BA: A Few Bad Days and a Few Million Pounds Later, Questions of Responsibility

BA has now recovered from its IT problem and flights are back to normal.  The IT problem was a stunning crisis for BA.  Flights from Heathrow were cancelled as the IT problem blinded BA and its customers.  Customers could not call up tickets on their devices and could not get on planes.  BA could not use most of its digital communication channels (still had Twitter) and had to hand write boarding passes.  The IT problem affected 75,000 passengers in over 70 countries and 170 airports.  Heathrow Terminal 5, you that is a BA hub if you have used BA there, was hit the hardest.  The one full day of canceled flights will cost BA about 30 million pounds.  The compensation to passengers (covering meals and hotels) is estimated to run in the tens of millions of pounds.  Moreover, BA stock prices did drop.

 

BA was trying its best to communicate was hindered by the limited access to digital channels.  Initial reports indicate there was no cyberattack but a power failure for its primary system and a failure of the backup system that created the problem.  BA did post information to Twitter (including an apology by CEO Alex Cruz, follow the link to view it), tried to answer questions on Twitter (very heavy volume of angry people), and worked hard to restore the schedule, get people where they needed to go, and provided compensation. There are rules for compensation in such circumstances.  Here is an overview, follow the link for more about compensation:

 

“Passengers are facing a third day of disruption as the airline deals with the impact of a worldwide IT crash.

There are EU regulations governing compensation for cancelled flights leaving from EU airports.

The amount of money reimbursed depends on the length of delay and whether it is a short, medium or long-haul flight.

A BA spokesman said:’”We have been giving letters to customers telling them how to claim under EU compensation rules and we will fully honour our obligations.’”

BA was trying hard to do the right things in terms of crisis communication.  There were calls for CEO Cruz to resign but those were rebuffed.  This case can be used to illustrate various crisis response strategies and a way to debate the usefulness of the strategies. 

However, it is important to look beyond the crisis response to how the crisis situation impacts BA.  Crisis communication is part of the way stakeholders judge an organization during a crisis but just part of it.  The crisis itself can impact the organization and management must take that into consideration when responding and planning future actions.  After the initial shock of the event, the media (tradition and social) turned to the cause of the crisis, the IT failure.  Questions began to emerge about why this happened and it BA was responsible for its own problem.  BA outsources its IT.  This is not uncommon as airlines are not IT experts but rely heavily on systems.  Hence, it is normal to hire experts to handle such complex matters.  But did BA use outsourcing as a way to cut costs and spend too little?  The idea is that BA was at risk for an IT failure because it hired such a low-cost firm to handle IT.  Follow this link for important questions for BA following the crisis.  A crisis can raise questions about operations and management must be ready to explain its previous decisions and implications of those decisions for the future.  A crisis is not just the response but is about the nature of the crisis and how the organization came to this point.  Responsibility is an important factor that managers choose to ignore at their own peril.  BA is feeling the presence of responsibility as the media narrative about the IT problems has been shifting to whether or not the crisis was avoidable.

Questions to Consider

1.  Why might managers want to avoid discussions of responsibility and just manage the immediate effects of a crisis?

2.  In terms of the crisis response, what did BA do well and not so well?

3.  Do the EU requirements for compensation lessen the potential positive effect of providing compensation in this case?

4.  How can a crisis manager identify a shift in the crisis discussion—the movement from crisis events to causes?

  

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