Easy risk management can prevent costly errors (ask United Airlines)

By Jonathan Hassell, CIO |  IT Management, risk management

United Airlines just can't win. Last week a data center hardware failure grounded caused nine cancellations and 580 delays. Recently, too, the carrier's computer systems let members of its Mileage Plus frequent traveler program book reservations involving either a connection or a final destination in Hong Kong, for travel in the first-class cabin (where purchased tickets can go for more than $15,000), for as little as four--yes, four--miles roundtrip.

This programming glitch remained active for many hours on Sunday, June 17. While no one outside of United and the United States Department of Transportation (DoT) knows for sure how many tickets were booked under this discount, well-placed sources told NBC News that the number was in the thousands. Indeed, on many flight dates, the entire first-class cabin (up to 12 seats on some routes) showed booked.

Consider the revenue implications of this glitch. Even by the most conservative measurement standards, United stands to miss out on hundreds of thousands, if not millions, of dollars in sales opportunities if these tickets are allowed to stand. A costly error, any way you slice it.

News: "Network Connectivity Issue" Grounded United Flights in 2011

As part of the airline's cleanup process, the lion's share of these tickets were unilaterally cancelled by the airline about a week after the glitch was corrected, although some individuals who booked reservations travelled within the next few days, and their reservations were honored.

(Full disclosure: I booked four of these tickets, but they were later cancelled by the airline, so I have not made any sort of gain on this transaction. If the tickets are re-instated as part of a future settlement, that may change, but as of this writing the transaction has been unwound. I simply illustrate it here as a teachable moment.)


Originally published on CIO |  Click here to read the original story.
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