United Is America’s Worst Airline

United Airlines
Source: United Continental Holdings Inc.
U.S. airlines are among the lowest-rated industries in the country when it comes to customer satisfaction. According a survey completed earlier this year by the American Customer Satisfaction Index (ACSI), only pay TV, social media companies, and Internet service providers rank below airlines. People like their wireless phone carrier more and even think they get better customer service from car dealers. Clearly, airlines need to polish up their image.

According to a ranking of eight U.S. air carriers, the best airline for overall performance is Delta Air Lines Co. (NYSE: DAL) and the worst is United Continental Holdings Inc. (NYSE: UAL). The ranking was prepared by and is based on May 2014 data reported to the U.S. Department of Transportation in four basic service areas: canceled flights; on-time arrivals, mishandled bags, and denied boardings. The website also includes the ACSI customer satisfaction rating to complete the ranking.

Delta leaped from sixth place in 2013 to first place in 2014 based on having the fewest canceled flights, the second-best on-time records, and the highest ACSI score among the country’s remaining legacy carriers — Delta, United Continental, and American Airlines Group Inc. (NASDAQ: AAL).

Virgin America, the soon-to-come-public airline controlled by Richard Branson, finished second again in 2014 and had the best score in the mishandled bag category.

Alaska Air Group Inc. (NYSE: ALK) ranked third, posting the second-best score for fewest cancelled flights and the top score for on-time arrivals.

Ranked fourth is JetBlue Airways Corp. (NASDAQ: JBLU) which ranked best in the number of denied boardings (just 3.58 per million passengers compared with second-place Virgin America’s 17.13 and 8th place United’s 245.61). JetBlue was also top-rated for customer satisfaction in the ACSI survey.

Privately-held Frontier Airlines finished fifth in the ranking. Republic Airways Holdings Inc. (NASDAQ: RJET) completed the sale of the airlines to private equity firm Indigo Partners in December 2013. Indigo plans to re-make Frontier into what the firm’s managing partner called “an ultra-low-cost carrier.” Indigo had been a major investor in another ultra-low-cost airlines, Spirit Airlines Inc. (NASDAQ: SAVE) until selling its stake in July of 2013.

Southwest Airlines Co. (NYSE: LUV) finished sixth, with the worst on-time arrival score and the worst mishandled bag score. Southwest scored second in the ACSI survey primarily on the basis of its low fares, indicating that U.S. passengers will forgive a lot of sins if the price is low enough.

Seventh overall was American which scored next to last in the ACSI ranking and could do no better than fourth in any individual category ranking. The airlines did not rank at the bottom of any category.

The overall worst airlines is United, which had the lowest ASCI score and the highest number of denied boardings. Much of the low customer satisfaction score is due to the still-to-be-fully-completed merger between United and Continental airlines. Airline mergers take years to sort out and this one is no different.

Since the merger between American and U.S. Airways was completed in December, airline stocks have lifted off. United is up nearly 15%, and it’s the worst performer. The best is Southwest, up nearly 53% followed by American which is up 51%. The other legacy carrier, Delta, is up more than 25%.

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