Southwest Airlines Safety and Risk Management

Southwest: Safety and Risk Management
Historically, Southwest Airlines has definitely turned heads in both business and aviation when it comes to how their company deals with risk. In 2014, the firm acquired AirTran, a Florida-based airline for over a $1 billion dollars. While the moved surprised many in the industry, Southwest essentially showed that they viewed that expensive acquisition as a form of an insurance policy. Risk manager Chris Thorn asserted, “We knew that this was going to be a great opportunity to try to save some money on our aviation placement” (Reynolds, 2014). Fundamentally, what looked like a splurge in spending with questionable reasoning behind it, soon manifested as both a risk management and savings maneuver. “AirTran and Southwest went into the market as a joint placement. That resulted in lower pricing for both sets of risk exposures” (Reynolds, 2014). This was a shining example of the mentality that guides so many of Southwest’s risk management moves: making strategic alliances that have a mutual benefit for all parties involved. Thorn has long credited his ability to engage in risk management with aplomb and effectiveness with his strong ability to problem solve, along with his marked understanding and compassion for the other professionals he works with, and their personal and professional limitations (Reynolds, 2014). Hence, one could argue that in the past, the bulk of Southwest’s perspective on risk management was largely colored by the perspective that most people working in aviation were trying to do the right thing and that all he need to was help empower others. Risk management at Southwest has long been characterized with an inherent sensitivity that realizes everyone has struggles and people they report to, and that there are still certain political dynamics between companies and the overall decision-making process (Reynolds, 2014).
However, recently the company has been on the receiving end of some very bad press regarding risk and safety. “Months before an airborne accident claimed the life of a Southwest Airlines passenger, the Federal Aviation Administration found that distrust between managers and mechanics at Southwest’s Dallas maintenance base was so bad, FAA investigators feared it could put passengers at risk” (Friedman & Douglas, 2018). Southwest has been on the receiving end of a host of whistleblower complaints from Southwest mechanics of late, and the FAA has assessed that Southwest supervisors dissuaded these mechanic from making official records of these aircraft issues, and that supervisors even doubted these technicians when maintenance issues were found in areas of the plane that they were not in charge of inspecting. In fall of last year, the FAA made official commentary on this trend, arguing that the management’s questioning of mechanics was generally, “... a tool used to influence a relaxing of standards, to look the other way, or to gain a degree of approval through a leniency of standards…The result of this pattern is a capitulation of airworthiness and a culture of fear and retribution. Some personnel have resorted to photographing their findings ... as a tool to ensure they can prove what they discovered in the event they are questioned by management” (Friedman & Douglas, 2018). This demonstrates clearly that from an internal level, management is sort of sticking their heads in the sand when it comes to dealing with risk and safety. This is an indication of a sick company culture: if management has become so opposed to dealing with problems that they essentially deny that the company has any problems and then punish or ignore workers who try to shed light on those issues.
This is clearly demonstrative of a very damaged and destructive internal culture. These declarations made by the FAA occurred six months before a woman was partially yanked out of a woman that had been broken out by flying debris from a failing engine: this woman later died in the hospital (Friedman & Douglas, 2018). While investigators could not determine what it was exactly that made this flying debris come lose, and there were not 2017 whistleblower complaints that touched on this at all, the imbalanced safety culture definitely offers some suggestions as to why this happened. When a company essentially creates a culture where risk and uncertainty as manifested by massive safety problems are met with denial or anger that problems exist at all, they create more problems. The loose fan blade in the case of the woman that was partially pulled out the window could very likely have occurred as a result of the fact that Southwest had created a culture that was inhospitable to sharing and addressing safety and risk concerns. It looks like many mechanics there have just been beat into submission and to just check the planes and say that things are fine regardless of accuracy.
If the company wants to improve risk management, they need to be able to fix this very sick and imbalanced internal culture, not just for the survival of the airline, but so that they don’t further damage their reputation and their sense of trust with customers. A recent study that examined both individual and organizational factors that can have a positive impact on risk responsiveness, found that having clear channels of communication is pivotal (Ford & Stephens, 2018). The study found that “…having safety conversations at work, possessing self-efficacy, and being willing to respond appropriately to risks” were absolutely vital when it came to appropriately managing risk (Ford & Stephens, 2018). As a result of the fact that risk directly connects to safety, the study drew from earlier health communication models, and developed a more integrated model of risk responsiveness (Ford & Stephens, 2018). “Results suggest that a combination of individual factors and perceptions of organizational information-seeking processes are better predictors of (a) risk-information-seeking behaviors, (b) safety self-efficacy, and (c) risk knowledge than individual-level factors or organizational processes alone” (Ford & Stephens, 2018). What this study implies is that there also needs to be an organizational culture in place that wants employees to do their part in minimizing risk and is one that does not punish them for sharing issues or concerns about the company or about very grave safety issues.
The issue described earlier in the paper including the FAA investigation into Southwest represents a clear and present adverse selection problem alive and festering within the company. The company essentially has two issues: the company culture is sick, and many of their planes appear to be unsafe and Southwest safety managers are unwilling to acknowledge the safety issues. Adverse selection refers to when one party involved in a transaction is at a disadvantage because they have less accurate and different information than the other part. In this case, the customers and client base of Southwest airlines represent the party that is at a marked disadvantage because they are the ones who have literally no idea whether the planes are safe to fly on. Southwest mechanics, mechanical managers and risk managers have a better idea of whether the planes are safe or unsafe and to what degree the planes are risky to fly on.
However, this asymmetry could be doing lasting damage to the brand’s reputation in the long run. Consider the following, “A Southwest Airlines plane made an emergency landing Monday morning when the engine spewed flames during a flight between Salt Lake City and Los Angeles. Shortly after takeoff, the engine backfired, and the plane returned to Salt Lake” (Graff, 2018). Many people near or around the airport caught sight of this “fire in the sky” and it was captured on digital cameras and soon uploaded to social media. This is perhaps some of the worst press that Southwest could receive of late. The adverse selection balance is starting to rectify itself. More and more customers are becoming aware that these planes have safety issues: word is rapidly spreading around the Internet. If the planes are unsafe, safety issues will continue to occur and they will continue to be documented by the media and on social media. Making the planes safer is the only way to best address this issue.
One could argue that the moral hazard problem that Southwest is facing right now has to do with the mechanical fortitude of their planes and their insurance policy. It appears as though Southwest is being so lax about the integrity of their planes because they have comprehensive insurance policies to cover literally every potential incident. This is not a best industry practice. If more safety issues continue to receive press, the company is going to slowly go out of business. The company needs to improve company culture, improve communication and make the planes safe for flying again, rather than hiding behind their insurance policy.
As stated earlier, the principal agent problem Southwest is facing is that the manager staff is not listening to the concerns of mechanics regarding the integrity and safety of the planes. They are making decisions that the planes are safe to fly, when the mechanics have deemed them unsafe, an action that puts the entire company at risk. This is a disease of culture and it is probably coming from upper leadership within southwest. The leadership of the company needs to be revamped, with high-level executives re-spotlighting the importance of listening and putting into action the needs of employees on every level of the company. “Managers listening to subordinates are assumed to have various positive effects, e.g. people feel more respected, visible and less anonymous, and included in teamwork. Rather than certain acts being significant in themselves, it is their being done by managers that gives them a special, emotional value beyond their everyday significance” (Alvesson, & Sveningsson, 2003). This mentality needs to be reinstated within the culture if Southwest is expected to survive the next ten years. Finally, the organizational structure of the company needs to be rehauled in order to put a greater priority on communication and safety. The managers who have ignored safety issues need to all be fired and replaced. There needs to be team managers hired instead who enact a system of checks and balances, ensuring that one is not turning a blind eye to safety or mechanical issues or otherwise potentially hurting the company. Moreover, the company needs to overhaul their social media and publicity department to attempt to do something to fix its image and brand identity. The repeated and very public safety issues have hurt the company in a lasting manner, but the damage does not have to be permanent.
In conclusion, risk management for Southwest has long been about creating strategic alliance and working towards common goals. Somewhere along the line, the company culture has become toxic and it has not only put passengers and crew at risk, but it has jeopardized the entire viability of the brand. At this time, the company is in danger of further sliding south and crossing the point of no return. However, with aggressive risk management, they can potentially fix these issues and return to their former glory.


References
Alvesson, M., & Sveningsson, S. (2003). Managers doing leadership: The extra- ordinarization of the mundane. Human relations, 56(12), 1435-1459.
Friedman, S., & Douglas, J. (2018, May 3). Southwest Mechanics Critiqued for Finding Safety Issues: FAA. Retrieved from https://www.nbcdfw.com/investigations/Distrust-Between-Southwest-Airlines-Mechanics-Managers-Could-Put-Passengers-at-Risk-FAA-481672721.html
Ford, J. L., & Stephens, K. K. (2018). Pairing Organizational and Individual Factors to Improve Employees’ Risk Responsiveness. Management Communication Quarterly, 0893318918774418.
Graff, A. (2018, February 27). Southwest Airlines engine spews flames across the sky. Retrieved from https://www.sfgate.com/news/article/Southwest-Airlines-engine-fire-flames-video-12713263.php
Reynolds, D. (2014, September 12). Tales of an Aviation Risk Manager - Risk & Insurance. Retrieved from http://riskandinsurance.com/tales-aviation-risk-manager/