Airline satisfaction index reaches record high

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By: Wise Marketer Staff |

Posted on May 29, 2002

Despite the impact of September 11th on all airlines, with changes ranging from increased waiting times to more stringent passenger security checks, air travellers in the US are happier with America's commercial airlines than they have been for five years, according to the American Customer Satisfaction Index (ACSI).

The airline industry has improved its ACSI score by 8% since 2001 (up from 61 to 66), marking the only time that the airlines have shown improvement in customer satisfaction since the creation of the ACSI in 1994. All of the major airlines have shown improvement.

Overall, the national aggregate ACSI score for 35 industries in the first quarter of 2002 rose to 73 (out of a possible 100), being the second quarterly improvement in a row, and the highest overall score in six years.

"Improved customer satisfaction, combined with growing disposable personal income, implies more consumer spending," says Claes Fornell, professor of business at the University of Michigan Business School's National Quality Research Centre (which compiles and analyses the quarterly ACSI data). More consumer spending, of course, means that companies are better off and more able to weather stock price volatility.

"Even though stock prices of the most widely held companies are down substantially for the year and the broader market indices are in negative territory, companies that have highly satisfied customers tend to be relatively sheltered from a market fall in stock prices," says Fornell. "Because high customer satisfaction is often a sign of a healthy company, companies that do well on the ACSI tend to do well in the stock market."

Airlines compared
Perhaps the biggest surprise among industries measured in the ACSI report is the improvement in customer satisfaction with the nation's airlines, coming at a time when losses are mounting for most of them. The decline in air travel since September 11th, 2001 - particularly among business travellers - has led to much less crowded planes and more time available per passenger from flight attendants. This is despite the fact that overall passenger load has not changed greatly. In order to fill seats airlines have also cut their fares and offered bargains. According to ACSI, Southwest Airlines leads the way in customer satisfaction with a score of 74, followed by Continental Airlines (68) and Delta Airlines (66). The biggest improvement came from Northwest Airlines, its score rising from 56 to 65.

The report also measures satisfaction with energy utilities, telecommunication companies, broadcast and cable/satellite television, parcel delivery services, the US Postal Service, newspaper publishing, hotels, hospitals, the motion picture industry and health care insurance.

Energy utilities
While the airline industry achieved the largest gains, energy utilities also showed healthy improvement, raising their collective score from an industry-low of 69 up to 73. Pacific Gas & Electric made the biggest stride among all of the gas and electric companies as its ACSI score climbed by 18% to 58 (up from 49). Southern Co (81), Allegheny Energy (80), PPL (80) and Duke Energy (79) were the leaders, and Xcel Energy, Consolidated Edison, Sempra Energy, Reliant Energy and Edison International all achieved double-digit percentage increases in their individual ACSI scores.

Another sector that showed some improvement was the telecommunication industry, scoring 71 (a rise of 1 point from last year's 70). Sprint and Verizon Communications paced the long-distance phone companies with scores of 74, with BellSouth topping the local phone services also with 74. Verizon did not fare as well with its local service, dropping by 8% to 67, and Qwest Communications also saw its score for local phone service fall by 8% to an industry-low of 56.

While customer satisfaction improved overall for the airlines, utilities and phone companies, the cable and satellite television industry was not as fortunate, with its score falling nearly 5% (down from 64 to 61). DIRECTV remained at the top with a score of 70 but other major companies lost ground: Charter Communications dropped 16% to an industry-low of 53, Comcast dropped more than 12% to 56, and AT&T dropped 10% to 56. "People just don't like their cable companies," explains Jack West of the American Society for Quality. "This industry reinforces the trend we've been witnessing in many other industries - that increased competition leads to greater satisfaction."

Other industries
In other industries, customer satisfaction was up 1% among parcel delivery-express mail services (from 78 to 79), while hotels remained the same at 71. Hospitals rose from 68 to 70, broadcast television rose from 62 to 65, newspapers dropped 7% to 63, motion pictures dropped 1% to 70, and health care insurance, measured for the first time, scored 68.

"The general improvement in consumer satisfaction with service industries is encouraging," West says. "It demonstrates that quality improvement techniques are just as effective in the service area as they are in the production of manufactured goods."

The ACSI is a national economic indicator of customer evaluations of the quality of goods and services available to household consumers in the US. It is updated every quarter with new measurements for different sectors of the economy replacing data from the previous year. The overall ACSI score for a given quarter is based on scores from 190 companies across 35 industries and from government agencies over the previous four quarters.

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