AmericaWest: Flight Plan

Poor on-time performance, lack of highly-available systems and reliance on older networking technology was crippling America West. Find out how the airline upgraded and improved everything while adding value to the bottomline. (Baseline)

On Feb. 17, 2000, the America West Airlines flight-planning computer system collapsed. The airline was forced to cancel 128 flights that day and following morning, leaving thousands of passengers stranded.

Bob Ewers was headed to his Chicago home from a consulting assignment in Pomona, Calif., and had a ticket for an afternoon flight out of nearby Ontario International Airport. Instead, he found himself standing in lines for hours before being sent to a hotel for the night, then returning the next morning to stand in more lines.

"It put me back, oh, I guess about 30 hours or so," Ewers recalls now. Yet he had some sympathy for America West employees, having worked in maintenance operations for other airlines. "They had a major failure of the computer system, and theres not too much you can do when that happens," says Ewers, now an airplane-maintenance instructor at the Aviation Professional Education Center in West Chicago, Ill.

Others, though, swore off flying America West. "For you to cancel a lot of flights and be late all the time—thats the best way in the world to get rid of customers," says financial analyst Ray Neidl of New York-based Blaylock & Partners.

The February 2000 system meltdown started with a simple hardware failure—a burnt-out network card at the main flight-operations center—and mushroomed. It was an acute example of the technology failures contributing to America Wests poor reputation for reliability at the time. Even when glitches didnt cause cancellations, the airline estimates they contributed to delays at the rate of 100 or more a month. Overall, the airline had one of the worst on-time performance records in the industry, ranking last among the major airlines in 1998 and 1999, according to U.S. Department of Transportation statistics.

While America West had reported record earnings in 1999, things went sour in 2000 on the financial front. Narrowing margins gave way to losses that started in the fourth quarter of 2000 and continued through the first quarter of 2003.

Even though its troubles began well before the trauma of the 9/11 terrorist attacks, America Wests operations started to show signs of improvement in late 2001: It had the best on-time performance between December 2001 and February 2002, and again in May 2002. Today, America Wests on-time performance is consistently above the industry average. One reason is the improved reliability of its supporting information systems, particularly those for the companys Strategic Operations Center—responsible for all flights nationwide—and its main hub in Phoenix.

Technology-related flight delays have dropped to about 25 or 30 per month, including relatively minor problems such as jammed printers, says chief information officer Joe Beery. He takes care to say that technology failures were never the top cause of delays, and that his departments improvements are part of a broader effort to improve operations. Still, Beery suggests America West ought to be able to take control of its systems and get that score for technology-related delays to zero. "Were not there yet, but were getting there," he says.

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So far, most progress has been achieved by eliminating the network infrastructures weaknesses. "We essentially never have system crashes now, where we used to have them frequently," says Scott Kirby, the airlines executive vice president of sales and marketing.

America Wests improvement in operations, whether due to better systems or more responsive employees, is paying off, says Michael Boyd, an airline-industry analyst with the Boyd Group. Thats why America West is edging back into profitability at a time when most airlines are still suffering losses, he says. "If youre reliable, people will fly you again."

The results are now evident: America West earned $79.7 million in the second quarter and $32.9 million in the third. And while America West still expects to lose money for the full year, it forecasts a profit for 2004.

Next Page: Raising the confidence level.