The 2 Airlines Americans Hate the Most, and the 1 They Still Love

Last week, researchers at Wichita State University and Purdue University released the results of the 2013 Airline Quality Rating survey. This study measured the performance of U.S. airlines on a variety of quality metrics in 2012, including the frequency of customer complaints. The results showed that -- for the most part -- airlines are earning their reputations. Oft-reviled network carriers United Airlines (NYSE: UAL  ) and American Airlines (UNKNOWN: AAMRQ.DL  ) saw higher rates of official complaints in 2012 than in 2011, placing them at the bottom of the industry. By contrast, Southwest Airlines (NYSE: LUV  ) improved on its already low complaint rate from 2011, further distancing itself from other airlines.

United: the costs of a merger
In early 2012, United's management proclaimed their confidence that the company's merger with Continental Airlines would proceed smoothly. Instead, the process was disastrous for customers and shareholders alike. United experienced 4.24 complaints to the U.S. Department of Transportation per 100,000 passengers last year. That was triple the industry average rate, and more than double the rate at the second-worst offender, American Airlines.

Other data collected in the AQR survey indicates that United's customers weren't just being finicky. United was more likely to lose your bag than any other major carrier in 2012, and its on-time arrival percentage was worse than any other major airline except American. To make matters worse, you were almost twice as likely to be "bumped" from your flight on United, relative to the industry average. In other words, United was at or near the bottom of the industry for every major customer service metric last year.

American: bad to worse?
American Airlines also saw deterioration from 2011 to 2012, and had the second-highest complaint rate last year. Still, that was much better than United's performance. American's main failing in 2012 was its on-time performance, which was the worst in the industry. However, American was actually less likely to lose your bag or bump you from your flight than the average carrier.

That said, American's pending merger with US Airways (NYSE: LCC  ) -- which was a close third in complaint rate last year -- could make its performance even worse over the next year or two. Merger integration challenges at United Continental caused the complaint rate to double there from 2011 to 2012. Even if American and US Airways manage their merger relatively well, it is almost inevitable that service quality will suffer in the short run.

Southwest: still America's favorite
Southwest Airlines once again had the lowest complaint rate in the airline industry last year, at 0.25 complaints per 100,000 passengers. Southwest's complaint rate was more than 80% below the industry average, and 50% below second-place finisher Alaska Airlines (NYSE: ALK  ) . The high level of customer satisfaction highlights the value of Southwest's generally cheerful staff, because Southwest's performance on the more objective criteria in the AQR survey was not particularly impressive.

For example, Southwest was near the industry average for denied boardings, mishandled bags, and on-time performance.Furthermore, these averages were dragged down by United's poor performance; in some cases, United was the only major carrier that performed worse than Southwest. As a result, Southwest only ranked No. 8 out of 14 in the AQR, behind most major competitors. Despite these problems, Southwest's flight attendants, customer service agents, and other staff were able to keep people happy. Southwest customers experienced more problems than other airline passengers (objectively speaking), but were much less likely to lodge official complaints with the DOT. The friendly and helpful staff seem to be critical to Southwest's success.

Smile!
Southwest's performance shows the value of a cheerful attitude in customer service, which can keep passengers satisfied in spite of technical problems. By contrast, people hate flying on United and American, because they do not find the staff helpful when problems arise. This was a particularly big problem for United last year, because there were a lot of problems. If American and US Airways hit merger turbulence in the next few years, they could be rivaling United for the bottom spot in the AQR survey very soon.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 15, 2013, at 12:11 PM, buzzltyr wrote:

    With oil dumping, the airlines are gonna have an amazing year, and I will give you credit Adam for about the only guy paying attention. Two months from now they will come out from everywhere.

  • Report this Comment On April 15, 2013, at 12:16 PM, jimyritz wrote:

    If it wasn't for corporate america (reimbursement for flying) no one would fly United or American. Two awful airlines who don't know the meaning of "good" customer service...

  • Report this Comment On April 15, 2013, at 12:25 PM, knightsean wrote:

    united is the worst-never again

  • Report this Comment On April 15, 2013, at 12:29 PM, flying70 wrote:

    There is some good, objective information in the Airline Quality Rating but there remains a major flaw in the data presentation for some of the airlines. According to the Regional Airline Association, http://www.raa.org/, "regional airlines operate more than 50 percent of the nation’s commercial schedule." While some of the larger regional airlines are listed alone in the Rating, the data is useless to consumers. In essence, these flights act as franchisees of the name brand major carrier, yet their performance is not included in the performance of United, Delta, American and the other carriers, on whose brand consumers are actually buying tickets.

    It would be analogous to a report that stated a fictional XYZ Burger Restaurant serves 100% horse meat free burgers; but then consumers find out that the report only applied to the 50% of XYZ Burger restaurants that are corporately owned, and that franchised XYZ Burger restaurants were excluded from that report and do, in fact, often incorporate horse meat.

    The performance of the regional carriers is often (or let the data show otherwise), far worse than the mainline carrier they operate under. So while, for example, United's performance in this Rating is abysmal, a substantial percentage of United's domestic and near-international customers cannot even expect to enjoy the level of abysmal service described in this report; and is likely far worse.

    I have previously brought this flaw to the attention of Drs. Bowen and Headley, and continue to urge them to start compiling data by the brand consumers are actually buying. So if the flight is sold as a Delta flight, with a Delta flight number, the performance counts for Delta. It should be noted that AirTran, JetBlue, and Southwest own and operate all their own flights, which makes their performance here more impressive because they are not able to omit large numbers of their brands' flights from the data like the older, mainline carriers do.

  • Report this Comment On April 15, 2013, at 12:46 PM, TMFGemHunter wrote:

    @flying70: I absolutely agree with you that it would be better to organize the data by brand, rather than listing the regionals separately. As it turns out, ExpressJet and SkyWest (which were #12 and #13 in the report) do the majority of their flying for United, while American Eagle (#11) does all of its flying for American.

    That said, while I think the number of flights by regional carriers may be higher than the number of domestic mainline flights, in terms of capacity (seat miles), the vast majority is mainline. That's because mainline flights use bigger planes and tend to be longer than the regional jet flights.

    Adam

  • Report this Comment On April 15, 2013, at 12:48 PM, Ontopofitall wrote:

    I fly frequently and have noticed huge price increases and a severe drop in quality since the United - Continental merger. The folks at Continental told during the transition period that United was hoping their good culture would rub off on United. The opposite has happened. The prices of some common routes have gone up over 200%, and the service has significantly declined. Why is congress allowing these monopolies to form at the expense of consumers? I thought we were a nation that believed in competition.

  • Report this Comment On April 15, 2013, at 12:51 PM, TMFGemHunter wrote:

    @buzzltyr: I'm thinking about writing an article on the subject. As of noon today, NY Harbor jet fuel was down to $2.77/gallon. At that rate, airlines will probably be paying 20-30 cents per gallon less than last year.

    Whether that actually leads to a rally in airline stocks remains to be seen. It will depend on whether jet fuel prices stay down (jet fuel was down to $2.65 last June but quickly bounced back to $3.30) and whether airlines lose their pricing discipline. With some of the bad revenue numbers reported recently, it's possible that airlines will use the lower fuel prices to offer more fare sales. If so, profit gains won't be nearly as impressive.

    Adam

  • Report this Comment On April 15, 2013, at 12:51 PM, JaxJaguars wrote:

    Go to the Southwest Facebook page, oh there are plenty of haters there.

  • Report this Comment On April 15, 2013, at 1:21 PM, vyakk wrote:

    Southwest claims to be a low cost airline but unless your flying within your state or someplace else that isn't too far, it's much more expensive than other airlines. Staff is helpful and I like they still give free checked bags though, but not a cheap airline as they claim.

  • Report this Comment On April 15, 2013, at 1:38 PM, jgpinto wrote:

    The main problem I see from flying for close to 50 years is : 1. On time performance- AA has to improve their on time record I almost missed by few minutes 2 intl cnx last year- I had to to run to the gate to make the second leg . 2. Cabin attendants have to be a little more pleasant in main cabin- they are great in business and first class but boy what difference in economy....

    I won't fly UA and only get negative reports from friends and clients.

  • Report this Comment On April 15, 2013, at 2:38 PM, rioesmarex wrote:

    Once again, the major airlines just don't get it.

    The flying public will put up with just about anything except corporate greed ( high priced airfares )

    The major's prices are disgusting and their staff really SUCK.

    Anytime I have a choice, give me Southwest or Allegiant or Jet Blue or Airtrans

  • Report this Comment On April 15, 2013, at 3:51 PM, julialopez49 wrote:

    The last time I flew with United airlines, I was cold and asked for a planket. I was told be the,"Stewardess," that only 1rst class were entitled to blankets. I will avoid using that airline. Nasty!!

  • Report this Comment On April 15, 2013, at 4:14 PM, TMFGemHunter wrote:

    Airlines in general are still not that profitable. So it's hard to argue that they are overcharging for airfares. I think the real problem is that people don't think they are getting value for what they are spending.

    As high as airfares are today, I think people would be willing to spend another $5-$10 if it meant they would get better service and amenities (such as complementary blankets, onboard snacks, etc.).

  • Report this Comment On April 15, 2013, at 4:27 PM, ndulgeme wrote:

    On a UAL flight the flight attend Locked the 1 restroom for coach passengers because she did not want customers going in and out of the restroom while she ate her lunch. Customer focus at its best.

  • Report this Comment On April 15, 2013, at 8:30 PM, TMFGemHunter wrote:

    @ndulgeme: That sounds like a particularly bad experience. I'm sorry you had to go through that!

    I think most FAs probably try to do their best, and some of the problem is lack of resources and poor company policies. Unfortunately, there are some bad apples...

    Adam

  • Report this Comment On April 15, 2013, at 9:15 PM, insk wrote:

    UAL went downhill when the union got involved with managing the company. Don't take my word for it . . . history doesn't lie. AA is still worse. Can't wait for its merger with US Scare. Southwest shouldn't sit on its laurels either as they treat golfers like crap. Ever see their luggage people try to hit the luggage wagon from the cargo hold? Seen some mighty heaves from downtown trying to accomplish that. They all know they've got us over a barrel since there are no missile buses or rocket trains. We're just gonna have to put up with their crap for for for forever! With all the crappy non-maintenance, it takes great faith to even climb aboard a plane these days. We'll all still do it.

  • Report this Comment On April 15, 2013, at 10:18 PM, Jcradio wrote:

    I have flown over 850,000 miles with UAL. during the transition of the reservation system between UAL and Continental, I experienced some of the worst customer service ever. I sent a note to the CEO/ President Jeff Smisek. The response back was even worse than the customer service. The initial response was a form response....the second responses were condescending and disrespectful...to any customer ...especially a loyal customer. I continue to fly UAL when necessary but I am also seeking out other airlines with better customer service.

  • Report this Comment On April 15, 2013, at 11:34 PM, bugmenot wrote:

    Duh! Look at Chicago. On Southwest you can fly to nowhere cheaper than you can believe. If you fly United you can fly to anywhere in the world direct.

  • Report this Comment On April 16, 2013, at 1:49 AM, John95035 wrote:

    Ha ha ha, What do you expect? The airlines outsource and force part time work on their employees reducing their pay and benefits in the quest for the cheapest fares for a public that only votes with their wallets and then they can't hire any reliable quality people to make the thing work right. What a surprise !!

  • Report this Comment On April 16, 2013, at 4:52 PM, insk wrote:

    AA definitely should be The most hated, especiallly with today's new glitch in their "system". UAL has just gone downhill since the union took over way back when. Don't take my word for it . . . history doesn't lie. Southwest shouldn't sit on their laurels as they don't treat golfers well. They take golfers' consent and then the baggage folk try to toss golf clubs from the cargo hold all the way down to the waiting luggage wagons without using the conveyor belts. Genius, just genius. They have us over a barrel as it's the only speedy way to travel. Too bad for us.

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