accidents or disasters. However, the planes had to sit on the tarmac for over 8 hours before they could deplane their passengers and food and drinks were also over within 2 hours. This situation could possibly have been avoided if Northwest Airlines had cancelled the departure of their planes to Detroit earlier. Other airlines had not encountered such a serious situation, while the planes of other airlines were just needed to wait for around an hour. Northwest airlines operation planning: NWAs daily operations are planned and controlled by the groups that comprise SOC. SOC directors ensure that the SOC group acts as a coordinated team. Department within SOC includes crew coordinators, crew scheduling, flight dispatch, maintenance control and meteorology. During a snowfall SOC operation planner receives data from each of these department and from the airport NWAs serves, and they are responsible for coordinating and NWAs response to schedule problems and any other potential problems. Snow fall was an act of god but the SOC director at the headquarter of Northwest Airlines had made some bad decision to cause the disaster. Some of the incidence that is mentioned in the case study clearly proves that is SOC director was responsible are as follows: On Saturday 2nd January at 1:30 p.m., Northwests chief dispatcher suggested to the Strategic Operation Center (SOC) director and three Northwest planners that they should shut down Detroit Metro. Rather than shutting down Detroit operations, the SOC director in Minneapolis decided to cancel more arrivals On the same day at 6:30 p.m., Northwests control center manager in Detroit told the SOC to shut down operations at Detroit Metro until at least noon Sunday. The SOC canceled most flights an half hour later, with a few exceptions
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On Sunday 3rd January at 2:00 a.m., the Detroit control center manager again requested that the SOC cancel all flights before noon yet the SOC director cancelled most of the arrivals but 2 planes were allowed to arrive at Detroit on Sunday morning After agreeing that only few aircrafts would land , more eights arrivals were allowed to land post 1 st arrival and all the flights en route Detroit were also allowed to land leading to 34 planes stranded at Detroit despite bad weather and bad condition at the airport due to failures of machines and bad communications among SOC ground staff and airport authorities The operating efficiency of the airport authorities and NWA personnel was found to be lacking as they did not co-ordinate with other airlines and ask for their help to deplane the passengers either by using their gates or by using their stairs for this purpose. This shows lack of judgment and contingency planning. Bad communication between SOC, airport authority and Detroit Control Center Manager.

What are the implications of all of the above? What can the whole episode mean for Northwest Airlines in the short term and in the long term? There are quite a few implications for NWA both in short term as well as long due to the incident at Detroit. They are as follows: Short Term FAA Investigation and Lawsuits Many lawsuits and legal action will be taken against the company which will increase our legal fees and expenditure and also give us a negative reputation. Penalties, if any, laid on us will increase our outgoings even further. Vouchers Giving away vouchers to our customers to retain them and to show them the turn around in our services is very important. The customer has to want to come on our flight as well as see and feel the changes made and being made so that he has a good experience of taking our flight. This will increase our expenditure in the short term nut it is believed to be a necessity to ensure customer loyalty. Media Presence In the weeks following the blizzard, the national news media vividly recounted what happened to passengers aboard the airplanes stranded in Detroit. The media will keep on hounding the airlines and will continue to air passengers interviews showing NWA in bad light. This will affect future sales as well as customer switching to other airlines. This will directly affect our top and bottom line. To get out of this mess we will have to increase our advertising as well our operating expenditure to make the customers aware that everything that can be done to improve the service is being done. Change in Management There will have to be a change in management as someone was responsible for the entire debacle. It is up to the higher officials to make a scape-goat and to make the customers believe that whoever was responsible is being punished and the airlines is making the necessary changes to improve their services. A more experienced employee will have to step in to take command of the situation and handle everything thereon. Financial Implications The financial implications of this disaster are that it will be very difficult to keep our costs down if we want to improve our services. Also fixed costs due contingency planning will go up. For
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insurance against these situations we will have to incur an increased fixed cost. Advertising expenditure will also go up to improve sales. Marketing Implications Marketing wise the company will have to come up with a new strategy to retain the customers and also will have to change the strategy to ensure the prospective customers do not run away due to one service fault. New advertising campaigns and also service recovery should come into the picture. Accepting mistake is the first step and apologising for it will go a long way with the customers Long Term Plan for Future Emergencies (Contingency Planning) On February 24, 1999, Northwest Airlines admitted to mistakes during the January blizzard that stranded Detroit Metro travelers and grounded planes for hours. According to an internal report, the airline encountered an internal dispute and breakdown in preparedness and communication. The entire episode could have been handled better. The airline hopes to alleviate problems similar to what it encountered in January. Therefore, in the internal report, Northwest outlined a plan that calls for more communication among executives and a team called Go Teams to be dispatched from Minneapolis to Metro Airport when inclement weather hits. Some of its other recommendations include: Developing standard check lists that will include status of staffing, weather conditions, and access to runways. Holding annual winter planning conferences that will review all aspects of weather-related operations. Developing procedures to ensure that airplanes are not delayed on tarmacs for extended periods. When taxi-in times exceed 30 minutes, Northwest will issue cautionary warnings to top-level executives. Coordinating with Wayne County snow removal efforts. Northwest will meet with county executives to determine how to better communicate during emergencies. Wayne County will also staff a position in the Northwest Control Center to enhance communications. Passenger Bill of Rights Bolstered by passenger tales of alleged mistreatment by Northwest during the New Years blizzard and by other airlines in general, the administration and Congress are moving to improve protections of air travelers rights. On February 10, 1999, chairman of the House Transportation and Infrastructure Committee, introduced a passenger bill of rights that would penalize airlines for specific service problems. The centerpiece of the bill is intended to prevent
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passengers from being held aboard planes for more than two hours after leaving the gate or upon landing. Passengers held for more than two hours would receive double the price of their ticket, with an additional ticket price being added for each extra hour they are delayed. Rep. John Dingell is also offering a bill that would require airlines to file a plan with the Department of Transportation detailing how passengers would be provided with food, water, medicine, and sanitary facilities during an emergency. Failure to comply with the plan would cost airlines $10,000 for each passenger violation. Dingells proposal requires that airlines submit a plan to the Transportation Department, laying out how they would handle flights stranded on a runway. In the plan, the airlines must address the availability of food, water, and air. Industry associations are also pointing to the unintended consequences of the regulations. Carol Hallett, president of the Air Transport Association, which represents most of the nations commercial airlines, told Congress that the airlines fully accept responsibility for service failures within their control and want the opportunity to address consumer complaints voluntarily. Thus, passenger rights has caused considerable distress in airline boardrooms and in lobbyists offices in Washington, D.C. The airlines and industry associations are working hard to persuade Congress not to pass the proposed bill. However, because angry passengers have a different view and are also attempting to influence their congressional representatives, only time will tell what will become of the passenger bill of rights. Hiring Training and Empowerment Establishing guidelines and standards Standard guidelines as to what action the airline should take in case of service failure. Providing easy access and effective response Complaint and suggestion facilities Revaluation and performance measurement forms Maintaining customer and product databases NWA could not operate effectively as a standalone entity. Therefore databases including the Air Traffic Control, Federal Aviation Administration etc should have to be maintained.

Service recovery plan

It is easy to focus on creating always better and more differentiated products and services when designing for remarkable customer experiences. Maybe it is simply human, that we tend to not look at situations when a product or service fails your customers loyalty will be negatively impacted. I see a huge opportunity for improvement and a chance to create remarkable experiences that create word-of-mouth marketing in situations when products and services fails if sophisticated service recovery programs are in place. Every service (human or technology driven) as well as product will eventually fail one day and put your customer in a uncomfortable situation. Smart organizations will understand this and develop a service recovery program which ensures that their customers are satisfied even after things have gone wrong. When organizations plan to implement recovery programs it is helpful to differentiate between (1) the strategic initiatives that should be in place before the actual problem occurs and (2) the tactical activities that should happen after a problem has occurred and the customer contacted the company. Lets start with the strategic initiatives that will ensure that the right environment for remarkable service recovery is in place. An tici p at e th e n eeds for r eco ver y: Whenever you roll out a product or service, the people related with it are probably well aware of potential problems or obstacles that might occur. It is probably not so much arrogance than probably more wishful thinking that limits the ability of companies to foresee potential problems with a product. Accepting that even the best designed product or service will fail one day in specific situations is the first step. Anticipating potential problems will help organizations to be prepared when the first customer contacts the company with a problem. Build an or ganiz at ion th at i s f ast i n d ec ision makin g, and f ast t o r espon s e. One of the key success factors to win back customers and restore their satisfaction is to act fast. While your front-line employees might be working hard (and fast) already, the whole organization that deals with service recovery has to be designed for agility. This includes clear escalation and decision-making processes. One key principle should be that the fastest decision-making happens when the front-line employee can make the decision. So the real goal is not to define better

escalation processes, but to define processes that empower employees so that escalation processes are not necessary anymore. E mpow er f ront -lin e empl o yees In most companies, the employees that are actually interacting with customers are the ones that receive the lowest salary in an organization. While increasing the salaries (compared to other competitors) is one way to attract and retain talent that is able to deliver exceptional service, empowering employees and giving them the freedom to do whatever is necessary to ensure that customers are satisfied is probably even more economically meaningful. Tr ai n emplo yees Ensure that your training program includes not just lessons on delivering service when everything works out as planned but also to include lessons that teach employees to improvise or to set recovery programs into action if something goes wrong. While these strategic initiatives are important to define the long-term direction of your service recovery programs, the "moment of truth" happens when a customer contacts a company and interacts with an employee to discuss the problem and possible solutions. In these moments the following seven rules should be applied by employees that are actually interacting with your customers: 1 . Ac kn owl ed gement Acknowledge that there is a problem. It doesnt matter whether the customer didnt understand certain aspects that are obvious from an organizations perspective. Acknowledgement by the NWA officials should have been very swift and . If one tries to convince customers that there is no problem, you are actually telling them they are stupid. This applies also to situations when the customer is following the wrong steps to perform a task never blame the customer. 2 . E mp ath y Understand the problem from a customers point of view and also understand that he might be upset after a problem has occurred.. Confronting the customer with his anger and frustration will not lead to an escalation of the problem, communicating that one can understand his situation will. The job of empathy was well handled by the customer service employees as well flight crew members when the flights were halted at the runways due to lack of gate availability.

3 . Ap olo gy Saying sorry in the name of the company is essential. An apology from the NWA spokesperson did not come forward until it was too late. The apology has to be sincere, prompt and from the higher management of the company. The customer must feel that since the management is apologising they understand what the customers went through and now they will do the needful to improve the conditions for them in the future. It is very essential that apology must be done personally too. A personal apology will go a long way with the customer and will help get repeat business. 4 . Fi x t h e Probl em and Pro vid e assur ance Obviously fixing or at leasing trying to fix the problem for the customer should be the top priority. Improve the operating efficiency and also the entire process of the service provider so that the customer feels safe and secure after going through such a debacle. Assuring the customer that what happened will not be repeated and educating him on what are the changes that have been implemented and what are the changes that are in the pipeline and how will they make the service provided better. When Customers get in touch with you to report a problem and to demand a fix their most important need is to be taken serious. Giving them a feeling of assurance that the problem will be sorted out and should (hopefully) not occur again will leave a professional impression and help rebuild the customers confidence a companys products and services. Contingency plans need to be in place for such unforeseen circumstances. Making a strategy for these circumstances by talking to the companies employees and coming up with a contingency. 5 . Pro vid e co mp ensati on If you want to make angry customers happy, give them money. Provide a refund, token or other compensation remains to be a powerful method for service recovery. Increasing the amount of money that a company pays to company to fix problems requires a rigorous control but it can indeed ensure that your customers are satisfied. It is important to note that just "handing out money" is not enough if money is handed out unfriendly or even worse, in a tedious discussion with the customers, satisfaction will not be restored. Free tickets could be provided and also giving a supplementary services to the clients. Give special discounts to elderly and children for their next journey. Giving special vouchers to the customers and ensuring customer loyalty in the future. During service recovery, you need to put your best foot forward. In fact, I believe that organizations must be twice as good at service recovery as they are at service delivery. Remember that every business is driven by confidence in the relationshipand that it is easier to recover from a service mistake to retain a client than it is to attract a new client.