Recently United Airlines encountered a software programming glitch that caused nine cancelled flights and 580 delays. According to this article by Jonathan Hassell, the glitch allowed passengers to travel round trip to Hong Kong for about fifty dollars (the trip normally costs $15,000 for first class tickets). The error caused a firestorm of denied tickets, customer complaints, and many millions of dollars lost. Hassell takes a step back to use this example to show us why risk management, even in a simple form, can mitigate some astoundingly impactful errors.
Hassell explains the fundamental errors that United Airlines made in this way:
Either way, United Airlines did not set itself up for success. The carrier managed to let a gaping hole emerge in its booking procedures, caused a situation that involved regulatory compliance through the DoT’s new mistake fare rules, allowed some of its most profitable products to be unavailable for sale for paying customers for days because of this error and risked a public relations firestorm by unilaterally unwinding transactions it considered invalid. It was not a good week at headquarters for sure.
So what could they have done differently? To start, they should have a line of code in place that blocks purchases if the number of miles paid for the ticket was less than 1000. This simple rule would create an instant elimination of the millions of dollars lost. Hassell goes on explaining that an IT risk assessment may have caught this danger and allowed for mitigation before experiencing it in real-life.
Will United Airlines learn a lesson here? Absolutely ““ but you can learn the lesson without any of the pain ““ have consistent, repeatable, effective risk management in place with anything that interacts with the customer. Not only will you save face, but you’ll potentially save millions of dollars.