The Future of the Legacy Airline

Since the beginning of powered flight on December 17, 1903 our world has

changed dramatically. As the airline industry has evolved over the last ninety years it has

brought with it changes that have affected the entire world as we know it. Sadly, since

1979 there have been over 185 airlines that have declared bankruptcy with no less than a

minimum of two every year! Just within 2008 there were 13 bankruptcies (“U.S. Airline

Bankruptcies and Service Cessations). So what are these companies doing wrong; how

can it be that every year multi-million dollar airlines are closing their doors? The main

question addressed in this paper will be: are legacy airlines adequately adjusting their

operations to compete for the future? More specifically, how does their customer service

compare to other airlines in the airline industry? While this by no means accounts for

everything that legacy airlines must do to compete for the future, it will be shown below

that these areas account for some of the largest differences in customer satisfaction and

financial success among airlines. To begin, a short introduction on the history of aviation

will be given in order to provide a framework through which to better understand the

current state of the industry. Next, the type of airline operations, their structure, and a

sampling of each will be given. From here, SERVQUAL and its five aspects will be

explored. Finally, a short conclusion and brief plan for success will conclude the paper.

On January 1, 1914 Tom Benoist began the first scheduled airline service from St.

Petersburg Florida to Tampa Florida with Tony Janus at the controls. This twenty three

minute flight would depart from St. Petersburg Monday through Saturday at 10 a.m. and

2 p.m. and would cost the rider $5 (“Outstanding achievements in the field of scheduled

air transportation”). It is important to note, however, that this airline was subsidized by

several important local business men. In total it transported 1,205 passengers safely over

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a period of four months. While the airline itself never made any money it showed that

Benoist’s idea was feasible (“First Scheduled Airline”).

Throughout the 1920’s passenger service was sporadic at best and airplanes had

primarily been used by the post office as a means to transport mail, or airmail, as it was

called at the time. As a result, the use of aircraft in transportation of mail and passengers

was essentially subsidized by the government (Alexander). In 1925, the Ford Motor

Company purchased the Stout Aircraft Company and began constructing a new airplane

called the Ford Trimotor (Alexander). While this new airplane would be able to transport

twelve people, it made passenger service potentially profitable thus possibly eliminating

the need for government subsidies. During this same time, Pan American World

Airway’s CEO Juan Trippe began building a series of air routes that would connect “Los

Angeles to Shanghai and Boston to London” through a fleet of flying boats (“Airline”).

Finally, in 1935 Donald Douglas introduced the first DC-3(“DC-3 History). While this

airplane could carry a maximum of twenty one passengers it marked the first time that an

airplane could be used profitably in transportation.

Throughout the next twenty years airlines would come and go, and merge into

larger more profitable companies. In the 1950’s the first jet transport aircraft began to

emerge bringing with them a significant change in airline transportation. Through the

advent of the jet engine, it brought into being an new type of aircraft, the turboprop.

While the turboprop may have seemed like a more powerful propeller aircraft, it began to

make small commuter routes possible (“Airline”). These airplanes had only a very brief

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encounter with the major airlines before other companies began operating these in their

own niche markets.

1978 arguably brought out the biggest change airlines would encounter in the

history of aviation, deregulation. Throughout the late 1960’s and1970’s academic

economists had argued that “the air transport industry has characteristics of market

structure that would bring market performance of reasonable quality without any

economic regulation” (Alexander). Thus, the Airline Deregulation Act of 1978 brought

about a significant change in the operating structure of the airline.

Throughout the last thirty years the airline industry has gone through significant

changes. With the Airline Deregulation Act of 1978 in place, it began to allow low cost

carriers to enter the market during good economic times. Unfortunately many of these

airlines such as ValuJet and Skybus would come and go depending on a myriad of

factors. Throughout the 1990’s and 2000’s, however, a number of low cost carriers such

as Southwest and JetBlue have emerged and carved out their own niche in the industry at

the expense of Legacy airlines of the past. Before we begin exploring the components of

customer service, and the SERVQUAL model, let’s first begin by defining the major,

national and regional operations of airlines.

Within the United States alone there are several hundred companies all providing

air transportation of some type. For this reason, it is important that we classify these

operations into different categories. When considering scheduled passenger commercial

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service, there are three main categories that a majority of the companies will fall into.

These three are major, national, and regional. Major airlines are officially defined as

having operating revenue in excess of $1 billion. These airlines typically offer both

nationwide and international service to a variety of destinations (Alexander). “Included

in this category are the largest feeder carriers who operate regional aircraft for their hub-

spoke network partners.” As a result aircraft operated in this category can include both

small and large jets, though a majority of this sector is dominated by large aircraft. Some

of the airlines included in this list for 2008 include Alaska, American, Southwest, Delta,

Continental, and American West.

National carriers are defined as having operating revenues between $100 million

and $1billion. In general, these airlines typically serve regions of the United States,

though some operate both nationwide and internationally. Aircraft operated in this

category can include both large and small transport jets. Some typical airlines in this

grouping include Airtran, Evergreen, JetBlue and Spirit.

Rounding out the last category is the regional sector. Within the regional sector,

however, there is a sub-grouping of three more categories which include large regionals,

medium regionals, and small regionals. Large regionals are defined as having $20

million to $100 million in operating revenue and in general have aircraft that can

accommodate more than sixty people (“How Airlines Work”). Operating revenues under

$20 million officially define medium regional airlines. These airlines typically operate

only aircraft with fewer than sixty seats. The last grouping of regionals, small, has no

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official definition, though they are regarded as small airplanes, typically turboprops,

carrying less than sixty passengers. Airlines in this category include a wide range of

operators from Colgan, Great Lakes, PSA, Piedmont, Mesaba, and Compass.

While these definitions serve to provide an official definition to categorize

operators according to their revenue, they include an eclectic mix of companies that make

it difficult to evaluate their operating structure. For this reason we will use a broader, but

well accepted categorization of companies. Legacy airlines, often referred to as the

majors are specifically defined as a group of large airlines that include only American,

Continental, Delta/Northwest, U.S. Airways, and United. Note also that Alaska Airlines

and Hawaiian Airlines were specifically left off this list. These two airlines have

specifically been excluded because they are traditionally not referred to as Legacy

carriers and they tend to operate more similar to a national carrier than that of a major

(“Legacy”).

The national category is generally thought of as the low cost carriers that fly large

aircraft as well as a handful of the largest commuter airlines that operate a mix of small

and large jet aircraft. Regional airlines refer to the smaller commuter airlines that

typically fly turboprops and smaller jets in a specific region of the United States. Using

the above definitions for airlines it will also help to briefly describe the various

operations of an airline.

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 In general, all three categories of operations include the same basic corporate and

operating structures. In breaking down these operations the following rudimentary

classifications can be made: 1) Operations 2) Reservations and Ticketing 3) Sales and

Marketing 4) Administrative and Management. Operations include a variety of different

jobs, and are responsible for much of the day to day work. Typically maintenance,

baggage handlers, pilots, flight attendants, and flight standards will fall within this

category. Reservations and ticketing, while fairly self explanatory, includes the people

responsible for taking reservations and entering them into the system, the customer

service agents who both issue tickets at check-in and collect the tickets before boarding,

as well as all the people behind the scene who are responsible for making changes,

issuing refunds, etc. Finally, both sales and marketing, and administrative and

management are responsible for much of the same duties in other corporations. Now that

a basic structure has been provided for understanding airline operations let’s take a look

at the current state of the airline industry.

As of early 2009 there were eight legacy airlines operating within the United

States; surprisingly, of these eight only one of them has not declared bankruptcy in their

lifetime, American Airlines. In fact, Continental Airlines has declared bankruptcy twice,

and the remaining six have all declared bankruptcy within the last ten years. In addition

to this, numerous spin-off airlines such as Ted, Song, Delta Express, United Express, and

others have been formed and then dissolved by these same airlines all in an attempt to

compete with the low cost carriers over the last ten years.

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 In another attempt by these same Legacies to improve profits, they have

restructured their routes for short-haul flights in order to remain competitive. Through

the use of a bid system, regional airlines will offer up bids for specific routes that the

major airline will award to them. The airline with the lowest bid wins the contract. As a

result, the regional airlines are now intertwined so deeply that it would be outside the

scope of this paper to even begin to explain their structure. A brief explanation, however,

will be helpful in understanding what these Legacy airlines need to do in order to remain

competitive in the future.

Rather than trying to explain how each airline is structured let’s take a close look

at the structure of Delta/Northwest Airlines as a representative view of the whole. The

reason for choosing this particular airline is due to the recent acquisition of Northwest by

Delta in 2008, and the way in which it has changed their operations. Beginning in 1984

Northwest began a code sharing agreement with Mesaba Airlines until 2007, when

Northwest acquired Mesaba (“Airline Member Listings”). Code sharing essentially

provides Mesaba Airlines the opportunity to sell tickets for their flights through

Northwest airlines ticketing department as well as allow them to paint their aircraft in the

Northwest color scheme. This is advantageous for Mesaba because it allows them to

transfer much of the advertising responsibility over to Northwest while retaining the

current management and administrative staff. Northwest also benefits by being able to

collect a percentage of sales revenue from Mesaba while allowing them to advertise more

flights throughout the country. While code sharing may seem advantageous on the

outside, it brings other problems with it, namely scope clause.

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 Scope Clauses are provisions in the pilot labor contracts that limit the number,

and/or seating capacity of regional jets that can be operated by an airline. For example,

as of 2007 Northwest had code share agreements with both Mesaba Airlines and Pinnacle

Airlines. Let’s say that Northwest has a scope clause allowing 50 aircraft with a

maximum 76 seats per aircraft and allowed for a 1:1 increase. This would mean that

between Mesaba and Pinnacle they can operate no more than 50 airplanes that have

between 50 – 76 seats; aircraft under 50 seats are typically not regulated. In addition, if

Northwest were to buy four more large transport aircraft then Mesaba and Pinnacle could

each add two more 76-seat aircraft to their fleet. The idea of scope clause became

popular in the late 80’s/early 90’s when regional aircraft started to become profitable. Its

original intent was to preserve jobs at the major airlines and prevent outsourcing or

contracting out of jobs to smaller airlines. As can be seen in the following paragraphs,

however, this created a whole new set of problems which served to only further erode the

revenues of legacy airlines.

Throughout the 2000’s the demand for short-haul regional transportation

increased as can be seen in the graph below:

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That is a 44% increase in the number of passengers over the last four years! As a result,

the legacy airlines were required increase the services they provided for their customers.

Continuing with the Northwest Airlines example, we can see its effects more clearly. In

2006 Northwest needed to increase its capacity in order to remain competitive.

Therefore, on April 24, 2006, Northwest purchased Independence Air’s operating

certificate and started a new regional company called Compass Airlines (“About Us”).

As a result Mesaba Airlines, Pinnacle Airlines and Compass Airlines were essentially

competing directly with one another for a portion of Northwest’s routes. During this

same time, Delta Airlines had a very similar situation involving Comair, Atlantic

Southeast Airlines, Chautaqua Airlines, Freedom Airlines, Pinnacle Airlines, Shuttle

America and SkyWest Airlines. Then in 2008, Delta acquired Northwest and now had

nine regional airlines all competing for the same routes and same passengers. Due to the

Delta/Northwest scope clause’s they were required to begin reducing the number of

airlines and aircraft in their code sharing agreements. While it may seem that this type of

competition would weed out the weak, it has done the exact opposite. This fierce

competition among regionals has induced some of these companies to accept contracts

that are below costs in an attempt to gain more business in the future. In addition, these

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same regionals are not only competing for contracts from Delta, but also from

Continental, American, United, and U.S. Airways. In fact, the average Legacy carrier has

6 regional airlines all competing for their business. This cycle then continues itself year

after year where old regionals eventually enter bankruptcy and new ones are born out of

need. As a result, neither the regional airline, nor the major airlines truly develop a

working relationship with each other. This then, causes quality to suffer among both

categories. Now that an understanding of the current state of the airlines has been

developed, let’s begin to explore the effects of these situations as well as what other more

innovative airlines have done to become more profitable.

So what does it take to remain competitive in the modern world of airline

transportation? In reviewing the problems facing the Legacies today, two major areas

clearly stand out. First, they must learn to improve their customer service. Second,

quality service needs to be addressed and improved.

In general, when a customer pays an airline several hundred dollars or more for an

airline ticket, they expect a certain level of service from the company. In fact, in the

survey below you can see that 84% of customers base their airline of choice solely off of

service quality (“Passenger Poll Results”).

1. Does staff service quality influence your airline choice?

(136,855 responses)

Yes 84%

No 16%

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 According to Operations Management, “The most popular measure of service

quality is called SERVQUAL” (“Schroeder”). It is measured by a customer questionnaire

based on five perceptual measures of service: 1) Tangibles, 2) Reliability, 3)

Responsiveness, 4) Assurance, and 5) Empathy. As the service quality of airlines is

reviewed, each of these five topics will be discussed in order. In addition, three

representative samples have been constructed according to the three main categories

identified above: Major, National and Regional. (Note: Northwest is identified as

separate from Delta. The most current data available for many of the areas listed is

through end of the year surveys from 2008. As of today, Northwest and Delta’s

operations are still fairly separate from each other and it may take another year or two

before they are fully merged into one company.) In the chart below a listing of the six

different airlines comprising each category of air transportation used for this paper is

shown.

Major National Regional

1 American AirTran American Eagle

Atlantic Southeast Airlines
2 Continental Frontier (ASA)

3 Delta JetBlue Comair

4 Northwest Southwest ExpressJet

5 United Spirit Mesa

6 US Airways Virgin Atlantic Skywest

Having outlined a representative group of airlines above, the next few pages will examine

the five areas of SERVQUAL.

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 When a business man prepares for the flight to his next meeting what is he likely

to remember? Most of us will quickly recall the TSA agent who virtually made us strip

down to our underwear as everyone else watched, or remember the hours we spent

waiting in the boarding area for the flight; maybe even the dingy smell as we boarded the

airplane. All of these experiences comprise the area of tangibles. Tangibles in the airline

industry can accompany a wide range of areas, some of which the airline can control and

some of which they can’t. Examples of uncontrollable tangibles include both the airport

and the TSA agent in our earlier example. Airlines do, however, control some tangibles

such as the aircraft, or the customer service agent’s appearance.

So how have the airlines in general faired in this area? It is safe to say that in

general most airlines are pretty comparable in this area. Unfortunately, there is little that

any airline can do to control the airport and facilities inside. In addition, all scheduled

passenger airlines have strict dress and appearance codes for both the customer service

agents as well as the flight crew. The biggest possible difference between airlines would

be the average age of the airplane. We all know that as our cars age the interior becomes

disheveled and the new car smell fades into a strange musty smell. The same is true for

airplanes. Below is a chart representing the average fleet age for our sample airlines

(“Average Fleet Age for Selected Carriers”).

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 Year Year
Major s National s Regional Years
1 American 14.7 Southwest 9.8 SkyWest 7
2 Continental 10.1 AirTran 4.5 Mesa 6.8
3 Delta 13.8 JetBlue 3.2 Comair 8.5
4 Northwest 18.5 Spirit 3.3 ExpressJet 6.1
5 United 12.7 Virgin America 1 American Eagle 7.8
6 US Airways 12.2 Frontier 3.8 ASA 6.5
AVG: 13.7 4.3 7.1

As can be seen from the above chart the major airlines have a fleet that is nearly

twice as old as the regionals, and more than three times as old as the nationals. While

airplanes are a very expensive asset that is not easily replaced, they still can leave a

remarkable impression on its passengers. Another important tangible to consider would

be leg room and seat. The configuration of the airplane can have a direct impact on the

passengers comfort and their impressions on the airline. Below is a snapshot of each

airlines leg room and seat width (“Airlines”) (“Leg Room Guide”) (“Legacy”) (“About

Us”) (“More”). When calculating these numbers, the standard coach seat was used.

Many of these airlines offer extra leg room, first class seats, or exit rows at an extra

charge; therefore, to keep these numbers as standard as possible, only the basic seating

area was used. In addition, airplanes used for long-haul flights were not included in these

averages as they often serve a different market, and tend to be limited exclusively to

major airlines. Below is a chart detailing the information:

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Major Leg Room Width National Leg Room Width
American 31.6 17.4 Southwest 32.5 17
Continental 31.5 17.3 AirTran 30 18
Delta 31.2 17.2 JetBlue 32 17.9
Northwest 31 17.2 Spirit 32 17
United 31.4 17.5 Virgin America 32 17.5
US Airways 31.8 17.3 Frontier 33 18
Average 31.4 17.3 Average 31.9 17.6

Regional Leg Room Width

American Eagle 31 17.2
ASA 31 17.5
Comair 31 17.5
ExpressJet 31 17.3
Mesa 31.2 17.3
SkyWest 31.6 17.5
Average 31.1 17.4

As shown, the national carriers win hands down when it comes to both leg room

and seat width. Surprisingly, the major airlines and regional airlines are very similar to

each other, especially when considering the airplanes used. Regional airlines use small

50 – 76 seat jets that are often criticized for being too cramped. Contrast this to the major

airlines which use large jet airplanes capable of carrying more than 200 passengers, and

you find nearly the same amount of leg room and seat width. One may suspect that the

larger cabin height plays to the illusion of greater room. At any rate, these small

differences in room have a large impact on the overall comfort of the flight. One can

even find several websites dedicated to comparing seating arrangements for the various

airlines. It is clear that the public is concerned about this tangible quality of the airline

business.

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 In this next section both assurance and empathy will be evaluated together. It can

be difficult to measure these two items so this subject will be approached a little

differently. Assurance refers to the ability of the employees to convey trust and

confidence in their operations. Does the pilot look like he just rolled out of bed, or is he

alert and aware of his surroundings? Do the flight attendants continuously slam their

beverage cart into the back of your elbow as the roll up and down the aisle? Even worse,

do they just walk by oblivious to the agonizing pain your elbow is now in?

Empathy is “The caring, individualized attention the company provides to its

customers.” Is the customer service agent courteous to those passengers in line or does

she announce, “Boarding will begin in about five minutes” knowing all along it will be at

least twenty minutes? When the gate agent sees you running up to your gate at the last

minute what is her reaction? Is it disgust or happiness that you made it just in time?

While empathy may be the most difficult of these to control its impact on the customer’s

perception of the airline is great.

So, how can assurance and empathy be evaluated? The best way to estimate these

are through personal reviews of service. Skytrax, “the leading research Advisors to the

world airline and air transport industry” regularly publishes official consumer reviews of

many airlines. Various areas are reviewed including arrival assistance, enthusiasm,

interaction with passengers, language skills, responding to requests, consistency,

personalization and many others. Unfortunately, only the major and national sample

groups are represented; there are no regional airlines represented from the sample group.

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Reviews are provided, however, for the regional airlines, though they are not considered

official by Skytrax. Consequently, the results for the regional sample group will be

grouped slightly differently. Of the six airlines within the regional category only five

actually received reviews. Of these five, Skywest and ASA received only two and

therefore the information may be unfairly skewed. In addition, the ratings for all of the

regionals were in regard to the service as a whole and thus may be unfairly biased from

other problems. For these reasons, instead of evaluating the individual regional airlines,

they will be evaluated as a whole. Finally, only the standard coach seating was used to

evaluate the service in order to remain consistent. Below are the findings (“Airline

Reviews”).

Interaction Cabin Language

Major Attitude w/ Passenger Presence Skills Consistency
American 3 2 2 2 2
Continental 4 ------- 2 3 ---------
Delta 3 2 3 2 2
Northwest 3 2 3 3 2
United 3 2 2 2 3
US Airways 3 ------- 3 3 --------
Average 3.2 2 2.5 2.5 2.3
Interaction Cabin Language
National Attitude w/ Passenger Presence Skills Consistency
AirTran 3 ------ 2 2 ------
Frontier 4 ------ 4 2 4
JetBlue 4 ------ 4 3 4
Southwest 3 ------ 3 2 3
Spirit 2 ------ 3 2 3
Virgin
Atlantic 3 3 3 3 3
Average 3.2 3 3.2 2.3 3.4

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Regional Attitude Interaction Cabin Language Consistency
w/ Passenger Presence Skills
Average 2.5 3 3 2 1

In reviewing the above numbers, only the major and national section will be used

as the regional chart is just an approximate reference. In language skills, the major

airlines ranked only slightly higher than the nationals. The nationals, however, beat out

the majors by a significant margin in interaction with passengers, cabin presence, and

consistency. So what can account for these differences? It depends upon the leadership

at the individual airlines and how they convey the importance of, and train their

employees to understand the importance of quality service in regards to how they treat

their customers. If management is to do this, it must be a goal that is clearly described

and planned out within their organization. A review of the individual airlines websites

provides some interesting information on their value of customer service.

As each website was reviewed the ability to locate their commitment to its

customers, as well as the content, was evaluated. Due to the difficulties of quantifying

the data, a basic review of the information, and ease of locating it, will be discussed.

Before beginning, it is important to note that nearly every website made the contract of

carriage available. The contract of carriage lays out the basic rights and services that are

required to be provided by law to all of their customers. Some of the major and regional

airlines promoted this as their commitment to their customers. While they did at least

attempt to provide some information, the purpose was lacking. In general, the overall

quality of the content and ease of finding the information was significantly higher within

the national airlines as opposed to the majors. Within the major airlines only one, Delta

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Airlines, did not have any information regarding customer expectations; in addition,

Continental Airlines information was very difficult to find. Of the remaining five airlines

most of them provided a couple lines in essence stating that the customer was their top

priority. Beyond this, however, no information was provided as to how they would

accomplish this. By far and away, United’s “Our customer commitment” was the best.

Their website detailed what customers should expect, how the service should be

provided, and how they can contact the company with the specific problem they

experienced. Unfortunately, this commitment does not appear to be reflected in their

reviews above. This disconnect is likely due to managements failure to communicate and

train their employees in customer service.

As stated earlier, the national airlines were rated the highest in terms of the

reviews. Not surprisingly, their customer service commitments were also the best in

comparison to all airlines. Of the six sample airlines only one of them, Spirit Airlines,

had almost no information available. The remaining five airlines were nearly identical to

United’s website, and all of them were relatively easy to locate. JetBlue had the best of

any airline in terms of their commitment to passengers. Not only did it detail what

customers should expect but it provided monetary compensation for nearly every type of

problem you could experience. For example, if the live TV system is not working in-

flight, you will receive a $15 voucher. If you are involuntarily denied boarding, well,

that’s a $1000; and the list goes on (“Customer Bill of Rights”). Southwest, Frontier,

Virgin Atlantic and AirTran all provided a basic statement as well as a detailed plan on

reaching those goals. Interesting enough, the quality of the detailed customer service

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commitment on the individual airlines website is reflected back in the individual scores in

the above chart. It would appear that these airlines have not only successfully outlined a

customer service plan but have done a great job of implementing it as well.

The regional airlines, our last group, faired the worst. In fact, all six airlines

failed to provide any additional information beyond the contract of carriage. Instead, the

regional airlines referred you back to their code sharing partner. As mentioned earlier, the

regional airlines will code share their flights with one of the major airlines. In doing this,

they are relying on the major airline to book their flights and handle a large portion of

their customer service. Unfortunately, this reflects poorly on both the major and regional

airline. This is due to the fact that the regional airline is still responsible for providing the

staff and the training required to operate these flights. A flight attendant or gate agent

who is not receiving the proper customer service training will generally not be able to

provide satisfactory customer service thus resulting in problems for both the passenger

and the major airline.

Once again, while it is difficult to measure both assurance and empathy it is not

impossible to evaluate them. The above measures of customer reviews, and the airline’s

commitment to its customers, may be the best measure we can use to evaluate them.

From the information provided above, it is clear that the national airlines are far

exceeding the majors in terms of goals and performance.

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 The ability of the airline staff to produce prompt and helpful service to its

customers is referred to as their responsiveness. While similar to the requirements in

reliability, its implications are slightly different. For example, when you board the

airplane does the flight attendant help you to find your seat? Once the flight has departed

how do they meet your needs during the flight? It could mean serving a drink, a meal on

longer flights, or providing internet service for you to finish some work. To evaluate this,

one can consider the assistance of the flight attendants and how well they respond to

requests, as well as the type of onboard services provided. Once again, surveys from

Skytrax will be used to estimate the assistance and response to requests. The same

criteria regarding coach seating and the regional chart will also be applied. Below are the

findings (“Airline Reviews”):

Responding Responding
Major Assistance to Requests National Assistance to Requests
American 3 2 AirTran 2 3
Continental 3 3 Frontier 3 4
Delta 3 3 JetBlue 3 4
Northwest 3 3 Southwest 2 3
United 3 3 Spirit 1 3
Virgin
US Airways 3 3 Atlantic 3 4
Average 3 2.8 Average 2.3 3.5

Regional Assistance Responding

to Requests
Average 2 2.5

The findings are quite interesting in this area. While the regionals scored the

lowest in this area, it is important to take this with a grain of salt as the numbers are only

estimates. Looking at the major and regional sections there is a striking difference

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between the two in both assistance and responding to requests. Assistance refers to

“assisting families and children.” One possible explanation for the large difference here

could be the way in which the aircraft is loaded. Every major airline listed above will

load in the following order: 1) those requiring special assistance; disabilities, 2) first

class/business class and families with small children, 3) coach seating. As a result those

customers who require more time to board such as those with disabilities or small

children are given the extra help they need to get settled. Contrast this to someone like

Southwest Airlines and it is easy to understand why there is a difference. Southwest

Airlines offers seats on “first come first served basis.” Based upon the time customers

check-in they will be issued a ticket for boarding group A,B, or C. According to their

website, “An adult traveling with a child four years old or younger will board between

the “A” and “B” boarding groups” (“Travel Tools”) While they do offer provisions for

people with disabilities or seniors, there requirements are rather stringent and

complicated. There is no doubt that some seniors feel it is just not worth the extra hassle

of showing up early and following their documentation procedure in order to board a

little earlier. Looking at Spirit Airlines, it is clear that they rate significantly lower and

helped to bring the average down. Recently Spirit has been in the news several times for

providing poor assistance to its passengers and then failing to rectify the situation. As an

example, the following website is recommended for reading; this appears to be an all too

common problem with them and a perfect example of poor assistance

http://www.elliott.org/blog/another-broken-spirit-airline-denies-family-boarding/

(“Another Broken Spirit”). Clearly the national airlines are missing something when it

comes to assisting families, though, they do seem to be slightly ahead of the curve when

22
it comes to responding to requests.

Another large change that has occurred over the last two years is that of

unbundling services. The chart below provides a comparison between airlines and is

compiled from the various airlines’ websites. Note that regional airlines are required to

provide the same services as their code-sharing major.

Continenta
American l Delta Northwest United U.S. Airways
1st Bag $15 $15 $15 $15 $15 $15
2nd Bag $25 $25 $25 $25 $25 $25
Ticket change
fee $150 $150-$250 $100/$200+ $100/$200 $150/$250 $150/$250
Booking Fee ~$25 ~$17.5 ~$22.5 ~$22.5 ~$27.5 ~$17.5
Pet In Cabin -
Each Way $100 $125 $150 $80 $125 $100
Free
Snacks -
$3/Snacks Other's $1- $3/Snacks $5/Snacks
In flight food $6/Sand. No charge $10 $10/sand. $6/Snacks $7/Sandwhich
Entertainment $2/Headset $1/Headset Wi-fi $9.95 N/A $0/Headset $5/Headset
Other Fees N/A N/A N/A N/A N/A N/A

Virgin
AirTran Frontier JetBlue Southwest Spirit Atlantic
1st Bag $0 $15 $0 $0 $15 $0
2nd Bag ~$15 $25 $20 $0 $25 $25
Ticket change
fee $75 $100 $100 $0 $90 $75
Booking Fee $10 $15 $15 $0 $20 $10
Pet In Cabin - Not
Each Way $69 $0 $100 Allowed $85 $100
Free $2-
In flight food N/A $3/Snacks Snacks N/A $4/Snacks $8/Meals
Free
TV/Wi-
Entertainment N/A Fi/XM

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 $7/Pillow
Other Fees N/A N/A & Blanket* N/A N/A N/A
*Pillow and Blanket are yours to keep and come in a carrying case. It also includes a $5 gift certificate to Bed, Bath and Beyond.

While there is not a great difference between the two, there are several important

areas that must be pointed out. Of all the national carriers, only two of them charge for

the first bag whereas all major carriers charge for the first bag. In regards to ticket

change fees, booking fees, and pets the major airlines are slightly more expensive than

the nationals. Continental Airlines is the only major to provide free snacks as well as

JetBlue the only national. JetBlue stands out among all airlines in terms of entertainment

in that they offer TV, XM and Wi-Fi for free. While they do charge for a blanket and

pillow, they are yours to keep, and are significantly nicer than those provided on other

flights. Moving on to the last section of reliability some of the biggest differences

between companies can be seen.

Reliability can be defined as “The ability of the company to perform the promised

service dependably and accurately without errors.” Within the airlines, this will include

things such as lost bags, on-time departures and arrivals, and service on board the

aircraft. Many of these items are directly under the control of the company while some

are not. For example, a weather system moving into the area during the time of departure

may delay your flight. In this situation, there is nothing the airline can do to help the

flight depart on time. More often than not, however, delays are due to the turn-around

time required by the ground staff to prepare for the next flight. Every year the University

of Nebraska at Omaha and Wichita State University professors work together to produce

a report called the “Airline Quality Rating.” This report is very comprehensive and

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focuses on the following four specific areas: on-time departures, denied boarding,

mishandled baggage, and customer complaints (Bowen and Headley). Within the focus

of reliability, the customer complaint section is the only one that does not specifically

meet the qualifications of reliability. In fact, the breakdown of customer complaints is

flight problems, oversales, reservation and ticketing, fares, refunds, baggage, customer

service, disability, advertising, discrimination, animals and other. This is a large

breakdown of customer service complaints and covers virtually every item in

SERVQUAL. For this reason, it will be included in the final section as a broader portion

of reliability. It is important to note that each of these categories is weighted according to

their importance as deemed by “Airline Quality Rating” publication. Below are two

diagrams outlining the quality scores over a period of six years. Within the national

category, scores for Spirit and Virgin Atlantic were not available as well as 2003, 2004,

and 2005 for Frontier Airlines. Scores were also not available for Express Jet as well as a

number of years for Comair, Mesa and Skywest. In the diagram below you can find the

specific airline by using the legend below and counting from left to right in each year.

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 Average Quality of All Airlines

2008 2007 2006 2005 2004 2003 American

0 Continental
Delta
-1 Northwest
United
-2
Quality Rating

U.S. Airways
-3 AirTran
Frontier
-4 JetBlue
-5 Southwest
American Eagle
-6 Atlantic Southeast
Comair
-7 Mesa
Year Skywest

The next graph below details the same information but averages the scores for each

airline within the major, national and regional carriers.

Average Quality of Major, National, and

Regional

08 07 06 05 04 03
20 20 20 20 20 20
0
-0.5
-1
Quality Rating

-1.5
Major Airlines
-2
National Airlines
-2.5
Regional Airlines
-3
-3.5
-4
-4.5
Year

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 From the above two graphs it should be quite apparent that the regional carriers

faired significantly worse than either the national or major carriers. In addition, the

national carriers have faired quite a bit higher than their major counterparts. The most

telling difference between the categories can be seen in the chart below.

Denied
Mishandled Customer Boardings per
On-time Baggage per 1,000 Complaints per 10,000
Major Arrivals Passengers 100,000 Passengers Passengers
American 69.8% 5.71 1.33 0.68
Continental 74.0% 5.33 1.1 1.41
Delta 76.4% 5.98 1.8 1.58
Northwest 76.8% 3.51 0.86 0.71
United 71.6% 5.24 1.85 1.18
U.S. Airways 80.1% 4.77 2.01 1.36
Average 74.8% 5.09 1.49 1.15
National
AirTran 76.7% 2.87 1.1 0.34
Frontier 79.0% 4.48 0.75 0.94
JetBlue 72.9% 3.47 1.02 0.01
Southwest 80.5% 4.55 0.25 1.02
Average 77.3% 3.84 0.78 0.58
Regional
American
Eagle 72.9% 9.89 1.03 2.44
ASA 70.9% 9.82 0.88 3.89
Comair 69.9% 8.32 1.21 3.41
Mesa 73.0% 7.89 0.78 1.36
SkyWest 79.0% 7.61 0.47 1.69
Average 73.1% 8.71 0.87 2.56

When comparing on-time departures, the numbers are relatively similar. The

most striking difference among all three categories is the vastly different numbers when

comparing mishandled baggage. The regional average is significantly higher than either

the national or major carriers. A second striking number is Southwest’s customer

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complaint average. Clearly Southwest is doing specific training in this area to cause such

a low number. Another area of particular interest is the denied boarding averages.

Moving from national to major, the number nearly doubles; once again, from major to

regional the number more than doubles again! JetBlue’s denied boarding average stands

out against all others as significant. So what accounts for this difference? A review of

JetBlue’s contract of carriage will reveal that anyone who is denied boarding shall

instantly receive $1,000 cash. It is quite obvious that JetBlue has made this a top priority

regarding their customer service. If there is one area that could use significant

improvement among all airlines it would be lost baggage. If the nationals lost baggage

average is converted bags lost per 100,000 passengers we come up with 384 lost bags per

100,000 passengers. 588 bags averaged between the three categories are lost per 100,000

passengers. Consider that in the U.S. alone there are approximately 156,000 flights per

day (faa.gov) carrying an average of 150 people per airplane works out to 23,400,000

people. Dividing this by 100,000 and multiplying it out comes out to 137,592 bags lost

on a daily basis! Anyone who has ever lost their bag will quickly tell you that it is one of

their most unpleasant experiences with an airline. Between lost baggage, customer

complaints, and denied boarding, the national carriers have performed significantly better

resulting in a higher rating

Before detailing what improvements need to be made, let’s take a quick review of

our findings. Under tangibles the average age of the fleet as well as the seat room

available on the airplane was given as a representation of tangibles. It was shown that the

average fleet age for nationals was about 4 years while the regionals were 7 years and the

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major airlines more than three times older than the nationals at 14 years. A review of leg

room and seat width found that on average, the national carriers were slightly larger.

Next, assurance and empathy were evaluated using reviews from skytrax’s website

(“Airline Reviews”). Averaging the results from the information provided, it was found

that the national carriers faired nearly 20% better in their interaction with passengers,

cabin presence and consistency. A review of every airlines website showed significantly

more time and energy was spent focusing on developing a plan to provide excellent

service to their customers for the national airlines. Responsiveness was also measured

using survey results from Skytrax’s website and it was found that the assistance provided

by major airlines was significantly better than the national carriers, while the national

carriers scored relatively better at responding to requests as opposed to the major airlines.

Finally, reliability was measured using the airline quality rating journal (Bowen and

Headley). Once again, the national carriers scored quite a bit higher than both the

regionals and majors in mishandled bags, customer complaints and denied boardings. To

improve the SERVQUAL characteristics, the legacy airlines need to put these items into

action through a six sigma process if they wish to avoid ending up like the 185 bankrupt

airlines.

So, what exactly do the legacy airlines need to do to stay competitive in the

future? In the beginning the premise was made that for service industries to survive,

specifically airlines, they must focus on the core basics of SERVQUAL. Going back to

the example of Delta and Northwest Airlines in the beginning let’s briefly analyze what

they must do to succeed as the largest airline in the world. To begin, significant changes

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must be made in the way they treat and serve their customers. Fortunately, much of the

information required in terms of surveys and qualifying information is already available

through organizations such as the Airline Pilot Association (ALPA) and the Regional

Airline Association (RAA). Second, their contract of carriage must be revised stressing

the importance of “customer first.” Simply integrating this philosophy into their mission

statement will not be enough, however. Customer service training must become a

significant part of the training provided to all the employees. Finally, Delta should re-

evaluate their operations regarding baggage handling and airplane turn-times, and look

for processes that will improve reliability and efficiency. Numerous examples can be

found and implemented from Southwest Airlines and JetBlue. In the end, legacy airlines

will likely to continue shrinking in size as they have done over the last decade unless

these changes can be implemented within their organization.

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