Wow Airlines : A Project Management Failure

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Wow Airlines has ceased operations March 28, 2019 stranding passengers everywhere across the globe. Reading the headlines it is surprising that Wow Airlines didn’t even have enough cash on hand to fly their passengers to their destinations and then ground their planes. That would be common courtesy and goodwill.

 

I am dissecting this from a project management perspective.

Triple Constraint

The triple constraint is scope, cost and time. Here I will start off with cost because Wow’s budget is bleeding red so many that it has to stop operating. I will delve deeper using reserve analysis. There are two parts of the reserve: contingency and management. As a project manager, you are in control of the reserve. The contingency reserve is a part of the cost baseline. The management reserve is the rest and it is controlled by management and not the project manager. In this case, Wow has exhausted all of its reserves because it does not have any money. These reserves are used for unknown knowns. Wow has been bleeding and burning cash for months. Everyone knows that cashflow is business fuel and without things come crashing down. There is another thing that has killed Wow and that’s scope.

Let me explain.

Scope is keeping the main thing the main thing. It is your core focus and in this case Wow’s focus is being a low cost airline carrier like Southwest, Frontier and Spirit Airlines. Wow is competing based on price. It knows that its primary customer is one who is looking to pay the least amount of money. Putting on my economist hat and applying price theory, it is unwise to make price your competitive advantage because  you can only cut so far because you will fail under your breakeven price which is what happened to Wow. Wow has had to continually cut prices in order to stay within scope. Wow’s failure shows the problem of the low-cost carrier: eventually if they don’t pivot like JetBlue moving into the medium-tier then its competitive advantage of competing on price will kill the company.

Wow Airlines’ collapse is avoidable and months in the making. Applying project management principles would have helped this beleaguered airline stay afloat instead of crashing and burning.

 

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