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Low-Fare Carriers Dominate Airline Rankings

April 5, 2005
With Jet Blue again taking the No. 1 spot, low-fare carriers dominate this year's national Airline Quality Rating study, which ranks the 16 largest airways.

The rest of the top six includes AirTran in second place, followed by Southwest, United Airlines, Alaska Airlines and America West. The only traditional or "legacy" carrier at the top of the ratings was United.

The complete AQR ranking for the 16 largest airlines for 2004:

1) Jet Blue
2) AirTran
3) Southwest
4) United
5) Alaska Airlines
6) America West
7) Northwest
8) American
9) Continental
10) ATA
11) Delta
12) US Air
13) American Eagle
14) SkyWest
15) Comair, and
16) Atlantic Southeast.

"Maintaining last year's score
or very close to it, shows that Jet Blue probably has the right mix of services and management to maintain and secure this top position
" researcher Brent Bowen of the University of Nebraska at Omaha said. "I would consider it a surprise had they not maintained the number one position this year."

Both researchers said United Airlines made a significant leap into the top five this year from the ninth spot the year prior. United has faced a variety of challenges in recent months, including conflicts with unions over pension plans and bankruptcy issues.

"We have a lot more airlines now partly due to the system coming back to full capacity," said Dean Headley of Wichita State University. "The low-fare carriers particularly took advantage of the lull we had the last few years. Five years ago, low-fare carriers had a 5 to 7 percent market share. Today, the low-fare airlines have a 25 percent share."

Criteria included in the AQR are screened to meet two basic elements: They must be readily obtainable from published data sources for each airline, and they must be important to consumers regarding airline quality. The resulting criteria include areas such as baggage handling, customer complaints, denied boardings and on-time arrivals.

Both researchers noted that the legacy carriers largely grouped in the middle of the rankings while regional carriers dominated the bottom tier.

"The way the rankings break out shows a continuation of just how popular low-fare carriers have become," Bowen said. "The last few years of ranking have marked the growth of airlines like Jet Blue and Southwest."

Other major industry findings in this year's research study include:

• The overall industry AQR score was lower in 2004 than in 2003. Particularly, the on-time arrival percentage was down (82 percent in 2003 compared to 78.3 percent in 2004); involuntary denied boardings per passenger served increased slightly (0.87 per 10,000 passengers in 2004 from 0.86 in 2003); mishandled baggage rates increased (4.83 per 1,000 passengers in 2004 versus 4.00 in 2003); and consumer complaint rates went up (0.76 per 100,000 passengers in 2004 up from 0.67 per 100
000 passengers in 2003).

• Ten of 14 airlines showed declines in their AQR score. Researchers saw these performances as indicative of the overall industry trend for 2004.

• AirTran, included in the AQR for the first time last year, was the best baggage handler in the industry, with 2.82 mishandled bags per 1,000 passengers.

Both Headley and Bowen said that challenges for the industry in the near future could be significant. During the past holiday season, the system collapsed for some carriers and left thousands stranded or without their bags, Bowen said. The cost of fuel is also a looming issue.

"The price of crude oil is going to be a big factor for the airlines," Headley said. "It's the second largest cost item the airlines have in their budget behind people. If oil prices continue to climb it's likely that the price of airline tickets will rise. And since this is a very price-sensitive business
there's a chance that the ridership will decline."

The AQR is a summary of month-by-month quality ratings for the largest domestic U.S. airlines operating during 2004. Co-researchers Brent Bowen director and professor at the University of Nebraska at Omaha (UNO) Aviation Institute/School of Public Administration, and Dean Headley, associate professor of marketing at Wichita State University (WSU), used 15 elements important to consumers when judging the quality of airline service.

The rating is conducted annually by the UNO Aviation Institute and W. Frank Barton School of Business at WSU. The AQR, as an industry standard, provides consumers and industry watchers a means to compare quality among airlines using objective performance-based data. It is a cooperative research project funded as part of faculty research activities at UNO and WSU.

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