墨尔本essay代写JetBlue and WestJet: A Tale of Two IS Pr
JetBlue and WestJet: A Tale of Two IS Projects墨尔本essay代写JetBlue and WestJet: A Tale of Two IS Projects
Source: Laudon, KC & Laudon, JP 2013, Essentials of Management Information Systems, 10th Edition, Prentice Hall, New Jersey
In recent years, the airline industry has seen several low cost, high efficiency carriers rise to prominence using a recipe of extremely competitive fares and outstanding customer service. Two examples of this business model in action are JetBlue and WestJet. Both companies were founded within the past two decades and have quickly grown into industry powerhouses. But when these companies need to make sweeping IT upgrades, their relationships with customers and their brands can be tarnished if things go awry. In 2009, both airlines upgraded their airline reservation systems and one of the two learned this lesson the hard way.
JetBlue was incorporated in 1998 and founded in 1999 by David Neeleman. The company is headquartered in Queens, New York and flies to 63 destinations in 21 states and 11 countries in the Caribbean, South America and Latin America. JetBlue's goal has been to provide low cost travel along with unique amenities like TV in every seat, and its heavy reliance on information technology throughout the business was a crucial factor in achieving that goal. JetBlue met with early success and continued to grow at a rapid pace, consistently ranking at the top of customer satisfaction surveys for US airlines.
Headquartered in Calgary, Canada, WestJet was founded by a group of airline industry veterans in 1996, including Neeleman who left to start JetBlue shortly thereafter. The company began with approximately 40 employees and three aircraft. Today, the company has 7,800 employees and operates 420 flights per day to 71 destinations in Canada, the United States, the Caribbean and Mexico. Earlier in this decade, WestJet underwent rapid expansion spurred by its early success and began adding more Canadian destinations and then US cities for its flights. By 2010, WestJet held nearly 40% of the Canadian airline market, with Air Canada dropping to 55%.
JetBlue is slightly bigger, with 167 aircraft in use compared to WestJet's 88, but both have used the same low cost, good service formula that brought profitability in the notoriously treacherous airline marketplace. The rapid growth of each airline rendered their existing information systems obsolete, including their airline reservation systems.
Upgrading reservations systems carries special risks. From a customer perspective, only one of two things can happen. Either the airline successfully completes its overhaul and the customer notices no difference in the ability to book flights, or the implementation is botched, angering customers and damaging the airline's brand.
The time had come for both JetBlue and WestJet to upgrade their reservation systems. Each carrier had started out using a system designed for smaller start-up airlines and both needed more processing power to deal with a far greater volume of customers. They also needed features like the ability to link prices and seat inventories to other airlines with whom they cooperated.
Both JetBlue and WestJet contracted with Sabre Holdings, one of the most widely used airline IT providers, to upgrade their airline reservation systems. The difference between WestJet and JetBlue's implementation of Sabre's SabreSonic CSS reservation system illustrates the dangers inherent in any large scale IT overhaul. It also serves as yet another reminder of how successfully planning for and implementing new technology is just as valuable as the technology itself.
Sabre's newest system, SabreSonic CSS, performs a broad array of services for any airline. It sells seats, collects payments, allows customers to shop for flights on the airline's Web site and provides an interface for communication with reservation agents. Customers can use it to access airport kiosks, select specific seats, check their bags, board, rebook and receive refunds for flight cancellations. All of the data generated by these transactions are stored centrally within the system. JetBlue selected SabreSonic CSS over its legacy system developed by Sabre rival Navitaire and WestJet was upgrading from an older Sabre reservation system of its own.
The first of the two airlines to implement SabreSonic CSS was WestJet. When WestJet went live with the new system in October 2009, customers struggled to place reservations and the WestJet Website crashed repeatedly. WestJet’s call centres were also overwhelmed and customers experienced slowdowns at airports. For a company that built its business on the strength of good customer service, this was a nightmare. How did WestJet allow this to happen?
The critical issue was the transfer of WestJet’s 840,000 files containing data on transactions for past WestJet customers who had already purchased flights from WestJet’s old reservation system servers in Calgary to Sabre servers in Oklahoma. The migration required WestJet agents to go through complex steps to process the data. WestJet had not anticipated the transfer time required to move the files and failed to reduce its passenger loads on flights operating immediately after the changeover. Hundreds of thousands of bookings for future flights that were made before the changeover were inaccessible during the file transfer and for a period of time thereafter because Sabre had to adjust the flights using the new system.
This delay provoked a deluge of customer dissatisfaction, a rarity for WestJet. In addition to the increase in customer complaint calls, customers also took to the Internet to express their displeasure. Angry flyers expressed outrage on Facebook and flooded WestJet’s site causing the repeated crashes. WestJet quickly offered an apology to customers on its site once it came back up, explaining why the errors had occurred. WestJet employees had trained with the new system for a combined 150,000 hours prior to the upgrade, but WestJet spokesman Robert Palmer explained that the company “encounter(ed) some problems in the live environment that simply did not appear in the test environment” foremost among them the issues surrounding the massive file transfer.
WestJet’s latest earnings reports show that the company weathered the storm successfully, remained profitable and ranks just below JetBlue and Southwest in airline customer satisfaction. Nevertheless, the incident forced the airline to slow down its rollout of a frequent flyer program as well as code-sharing plans with other airlines such as American Airlines and Cathay Pacific. These plans allow one airline to sell flights under its own name on aircraft operated by other airlines.
In contrast, JetBlue learned from WestJet’s mistakes and built a backup Website to prepare for the worst case scenario. The company also hired 500 temporary call centre workers to manage potential spikes in customer service calls. WestJet also ended up hiring temporary offshore call centre workers, but only after the problem had gotten out of hand. JetBlue made sure to switch its files over to Sabre’s servers on a Friday night because Saturday flight traffic is typically very low. JetBlue also sold smaller numbers of seats on the flights that did take off that day.
JetBlue experienced a few glitches – call wait times increased and not all airport kiosks and ticket printers came online right away. In addition, JetBlue needs to add some booking functions. But, compared to what WestJet endured, the company was extremely well prepared to handle these problems. JetBlue ended up using its backup site several times.
JetBlue had the advantage of seeing WestJet begin its implementation months before, so it was able to avoid many of the pitfalls that WestJet endured. But JetBlue had also experienced similar customer service debacles in the past. In February 2007, JetBlue tried to operate flights during a blizzard when all other major airlines had already cancelled their flights. This turned out to be a poor decision, as the weather conditions prevented the flights from taking off and passengers were stranded for as long as 10 hours. JetBlue had to continue cancelling flights for days afterwards, reaching a total of 1,100 flights cancelled and a loss of $30 million. JetBlue management realised in the wake of the crisis that the airline’s IT infrastructure, although sufficient to deal with normal day to day conditions, was not robust enough to handle a crisis of this magnitude. This experience, coupled with the observation of WestJet’s struggles when implementing its new system, motivated JetBlue’s cautious approach to its own IT implementation.
墨尔本essay代写JetBlue and WestJet: A Tale of Two IS Projects
- How does the reservation system at airlines such as WestJet and JetBlue impact on operational activities and decision making?
- Classify and describe the problems each airline faced in implementing its new reservation system with reference to the Technology, Management and Organisation factors.
- In the case, WestJet was the first to update their system and JetBlue followed, learning from the mistakes made by their competitor. Discuss how this relates to the Innovator’s Dilemma in terms of the pros and cons of organisations being early adopters or using the “wait and see” approach when changing / innovating their information system. Giving examples from the case study, what risks are taken when upgrading an information system and how can these be overcome?
- Discuss the impact of the Internet on the communication from customers and the airlines related to their problems. How has social media been used as a negative tool in this case and for organisations in general? Suggest how such negative communication should be addressed to reduce risks to the organisation.