Quality Counts at Alaska Airlines

Alaska Airlines, with nearly 100 destinations, including regular service to Alaska, Hawaii, Canada, and Mexico, is the seventh-largest U.S. carrier. Alaska Airlines has won the J. D. Power and Associates Award for highest customer satisfaction in the industry for 8 years in a row while being the number one on-time airline for 5 years in a row.

Management's unwavering commitment to quality has driven much of the firm's success and generated an extremely loyal customer base. Executive VP Ben Minicucci exclaims, "We have rewritten our DNA." Building an organization that can achieve quality is a demanding task, and the management at Alaska Airlines accepted the challenge. This is a highly participative quality culture, reinforced by leadership training, constant process improvement, comprehensive metrics, and frequent review of those metrics. The usual training of flight crews and pilots is supplemented with classroom training in areas such as Six Sigma. Over 200 managers have obtained Six Sigma Green Belt certification.

Alaska Air lines

ELEMENTS WEIGHTING PERFORMANCE SCORE BONUS POINTS TOTAL GRADE Process Compliance 20 15 15 B Staffing 15 15 5 20 A+ MAP Rate (for bags) 20 15 15 B Delays 10 9 9 A Time to Carousel (total weight = 10) 10 10 A Percentage of flights scanned 2 98.7% Percentage of bags scanned 2 70.9% 20 Minutes all bags dropped (% compliance) 4 92.5% Outliers (>25mins) 2 2 Safety Compliance 15 15 5 20 A+ Quality Compliance 10 10 10 A Total - 100% 100 89 10 99 A+ Time to Carousel

Points 2 1.5 1 0 Percentage of flights scanned 95%-100% 90%-94.9% 89.9%-85% < 84.9% Points 2 0 Percentage of bags scanned 60% or above 59.9% Points 0 4 Last bag percent compliance Below 89.9% 90%-100% Points 0 1 1.5 2 Last Bag >25 min. (Outliers) 20 15 10 5 Alaska collects more than 100 quality and performance metrics every day. For example, the accompanying picture tells the crew that it has 6 minutes to close the door and back away from the gate to meet the "time to pushback" target. Operations personnel review each airport hub's performance scorecard daily and the overall operations scorecard weekly. As Director of System Operations Control, Wayne Newton proclaims, "If it is not measured, it is not managed." The focus is on identifying problem areas or trends, determining causes, and working on preventive measures. Within the operations function there are numerous detailed input metrics for station operations (such as the percentage of time that hoses are free of twists, the ground power cord is stowed, and no vehicles are parked in prohibited zones). Management operates under the assumption that if all the detailed input metrics are acceptable, the major key performance indicators, such as Alaska's on-time performance and 20-minute luggage guarantee, will automatically score well. The accompanying table displays a sample monthly scorecard for Alaska's ground crew provider in Seattle. The major evaluation categories include process compliance, staffing (degree that crew members are available when needed), MAP rate (minimum acceptable performance for mishandled bags), delays, time to carousel, safety compliance, and quality compliance. The quality compliance category alone tracks 64 detailed input metrics using approximately 30,000 monthly observations. Each of the major categories on the scorecard has an importance weight, and the provider is assigned a weighted average score at the end of each month. The contract with the supplier provides for up to a 3.7% bonus for outstanding performance and as much as a 5.0% penalty for poor performance. The provider's line workers receive a portion of the bonus when top scores are achieved. As a company known for outstanding customer service, service recovery efforts represent a necessary area of emphasis. When things go wrong, employees mobilize to first communicate with, and in many cases compensate, affected customers. "It doesn't matter if it's not our fault," says Minicucci. Front-line workers are empowered with a "toolkit" of options to offer to inconvenienced customers, including the ability to provide up to 5,000 frequent flyer miles and/or vouchers for meals, hotels, luggage, and tickets. When an Alaska flight had to make an emergency landing in Eugene, Oregon, due to a malfunctioning oven, passengers were immediately texted with information about what happened and why, and they were told that a replacement plane would be arriving within 1 hour. Within that hour, an apology letter along with a $450 ticket voucher were already in the mail to each passenger's home. No customer complaints subsequently appeared on Twitter or Facebook. It's no wonder why Alaska's customers return again and again.

Answer the following.

Detail some ways that Alaska can ensure that quality and performance metric standards are met when the company outsources its ground operations to a contract provider.

Identify several quality metrics, in addition to those identified earlier, that you think Alaska tracks or should be tracking.

Think about a previous problem that you had when flying, for example, a late flight, a missed connection, or lost luggage. How, if at all, did the airline respond? Did the airline adequately address your situation? If not, what else should they have done? Did your experience affect your desire (positively or negative) to fly with that airline in the future?