US Airways' efforts to improve service pay off

— -- For years, US Airways found itself ranked in or near last place when it came to the services that matter most to passengers. But times have changed.

In July, US Airways had a lower rate of mishandled bags than any of its traditional, big-network peers, according to the latest report from the Transportation Department's Bureau of Transportation Statistics.

It was the sixth month this year that the airline came out on top when compared with Delta, United, Continental and American.

And in 2010, US Airways was ranked No. 1 among the so-called legacy carriers — and sixth out of the 16 largest airlines overall — in the Airline Quality Rating Report compiled by professors at Wichita State and Purdue universities. It was near the bottom of the overall list just four years ago.

The airline's steady rise is the result of a concentrated effort to improve its service and image at a time when the airline industry is fighting for every passenger. And though US Airways still often ranks below such low-cost carriers as JetBlue, AirTran and Southwest, some industry observers say its progress is notable.

"If you look at how far they've come in three years, it is fairly impressive," says Jami Counter, senior director of TripAdvisor Flights. "The question is, 'Can they keep this up and provide a very well-run operational airline?'"

Leading a turnaround

US Airways realized it needed to dramatically boost performance in 2007, two years after it merged with America West. Since then, incentives that have put hundreds of extra dollars in employees' pockets, as well as new technology and enhanced customer service, have led to a turnaround. In 2010, the airline was No. 1 in baggage handling and No. 2 in getting to its destinations on time compared with other big-network airlines.

"In 2007 we were at the bottom of the list — and when I say bottom, I mean at the bottom by quite a ways," says Robert Isom, US Airways executive vice president and COO.

The airline, he says, decided to launch a "multipronged effort" that put particular emphasis on baggage handling, arriving on time and reducing customer complaints.

"If we could move the needle in those areas, we felt it was the best way to run an airline," he says.

A key incentive has been the company's Triple Play Bucks program, which pays each employee $50 every time the airline comes out No. 1 over its big-network competitors in any of the three categories. Top billing for baggage handling, on-time arrivals and the lowest rate of complaints in one month — a triple play — means an extra $150 for an employee. And the company acheived that particular milestone in May 2010, Isom says.

In the last four years, the program has begun to yield payoffs. Employees have received $13.1 million, or $350 each, through July of this year. In 2010, the payout amounted to $24 million. Other employee incentives include profit-sharing and a program called "above and beyond" that gives $10,000 awards to employees.

Tech upgrades

The airline also has invested millions of dollars in technology. Customers can get updated itineraries on their mobile devices as soon as their flight lands, for instance.

Enhanced baggage scanning enables airline staff to "know where every bag is every step of the way," cutting down on the number of misplaced bags, says John Romantic, US Airways managing director of service recovery.

Despite gains, US Airways finds it can take awhile for old images to fade.

The airline continues to lag in customer satisfaction. And the most recent traveler ratings on TripAdvisor found the airline was recommended by only 61% of travelers compared with 83% for Continental and 66% for United, Counter says.

"Turning the perception of an airline around is a lot of work," Counter says. "And US Airways has suffered for a number of years as being viewed as not at the top of the heap. You really have to be patient to see the results pay off."

Pleasing passengers

Industry analysts say the airline's focus reflects an understanding that to boost profits, you must please passengers. "I think they realized that … to do well in the long term they really have to cater more to the business traveler, and the business traveler needs reliability and is less willing to put up with some of the aspects of a poorly run airline," Counter says.

He says other new amenities, such as the addition of first-class cabins on regional planes, should appeal to business travelers.

Dean Headley, co-author of the Airline Quality Rating Report, says there's still room for US Airways to improve.

Isom says US Airways compares itself with other large network carriers because their operations are most similar.

But Headley says it also must pay attention to low-cost carriers such as Southwest, which compete on many of the same routes and usually score higher in passenger satisfaction.

"You could say they were the best of the middle of the pack," Headley says of US Airways' 2010 ranking. "It seems kind of crazy to me to have an airline say, 'We're just going to count the big ones.'"