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United Continental Holdings Inc (UAL), Southwest Airlines Co. (LUV): Two Airlines Americans Hate the Most, and One They Still Love

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Last week, researchers at Wichita State University and Purdue University released the results of the 2013 Airline Quality Rating survey. This study measured the performance of U.S. airlines on a variety of quality metrics in 2012, including the frequency of customer complaints. The results showed that — for the most part — airlines are earning their reputations. Oft-reviled network carriers United Continental Holdings Inc (NYSE:UAL) and American Airlines saw higher rates of official complaints in 2012 than in 2011, placing them at the bottom of the industry. By contrast, Southwest Airlines Co. (NYSE:LUV) improved on its already low complaint rate from 2011, further distancing itself from other airlines.

United Continental Holdings Inc (NYSE:UAL)

United Continental Holdings Inc (NYSE:UAL): the costs of a merger
In early 2012, United Continental Holdings Inc (NYSE:UAL)’s management proclaimed their confidence that the company’s merger with Continental Airlines would proceed smoothly. Instead, the process was disastrous for customers and shareholders alike. United experienced 4.24 complaints to the U.S. Department of Transportation per 100,000 passengers last year. That was triple the industry average rate, and more than double the rate at the second-worst offender, American Airlines.

Other data collected in the AQR survey indicates that United Continental Holdings Inc (NYSE:UAL)’s customers weren’t just being finicky. United Continental Holdings Inc (NYSE:UAL) was more likely to lose your bag than any other major carrier in 2012, and its on-time arrival percentage was worse than any other major airline except American. To make matters worse, you were almost twice as likely to be “bumped” from your flight on United Continental Holdings Inc (NYSE:UAL), relative to the industry average. In other words, United Continental Holdings Inc (NYSE:UAL) was at or near the bottom of the industry for every major customer service metric last year.

American: bad to worse?
American Airlines also saw deterioration from 2011 to 2012, and had the second-highest complaint rate last year. Still, that was much better than United’s performance. American’s main failing in 2012 was its on-time performance, which was the worst in the industry. However, American was actually less likely to lose your bag or bump you from your flight than the average carrier.

That said, American’s pending merger with US Airways Group, Inc. (NYSE:LCC) — which was a close third in complaint rate last year — could make its performance even worse over the next year or two. Merger integration challenges at United Continental caused the complaint rate to double there from 2011 to 2012. Even if American and US Airways Group, Inc. (NYSE:LCC) manage their merger relatively well, it is almost inevitable that service quality will suffer in the short run.

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