Lessons from Heathrow’s Terminal 5 meltdown

May 30, 2008 Business Daily, Management

“The gleaming 3.4bn pound new terminal at Heathrow Airport was opened to the public…and immediately went into meltdown when its baggage system failed. Over the course of five days, more than 250 flights were cancelled, and 20,000 pieces of luggage were separated from their owners. The chaos was a serious embarrassment for BAA, the Spanish-owned firm that controls the airport, and British Airways, the sole occupant of Terminal 5, both of which had spent five years boasting that T5 would transform Heathrow. BA’s chief executive, Willie Walsh, conceded that it was not “our finest hour.””

The Week (5 April 2008)

The amazing Terminal 5 fiasco should be noted with deep concern and studied with great insight by business leaders everywhere. Many executives have had their careers ruined by it. Willie Walsh himself may not last out the after-effects of the carnage.

Lesson 1: the CEO cannot afford to spend his life in the clouds, dreaming up visions. Business leadership is a hands-on undertaking. Crucial matters cannot be left to juniors, no matter how capable. The boss must be in charge, and must look at the details.

In this case, the details were woeful. It is now evident that even the basics of opening the terminal were not addressed. The computerised baggage-handling system went missing in action. Staff appeared inadequately trained to handle it. Many of them couldn’t even get into the building, and once in, didn’t appear to know where to go, according to reports.

The terminal itself is not the problem. T5 is a “superb celebration of contemporary architecture”, according to commentators. Nor is it the fault of the much-vaunted computer system. Lesson 2 can be summarised as: “It’s the people, stupid”.

Airports are not just about great design and efficient systems: they are complex machines that require well-trained, well-motivated employees to run them. Here, BA and BAA have not been up to the mark. BA has a recent history of huge layoffs, and has allegedly failed to invest in long-term skills and staff loyalty. BAA was bought by Spain’s Ferrovial with a 9bn pound loan. Servicing that debt has put the emphasis on stuffing as many people as possible into Heathrow and getting them to spend money in the shops.

And as people go, T5’s customers really got in the neck. Holidays were ruined, business trips were postponed. There were queues of angry people everywhere. BA’s initial response was not inspiring: thousands of customers were left stranded, with little explanation or assistance being offered. BA is even accused of declining to book hotel rooms for delayed passengers, and of misleading them about their right to compensation.

Lesson 3: Crises happen. The best-laid plans of mice and men often end in utter chaos. Often, it is the reaction to the crisis that makes the difference. When you have a very angry customer on your hands, it is still not too late to rescue the situation. Good and continuous communication, a reasonable response that admits blame, concern for the customer’s plight and a firm and credible offer to put things right – these are the essentials of crisis management. A crisis is a time for leadership, and for doing the right thing.