JetBlue and WestJet: A Tale of Two IS Projects (page 556 of your text) If you are using the 13th edition of the book, see the

INFO531, APUS/Dr. Kraimeche

Source: Laundon & Laundon, MIS, 12th edition, pages 556-557

JetBlue 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.

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