US Airways: On Time Yet Unloved

CHARLOTTE, N.C. ( TheStreet) -- Airlines believe that the principal way to please customers is to operate on time, which tends to alleviate most of the problems of air travel, particularly missed connections and mishandled bags.

But this year, the formula seems to have failed for US Airways ( LCC) which, despite years of work to improve its on-time performance, finished last among a dozen airlines in a customer satisfaction survey by J.D. Power. In 2008, US Airways leaped from worst to first among the six major hub and spoke carriers in operational metrics measured by the U.S. Transportation Department, and its operational performance has generally been good, if not first among its peers, ever since then.

The airline industry is afflicted with an historic inability to keep its customers happy, primarily because it is both blessed and cursed with the daily task of connecting millions of passengers in hubs, where operational performance depends largely on two uncontrollable factors: weather and an antiquated air traffic control system.

But the release of two consumer satisfaction surveys this month -- J.D. Power's last week and the American Customer Satisfaction Index on Tuesday -- shows airline passengers to have remained unsatisfied, relative to other industries, even as on-time performance has generally improved. The major reason is the advent of fees for checked baggage, which have become a major irritant as well as a key to profitability for a long unprofitable industry. US Airways scored last in the former survey and middle of the pack in the other.

"Checked baggage fees are a customer sore point and have a notable impact, with satisfaction averaging 85 points lower among passengers who pay to check bags," said J.D. Power, in a prepared statement. The firm noted that JetBlue ( JBLU) and Southwest ( LUV), the two carriers with the highest satisfaction index, do not charge passengers to check the first bag.

Meanwhile, ACSI found that "customer satisfaction with the airline industry matches its best level in a decade." But airlines remain among the bottom three of the 47 industries ACSI tracks, grouped with subscription TV service and "the fast-fading newspaper industry." In the information age, it seems, credible information lacks appeal. Airline flaws, meanwhile, are "high ticket prices, growing fees and poor service," the firm said.

In both surveys, JetBlue and Southwest finished first and second, respectively. In the ACSI survey, among six ranked airlines, US Airways finished tied for third with Delta ( DAL). But its last place finish in the J.D. Power survey was striking.

The airline's biggest problem, said Stuart Greif, vice president and general manager of J.D. Power's global travel and hospitality practice, was a drop in customer satisfaction with its cost and fees.

"US Airways actually does pretty well on the operational metrics the Department of Transportation reports on -- arrival times, bumping, mishandled bags, and complaints -- which (the carrier) has focused upon," Greif said, in an e-mail interview.

"US Airways has probably mitigated the more severe downside of passenger dissatisfaction that occurs when (operational problems) do arise," he said. "Part of the challenge is that passengers expect (smooth operational performance) and don't really give you extra satisfaction credit for what they expect you to deliver on."

In the J.D. Power survey, US Airways improved this year in satisfaction with its reservations and aircraft and in interaction with its flight attendants. The carrier declined a bit in check-in, boarding/deplaning/baggage, in-flight services and cost and fee satisfaction. The biggest drop in satisfaction was in the cost and fee area. Greif said more than 70% of passenger satisfaction is related to a carrier's "process and people," rather than cost and fees. But US Airways "performs below the traditional network carrier segment average in each area, so it is not one area or two where there are gaps vs. competitors but broadly across the experience," he said.

Perhaps US Airways is disadvantaged by being smaller than its three network competitors and having less capital to invest in technology, Greif suggested. "They are among the airlines most caught between trying to be responsible to profitability and making the necessary and sometimes painful decisions to balance what they can do given those constraints vs. what they would like to do and how quickly," he said.

US Airways spokeswoman Michelle Mohr said the carrier is "very proud of the terrific operation we're running for our customers.

"Performance is an objective metric while the surveys are focusing more on subjective items," Mohr said. "We're focused on delivering a safe, reliable travel experience for our customers and our people are doing that extremely well." In April, US Airways achieved a record on-time performance rate of 90.6%, as well as record performance in avoiding mishandled bags, with just 1.83 mishandled bags per 1,000 bags carrier.

That's great, yes, but in April Delta slightly outperformed US Airways in both categories. In fact, the U.S. airline industry as a whole had exceptionally strong operations in April, as 86.3% of flights arrived on time, the best performance since November 2009, and 99.7% of bags were delivered on time, the best since Transportation Department record-keeping began in 1987.

One would have thought that type of performance would go a long way toward satisfying the industry's customers.

-- Written by Ted Reed in Charlotte, N.C.

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