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The 5 Worst Airlines of 2012

On-time and baggage handling scores improve, but complaints soar

By Susan J. Aluise, Aviation, Auto & Transportation Writer

http://invstplc.com/1fq003L

airportAccording to the annual Airline Quality Rating report released on Monday, U.S. airlines posted their second-highest overall performance rating in 23 years.

Unfortunately, that’s down slightly from 2011. And consumer complaints jumped by a whopping 20% as passengers — particularly frequent flyers — railed against packed planes and smaller seats.

The good news: Airlines improved in the critical measurements of on-time performance and baggage handling. The bad news: Consumer complaints and involuntary denied boardings (passengers with confirmed reservations who are bumped from oversold flights) increased.

The AQR is an annual, independent analysis of government airline data by researchers at Purdue University and Wichita State University. The researchers use a weighted average of four metrics — on-time performance, denied boardings, mishandled baggage and consumer complaints. Of the 14 U.S. carriers the AQR tracked in 2011 and 2012, seven airlines improved, five declined and two were added to the rankings.

Some airlines had a few things to crow about in 2012, foremost among them AQR newcomer Virgin America, which scored the highly coveted first place in its first year in the survey. And JetBlue (NASDAQ:JBLU) came in second, up one spot from 2011’s third-place finish.

But some are a long way from cruising altitude. Here are the five worst airlines in 2012:

#5: American Airlines

American Airlines AAMRQYou would expect a carrier working its way through bankruptcy to take a performance hit, but the performance of AMR Corp.‘s (PINK:AAMRQ) American Airlines managed to improve in two key metrics. Mishandled baggage was down to 2.92 lost or mishandled bags per 1,000 passengers in 2012, compared to 3.55 in 2011. Denied boardings per 10,000 passengers also fell to 0.73 in 2012 compared to 0.92 a year earlier.

Unfortunately, on-time performance declined as consumer complaints rose — American’s flights arrived on time only 76.9% of the time in 2012 — a drop of about 1 percentage point from 2011. Blame at least some of that deterioration on a work slowdown by the airline’s pilots last fall — a problem that should be resolved by the merger with US Airways (NYSE:LCC). Customer complaints also rose 23% from 2011’s numbers.

While a merged AAMRQ seems poised to boost performance in 2013, the unfortunate reality is that glitches are par for the course where airline mega-mergers are concerned.

#4: American Eagle

AmericanEagleAirlines185American Eagle, AAMRQ’s regional feeder subsidiary, improved its performance more than any other carrier in 2012 — although it still ranks near the bottom compared to its peers. The airline improved its on-time performance to 81.6%, from a dismal 76.3% in 2011.

Complaints were down 13% to 1.27 per 100,000 passengers, and Eagle cut denied boarding rates in half — down to 1.07 per 10,000, compared to 2.24 a year earlier. The airline’s mishandled baggage rate was down to 5.80 bags per 1,000 passengers in 2012 — an improvement of more than 20%, but still much higher than the industry average of 3.07.

It’s hard to speculate whether Eagle will continue to improve its metrics as the US Airways (NYSE:LCC) merger moves forward — after all, LCC has its own regional feeder to manage. Besides, a merged American-US Air will likely focus on attacking higher-margin international routes and luring lucrative business travelers.

#3: SkyWest

SkyWest185Regional feeder carrier SkyWest (NASDAQ:SKYW) had it tough in 2012 — it posted the second-largest declines in AQR ratings year-over-year. The biggest problem: SKYW’s involuntary denied boarding rates zoomed to 2.32 per 1,000 passengers in 2012, compared to only 0.68 a year earlier. Those numbers suggest that SkyWest flights are heavily oversold and the carrier may be struggling to manage capacity.

Mishandled baggage rates rose 27% to 5.26 per 1,000 passengers and customer complaints inched up to 0.88 per 100,000 passengers from 0.73 in 2011. One ray of sunshine: SkyWest’s on-time performance improved to 81.6% in 2012, up from 79.3 in 2011.

#2: ExpressJet

ExpressJet185For the first time, the 2012 AQR entry reflects combined data from the ExpressJet and Atlantic Southeast merger that closed in November 2010. But the numbers aren’t good.

ExpressJet’s on-time performance was only 76.9% in 2012 — well below the industry average of 81.8%. And its denied boarding rate of 2.13 per 10,000 passengers was the second-highest among the 14 carriers and more than double the industry average.

The airline’s mishandled bag rate of 5.52 per 1,000 passengers is also frighteningly higher than the industry average of 3.07. But ExperssJet apparently has a very forgiving customer base: Its customer complaint rate is only 1.07 per 100,000 passengers. (The industry average is 1.43.)

#1: United Continental

United185Most passengers who flew United (NYSE:UAL) won’t be surprised that the airline earned the dishonor of being the worst in 2012.

UAL struggled to integrate the complex IT systems for the two airlines that officially merged in May 2010. A string of serious computer glitches and systems snafus resulted in cancelled or delayed flights and enraged passengers; it also triggered a precipitous drop in revenue as customers fled the troubled airline.

The carrier’s on-time performance slipped to 77.4% in 2012 from 80.2% a year earlier; UAL’s involuntary denied boarding rate increased 81% compared to 2011. Mishandled baggage rate also inched up to 3.87 bags per 1,000 passengers in 2012, compared to 3.66 in 2011.

Not surprisingly, customer complaints skyrocketed to 4.24 per 100,000 passengers — nearly double the previous year’s number. No wonder UAL earned top dishonors.

The good news for UAL and its passengers: The airline is finally putting the glitches behind it and should start gaining altitude soon. But it will take some time — and perhaps some incentives — to lure back frequent flyers that bailed on United at the height of its woes last year.

As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2013/04/the-5-worst-airlines-of-2012/.

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