Airlines Finding Out Who Made the Grade

April 7, 2008 — -- The 16 major U.S. airlines learned today who's the best and who's the worst according to the newly released annual Airline Quality Rating Report, which detailed just how unfriendly the skies were in 2007.

After a rough week for the industry, it seems things won't get any easier for some carriers.

The report looks at four measures of customer satisfaction: on-time arrivals, mishandled bags, passengers bumped off flights and customer complaints.

All went south as customer complaints skyrocketed for 15 of the 16 biggest U.S. airlines. Complaints were up 60 percent in the last year, with the highest number of customer complaints about scheduling problems; stolen, lost or damaged baggage; and customer service.

"This just really isn't all that fun and it hasn't been for a while," said Dean Headley, co-author of the report. "And it just keeps getting worse and worse."

Headley and Brent Bowen, the report's co-authors, said rising operation costs were a major factor explaining the precipitous drop in airline quality.

"The fares that the airlines are charging are continuing to be below the actual cost, and no industry can survive in that situation," Bowen said.

Airlines have responded to increasing operation costs by tacking on additional fees, such as the newly introduced charge for extra carry-on bags, to increase cash flow without raising the price of the ticket itself.

Bowen and Headley also said airline mergers could lead to a decline in performance, citing the merger of America West with US Airways as an example of a company that created the most complaints of any airline.

Only four out of the 16 airlines improved their Airline Quality Ratings (AQR) score, and three of them were low-cost carriers.

AirTran Airways, Jet Blue and Southwest came out on top with the highest scores. Bowen and Headley praised these low-cost carriers for having a "management and work force more concerned about overall performance."

Last year was one of the worst for air travelers, in which passengers ended up stranded on tarmacs and were left to deal with delays.

"People are finally fed up. They had been for a long time, but finally they get to a breaking point," Headley said. "They finally [have decided] to say something about it."

The majority of complaints were about cancellations and delays, while the next biggest gripe was about mishandled and lost luggage.

US Airways had the most complaints, while discount carrier Southwest Airlines, which has recently been in the news for flying planes without required maintenance, had the least complaints and also touted the best on-time record. Southwest was the only airline with more than 80 percent of flights on time.

Regional carrier Atlantic Southeast had the worst on-time record with only 65 percent of its flights on time.

Overall, the report says regional carriers are at the bottom of the list when it comes to customer satisfaction, while the more traditional airlines are in the middle and low-cost airlines are at the top.

This year may shape up to be as bad as last year, thanks to high oil prices. In fact, airlines already have tried to raise fares 10 times this year, while they cut flights, and critics argue none of that helps customer satisfaction.

The AQR study will launch a new study on the AQR Web site that will allow customers to fill out airline quality surveys. The results of this survey will not be included in future AQR studies but will provide a consumer perspective of the airline industry in real time.