Best laid plans…

by Aaron Karp
Dec 19, 2017

In August 2016, a power surge shut down Delta Air Lines’ data center—and backup systems did not switch on as they were supposed to. The result was Delta’s global computer network crashing, forcing the cancellation of 2,300 flights and costing the Atlanta-based carrier $100 million in lost revenue. The system crash was particularly hurtful for Delta, which has made reliability a central component of its brand. “This isn’t who we are,” CEO Ed Bastian said in a one of several apology videos Delta posted online in the aftermath.

Delta, determined not to have a repeat, decided in October 2016 to invest $200 million in a new data center that would have a “live” backup running that would immediately and seamlessly take over if Delta’s main system went down again. “We’ve got a new technology center up,” Bastian told reporters visiting Atlanta in October 2017 for the carrier’s public debut of its first Airbus A350-900. The new data center opened in September.

What happened in August 2016 “won’t happen again,” Bastian said. “It can’t happen again. We’ve got a live backup that’s up and running. A $200 million investment made that come to life from a standstill position 12 months ago.”

And then…

Delta’s operations at its base hub, Atlanta Hartsfield (ATL), ground to a complete halt on Dec. 17—and there was nothing Delta could do about it. Electric utility Georgia Power experienced a ruinous fire in an underground facility that damaged, among other equipment, substations serving ATL. Georgia Power said it has “many redundant systems” in place to keep electricity flowing to ATL. But none of those systems worked. ATL went dark around 1 p.m. and electricity wasn’t restored until midnight—an 11-hour blackout at the airport that handled more passengers than any other airport in the world in 2016.

Delta had to cancel about 1,300 flights over two days. It had to pay for hotel rooms for stranded passengers. It waived flight-change fees for any passenger flying to, from or through ATL. Passengers, including former US transportation secretary Anthony Foxx, were stuck on Delta aircraft on the tarmac for hours. Many passengers wound up spending Sunday night in ATL terminals. The airline’s global network was disrupted. I don’t know if the ATL blackout will cost Delta $100 million, but it’s not hard to imagine a figure in that neighborhood.

Delta did everything right after its August 2016 system crash. It invested heavily to build a new backup system, and got it up and running in under a year after making the decision to build it. And none of that mattered on Sunday. Delta has no control over Georgia Power’s systems, but as is now plainly obvious, it depends on those systems to operate its main hub.

The blackout occurred just 10 days after Delta had to cancel around 1,400 flights over two days because of a late autumn snow storm…in Atlanta. That almost never happens. But it did in December 2017.

I bring all this up to note something that has struck me over and over again as I’ve covered the airline business over the last 18 years. Running an airline is hard. That’s not to say airlines haven’t made, and won’t continue to make, mistakes. As Warren Buffett—a recent enthusiastic investor in US airlines after years of warning against buying stock in the industry—has wryly noted, airlines had a bad first century. “Everyone has a bad century now and again,” he quipped in a CNBC interview earlier this year. US airlines, in particular, made many poor decisions over multiple decades, leading to a wave of Chapter 11 bankruptcy restructurings.

The US airline industry has done a lot better in recent years. “The quality of the business we’re running today, not just Delta, it’s our competitors too … is unlike ever before,” Bastian said recently.

But airlines are still enormously affected by factors over which they have no control, something that will likely never change. It’s a complicated business even when you take care of your own details and get everything you can control right. On many days, however, that is not good enough. Someone else’s disaster quickly becomes your disaster. That’s what happened to Delta on Sunday. It spent the money and did the work to make sure a systems crash sparked by a power problem wouldn’t bring its operations grounding to a halt again. But all of its gates and facilities at its main hub went dark anyway.

Aaron Karp

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