Southwest Airlines Safety Culture and Risk Management Failures

Southwest's Historical Approach to Risk Management

Historically, Southwest Airlines has turned heads in both the business and aviation worlds when it comes to how the company deals with risk. In 2014, the firm acquired AirTran, a Florida-based airline, for over one billion dollars. While the move surprised many in the industry, Southwest essentially demonstrated that it viewed the expensive acquisition as a form of 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). What initially appeared to be a questionable spending decision soon manifested as both a risk management and cost-saving 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 clear example of the mentality that guides many of Southwest's risk management decisions: making strategic alliances that provide mutual benefit to all parties involved. Thorn has long credited his effectiveness in risk management to strong problem-solving abilities, along with a genuine understanding of and compassion for the professionals he works with and their personal and professional limitations (Reynolds, 2014). In this way, the bulk of Southwest's historical perspective on risk management was shaped by the belief that most people working in aviation were trying to do the right thing, and that the primary job of a risk manager was to help empower others. Risk management at Southwest was long characterized by a sensitivity that acknowledged everyone has pressures and reporting structures, and that political dynamics between companies affect the overall decision-making process (Reynolds, 2014).

FAA Investigations and Internal Safety Culture

Recently, however, the company has been on the receiving end of damaging 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 faced a wave of whistleblower complaints from mechanics, and the FAA found that Southwest supervisors discouraged mechanics from creating official records of aircraft issues, and even doubted technicians when maintenance problems were found in areas outside those technicians' assigned inspection zones.

In fall of 2018, the FAA made official commentary on this pattern, characterizing management's questioning of mechanics as "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 that at an internal level, management was effectively burying its head in the sand when it came to risk and safety — a hallmark of a deeply unhealthy organizational culture. When management becomes so resistant to acknowledging problems that it punishes or dismisses workers who attempt to surface serious issues, the company's fundamental safety framework is compromised.

The FAA's declarations came six months before a passenger was fatally injured after being partially pulled from a window broken by flying debris from a failing engine (Friedman & Douglas, 2018). While investigators could not establish a direct causal link between the 2017 whistleblower complaints and this specific incident, the imbalanced safety culture strongly suggests why such events are more likely to occur in such an environment. When a company creates a culture in which risk and safety concerns are met with denial or punitive responses, it generates more problems than it resolves. The loose fan blade that caused the fatal incident could well have been a consequence of Southwest having built a culture inhospitable to the reporting and addressing of safety problems — one in which many mechanics appear to have been conditioned simply to inspect planes and declare them airworthy, regardless of accuracy.

Research on organizational safety culture supports this concern. A study examining both individual and organizational factors affecting risk responsiveness found that clear channels of communication are pivotal (Ford & Stephens, 2018). Specifically, "having safety conversations at work, possessing self-efficacy, and being willing to respond appropriately to risks" were found to be absolutely vital to effective risk management (Ford & Stephens, 2018). The study, which drew on health communication models to develop an integrated model of risk responsiveness, concluded: "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 implies for Southwest is the need for an organizational culture that actively encourages employees to identify and report risks, rather than punishing them for doing so.

Adverse Selection and Asymmetric Information

The FAA investigation into Southwest represents a clear and present adverse selection problem alive and festering within the company. Southwest faces two compounding issues: a toxic internal culture and a fleet of aircraft with safety concerns that management has been unwilling to acknowledge. Adverse selection refers to a situation in which one party to a transaction is at a disadvantage because they possess less accurate information than the other party. In this case, Southwest's customers are the disadvantaged party — they have no reliable way of knowing whether the planes they are boarding are airworthy. Southwest mechanics, maintenance managers, and risk managers hold a far clearer picture of the planes' actual condition and the degree of risk involved in flying them.

This information asymmetry is already doing lasting damage to the brand's reputation. Consider the following incident: "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). Bystanders near the airport filmed the incident and uploaded the footage to social media, generating some of the worst public relations coverage Southwest had faced in years. The adverse selection imbalance is beginning to correct itself, as more customers learn about these safety issues through media coverage and online platforms. If safety failures continue, they will continue to be documented and circulated. Making the planes genuinely safer is the only sustainable solution.

References

Alvesson, M., & Sveningsson, S. (2003). Managers doing leadership: The extra-ordinarization of the mundane. Human Relations, 56(12), 1435–1459.

Ford, J. L., & Stephens, K. K. (2018). Pairing organizational and individual factors to improve employees' risk responsiveness. Management Communication Quarterly.

Friedman, S., & Douglas, J. (2018, May 3). Southwest mechanics critiqued for finding safety issues: FAA. NBC DFW.

Graff, A. (2018, February 27). Southwest Airlines engine spews flames across the sky. SFGate.

Reynolds, D. (2014, September 12). Tales of an aviation risk manager. Risk & Insurance.