19 Nov Case Study #2
12304JetBlue and WestJet: A Tale of Two IS Projects
CASE STUDY 2
In recent years, the airline industry has seen sev-
eral low-cost, high-efficiency carriers rise to
prominence using a recipe of extremely
competitive fares and outstanding customer ser-
vice. 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 headquar-
tered in Queens, New York. Its goal is to provide low-
cost travel along with unique amenities like TV in
every seat, and its development of state-of-the-art IT
throughout the business was a critical factor in achiev-
ing that goal. JetBlue met with early success, and the
airline was one of the few that remained profitable in
the wake of the 9/11 attacks. JetBlue continued to
grow at a rapid pace, remaining profitable throughout,
until 2005, when the company lost money in a quar-
ter for the first time since going public. Undaunted,
the airline quickly returned to profitability in the next
year after implementing its “Return to Profitability”
plan, and consistently ranks at the top of customer
satisfaction surveys and rankings for U.S. 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 approxi-
mately 40 employees and three aircraft. Today, the
company has 7,700 employees and operates 380
flights per day. Earlier in this decade, WestJet under-
went rapid expansion spurred by its early success
and began adding more Canadian destinations and
then U.S. cities to its flight schedule. By 2010, WestJet
held nearly 40 percent of the Canadian airline mar-
ket, with Air Canada dropping to 55 percent.
JetBlue is slightly bigger, with 151 aircraft in use
compared to WestJet’s 88, but both have used the
same low-cost, good-service formula to achieve prof-
itability in the notoriously treacherous airline mar-
ketplace. The rapid growth of each airline rendered
their existing information systems obsolete, includ-
ing their airline reservation systems.
Upgrading a reservation system 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.
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 communica-
tion 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 sys-
tem. JetBlue selected SabreSonic CSS over its legacy
system developed by Sabre rival Navitaire, and
WestJet was upgrading from an older Sabre reserva-
tion 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, cus-
tomers struggled to place reservations, and the
WestJet Web site crashed repeatedly. WestJet’s call
centers 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 migra-
tion 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 operat-
ing 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 dissatis-
faction, 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 went 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 and
remained profitable, but the incident forced the
airline to scale back its growth plans. WestJet has put
its frequent flyer program and co-branded credit
card, the RBC WestJet MasterCard, on hold, in addi-
tion to code-sharing plans with other airlines includ-
ing Southwest, KLM, and British Airways. These
plans would allow one airline to sell flights under its
own name on aircraft operated by other airlines. For
the time being, WestJet is hoping to return to growth
before pursuing these measures.
In contrast, 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. For example, they built a backup Web site
to prepare for the worst-case scenario. The company
also hired 500 temporary call center workers to man-
age potential spikes in customer service calls.
(WestJet also ended up hiring temporary offshore
call center 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 needed 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.
However, JetBlue had also experienced its own
customer service debacles in the past. In February
2007, JetBlue tried to operate flights during a bliz-
zard when all other major airlines had already can-
celed their flights. This turned out to be a poor deci-
sion, as the weather conditions prevented the flights
from taking off and passengers were stranded for as
long as 10 hours. JetBlue had to continue canceling
flights for days afterwards, reaching a total of 1,100
flights canceled and a loss of $30 million. JetBlue
management realized 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.
Sources: Susan Carey, “Two Paths to Software Upgrade,” The Wall
Street Journal, April 13, 2010; Aaron Karp, “WestJet Offers
‘Heartfelt Apologies’ on Res System Snafus; Posts C$31 Million
Profit,”Air Transport World, November 5, 2009; Ellen Roseman,
“WestJet Reservation Change Frustrates,” thestar.com, December
2, 2009; Calgary Herald, “WestJet Reservation-System Problems
Affecting Sales,” Kelowna.com; “JetBlue Selects SabreSonic CSS for
Revenue and Operational Systems,” Shepard.com, February 17,
2009; “Jilted by JetBlue for Sabre,” Tnooz.com, February 5, 2010.
After your review, please answer the following questions and formulate them into an APA formatted paper:
1. How important is the reservation system at airlines such as WestJet and JetBlue? How does it impact operational activities and decision-making?
2. Evaluate the key risk factors of the projects to upgrade the reservation systems of WestJet and JetBlue.
3. Classify and describe the problems each airline faced in implementing its new reservation system. What management, organization, and technology factors caused those problems?
4. Describe the steps you would have taken to control the risk in these projects.
5. Perform research to learn more about the Sabre system. What is it? How did come about?
6. JetBlue had the opportunity to learn from the problems encountered by WestJet during its migration. What options did WestJet have to learn from another company who faced a similar situation? What would you recommend to the leadership team?
7. Do you believe the WestJet problem is mostly IT-related, or do you think that poor leadership and planning caused the catastrophe? Explain.
8. Why do you think that WestJet has slowed down its growth plans, such as the RBC WestJet MasterCard? What does a credit card have to do with the IT issues? Explain.
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