Customer Relationship Management and Flight Attendants

Essentials of MIS Additional Cases 1 BUSINESS PROBLEM-SOLVING CASE JetBlue Hits Turbulence In February 2000, JetBlue started flying effortless to Fort Lauderdale, Florida and Buffalo, in the raw York, promising top-notch client value at budget prices. The airline featured new Airbus A320 planes with leather seats, each equipped with a personal TV screen, and average one-way f ars of hardly $99 per passenger. JetBlue was able to provide this relatively luxurious flying give by using information ashess to automate key processes, such(prenominal) as ticket sales (online sales dominate) and baggage handling (electronic tags help span luggage).Jet Blue prided itself on its paperless processes. JetBlues investment in information technology enabled the airline to turn a profit by running its business organization sector at 70 percent of the cost of larger competitors. At the very(prenominal) time, JetBlue filled a gamyer percentage of its seats, employed non-union workers, an d established decent good will to score an impressive customer retention mark of 50 percent. Initially, JetBlue flew only one type of plane from one vendor the Airbus A320. This approach enabled the airline to standardize rush operations and maintenance procedures to a degree that resulted in considerable parsimoniousnesss.CIO Jeff Cohen used the same simple-is-better strategy for JetBlues information systems. Cohen depended almost exclusively on Microsoft software products to design JetBlues extensive network of information systems. (JetBlues qualification system and systems for managing planes, clusterings, and programing are run by an step forwardside contractor. ) Using a hotshot vendor provided a technology framework in which Cohen could keep a small ply and favor in-house development of systems over outsourcing and relying on consultants. The benefit was stable and focused technology spending. JetBlue pass only 1. percent of its tax revenue on information technol ogy, as opposed to the 5 percent spent by competitors. JetBlues technology strategy helped create a loving flying experience for passengers. As president and chief operating incumbent Dave Barger put it, Some people say airlines are powered by fuel, provided this airline is powered by its IT infrastructure. JetBlue consistently found itself at the top of J. D. Power and Associates customer satisfaction surveys. JetBlue believed it had learned to work escape and smart. The big question was whether JetBlue would be able to maintain its strategy and its victory as the airline grew.By the end of 2006, the conjunction was operating 500 outflows daily in 50 cities and had $2. 4 broadsideion in annual revenue. a vast the way, JetBlue committed to purchasing a new plane every atomic number 23 weeks through 2007, at a cost of $52 million each. through all of this, JetBlue remained true to its formula for success and customers continued to return. February 14, 2007, was a wake-up c all. A fierce ice storm struck the New York City playing field that day and set in motion a string of events that endanger JetBlues sterling reputation and its stellar customer relationships.JetBlue made a fateful decision to maintain its schedule in the belief that the horrible weather would break. JetBlue typically avoided pre-canceling flights because passengers usually preferred to confirm a decelerate 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 full and made the customers who were scheduled to fly that day very happy. Most opposite airlines began canceling flights early in the day, believing it was the prudent decision even though passengers would be inconvenienced and money would be bewildered.The other airlines were correct. Nine JetBlue planes left their provide at John F. Kennedy International Airport and were stranded on the macadamise 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 run into the aircraft. Passengers were confined inside the planes for up to ten and one-half hours. Supplies of food and peeing on the planes ran low and toilets in the restrooms began to back up. JetBlue found itself in the midway of a massive dual crisis of customer and public relations.JetBlue waited in addition long to solicit help for the stranded 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 JetBlues reservations system, which could not handle the onslaught. At the same time, many of the airlines 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 anywhere.Moreover, JetBlue did not have a system in place for the be crews to call in and have their assignments rerouted. The glut of planes and displaced or tired crews agonistic JetBlue to cancel more flights the next day, a Thursday. And the cancellations continued daily for just intimately a week, with the Presidents Day holiday week providing few opportunities for rebooking. On the sixth day, JetBlue cancelled 139 of 600 flights involving 11 other airports. 2 76 Part I Information Systems in Hits Digital Age JetBlue the TurbulenceJetBlues eventual recuperation was of little solace to passengers who were stranded at the airport for days and bemused reservations for family vacations. Overall, more than 1,100 flights were cancelled, and JetBlue lost $30 million. The airline persistence is marked by low profit margins and high fixed costs, which means that even in brief revenue droughts, such as a four-day shutdown, can have devastating consequences for a carriers financial stability. Throughout the debacle, JetBlues chief executive officer David G. Neeleman was very visible and forthcoming with accountability and apologies.He was quoted many times, saying things such as, We love our customers and were horrified by this. Theres discharge to be a lot of apologies. Neeleman also admitted to the press that JetBlues trouble was not strong enough and its communications system was inadequate. The department trustworthy for allocating pilots and crews to flights was too small. Some flight attendants were unable to get in resuscitate 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.JetBlue had grown too fast, and its low-cost IT infrastructure and systems could not keep up with the business. JetBlue was accustomed to saving money both from streamlined information systems and lean staffing. Under common ci rcumstances, the lean staff was sufficient to handle all operations, and the electronic computer systems functioned salubrious 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 Neeleman asserted in a conference call hat JetBlues computer systems were not to blame for its meltdown, critics of the company pointed out that JetBlue lacked systems to keep track of off-duty flight crews and lost baggage. Its reservation system could not expand enough to meet the high customer call volume. Navitaire, headquartered in Minneapolis, hosts the reservation system for JetBlue as wellhead as for a dozen other discount airlines. The Navitaire system was configured to accomodate up to 650 agents at one time, which was more than sufficient under frequent circumstances.During the Valentines Day crisis, Navitaire was able to tweak the system to acco modate up to 950 agents simultaneously, but that was still not enough. Moreover, JetBlue could not find enough qualified employees to staff its phones. The company employs astir(predicate) 1,500 reservation agents who work primarily from their homes, linking to its Navitaire Open Skies reservation system using an Internet-based voice communications system. Many ticketholders were unable to run across the status of their flights because the phone lines were jammed.Some callers received a recording that directed them to JetBlues Web site. The Web site stopped responding because it could not handle the enlace in visitors, leaving many passengers with no way of knowing whether they should take a shit the trip to the airport. JetBlue lacked a computerized system for recording and tracking lost bags. It did have a system for storing information such as the number of bags check in by a passenger and bag tag appellation numbers. But the system could not record which bags had not been p icked up or their location.There was no way for a JetBlue agent to use a computer to see if a lost bag for a particular passenger was among the heap of unclaimed bags at airports where JetBlue was stranded. In the past, JetBlue guidance did not aspect there was a need for such a system because airport personnel were able to look up passenger records and figure out who owned leftover bags. When so many flights were canceled, the process became unmanageable. JetBlue uses several activitys provided by outsourcing vendor Sabre Airline Solutions of Southlake, Texas to manage, schedule, and track planes and crews and to develop actual flight plans.Sabres FliteTrac application interfaces with the Navitaire reservation system to provide managers with information about flight status, fuel, passenger lists, and arrival times. Sabres CrewTrac application tracks crew assignments and provides pilots and flight attendants access to their schedules via a secure Web portal. JetBlue uses a Navita ire application called SkySolver to determine how to redeploy planes and crews to emerge from flight disruptions. However, JetBlue found out during the Valentines Day emergency that SkySolver was unable to transfer the information quickly to JetBlues Sabre applications.And even if these systems had worked properly together, JetBlue would have probably been unable to range all of its flight crews to redirect them. It did not have a system to keep track of off-duty crew members. Overtaxed phone lines prevented crew members from calling into headquarters to give their locations and availability for work. JetBlues response to its humiliating experience was multifaceted. On the technology front, the airline deployed new software that sends recorded messages to pilots and flight attendants to take about their availability.When the employees return the calls, the information they supply is entered into a system that stores the information for access and analysis. From a staffing standp oint, Neeleman promised to train 100 employees from the airlines merged office to serve as backups for the departments that were stretched too thin by the effectuate of the storm. Chapter 2of MIS AdditionalBusinesses Use Information Systems Essentials E-Business How Cases 77 3 JetBlue attempted to insure its customer relations and image problems by creating a customer bill of rights to enforce standards for customer treatment and airline behavior.JetBlue would be penalized when it failed to provide proper service, and customers who were subjected to poor service would be rewarded. JetBlue set the maximum time for holding passengers on a delayed plane at five hours. The company changed its operational philosophy to make more accomodation for inclement weather. An opportunity to footrace its changes arrived for JetBlue just one month after the incident that spurred the changes. Faced with another(prenominal) snow and ice storm in the northeast United States on March 16, 2007, Jet Blue cancelled 215 flights, or about a third of its check daily slate.By canceling early, management holdd to ensure that its flight crews would be accessible and useable when needed, and that airport gates would be kept clear in upshot flights that were already airborne had to return. In the wake of its winter struggles, JetBlue was left to hope that its customers would be forgiving and that its losses could be offset. Neeleman pointed out that only about 10,000 of JetBlues 30 million annual customers were inconvenienced by the airlines weather-related breakdowns.On May 10, 2007, JetBlues Board of Directors removed Neeleman as CEO, placing him in the part of non-executive chairman. According to Liz Roche, managing partner at Customers Incorporated, a customer relationship management research and consulting firm, JetBlue demonstrated that its an adolescent in the airline industry and that it has a lot of learning and growing up to do. Sources Doug Bartholomew and Mel Duvall, Wh at Really Happened at JetBlue, Baseline Magazine, April 1, 2007 JetBlue Cancels Hundreds of Flights, The Associated Press, accessed via www. nytimes. om, March 16, 2007 Susan Carey and Darren Everson, Lessons on the Fly JetBlues New Tactics, The palisade Street Journal, February 27, 2007 Eric Chabrow, JetBlues Management Meltdown, CIO Insight, February 20, 2007 Jeff Bailey, Chief Mortified by JetBlue Crisis, The New York Times, February 19, 2007 and Long Delays Hurt Image of JetBlue, The New York Times, February 17, 2007 Susan Carey and Paula Prada, Course Change why JetBlue Shuffled Top Rank, The Wall Street Journal, May 11, 2007 Coreen Bailor, JetBlues Service wing South, Customer Relationship Management, May 2007 Thomas Hoffman, Out-of-the-Box Airline Carries Over well-being Approach to IT, Computerworld, March 11, 2003 and Stephanie Overby, JetBlue Skies Ahead, CIO Magazine, July 1, 2002. Case Study Questions 1. What types of information systems and business functions are dr aw in this case? 2. What is JetBlues business model? How do its information systems support this business model? 3.What was the problem experienced by JetBlue in this case? What people, organization, and technology factors were responsible for the problem? 4. Evaluate JetBlues response to the crisis. What solutions did the airline come up with? How were these solutions implemented? Do you count that JetBlue found the correct solutions and implemented them correctly? What other solutions can you commend of that JetBlue hasnt tried? 5. How well is JetBlue prepared for the future? Are the problems described in this case likely to be repeated? Which of JetBlues business processes are most vulnerable to breakdowns? How much will a customer bill of rights help?