Abstract. This research looks at the service failure and recovery in the airline industry, a general service business vulnerable to failures such as losing baggage. Based on a real experience interacting with China Southern Airline, the study reviews existing literature and addresses that the service failure is detrimental to maintaining customer loyalty or long-term profitability, whereas a successful recovery is conducive to moderating the risk of losing revenue. Six potential solutions from current literature being evaluated, the study thereupon recommends three practicable strategies that assisting managers in getting further insight into service recovery and eventually minimizing potential losses.