Customer service hits 5-year low at airlines

BUSINESS DIGEST

May 17, 2006|By BLOOMBERG NEWS

NEW YORK -- Customer service at U.S. airlines during the first quarter was the worst it has been in five years, according to a University of Michigan index that ranks customer satisfaction.

Only cable television, satellite services and newspapers ranked lower than airlines in the American Customer Satisfaction Index, which also examined industries such as utilities, health care, telecommunications and food service.

Among the U.S. airlines, Northwest ranked lowest, its rating falling 4.7 percent from the first quarter of last year. Tied for second-worst were American Airlines, whose ranking fell 3.1 percent from a year ago, and US Airways, which the study said improved the most, by 8.8 percent.

"It becomes more difficult to provide good service when you don't have the resources." said Claes Fornell, a professor at the University of Michigan's business school.

The largest U.S. airlines have been shedding employees and capacity as they try to stem $40 billion in losses since 2000. The U.S. airline industry employed 5.4 percent fewer people in March than a year earlier, according to the latest U.S. Transportation Department statistics. March marked the 15th monthly decline in airline employment.

"The unfortunate thing is it's hard to see how things can get much better, at least not in the short term," Fornell said. "We do have more passengers flying, and it's just going to get more crowded and maybe a harder strain for passengers."

On-time arrivals by U.S. airlines stood at 76.1 percent in the first quarter, the poorest first-quarter showing in five years, according to U.S. Transportation Department data.

Two of the five largest U.S. carriers - Delta Air Lines Inc. and Northwest - are currently in bankruptcy proceedings. All airlines have been affected by high fuel prices.

On the positive side, Southwest and Continental airlines led in service, their ratings both unchanged from a year earlier.

In other industries, wireless telephone service providers barely edged out the airlines in customer satisfaction, improving their ranking by 5 percent overall. T-Mobile USA Inc., and Verizon Wireless were the best performers.

Overall, customer satisfaction improved for 54 percent of the companies covered by the survey.

PPL Corp. and Allegheny Energy Inc. led utility companies and FedEx Corp. and UPS Inc. led express companies in the rankings.

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