News: Analysis & Commentary: AIRLINES

COFFEE, TEA--AND ON-TIME ARRIVAL

Customer satisfaction is a top priority at airlines again

To many American travelers, airline quality is an oxymoron. Ted J. Kreder, director of hobby sales for Dallas-based trading-card company Pinnacle Brands Inc., complains of frequent flight cancellations, late arrivals, and lousy food. "It's a function of some of the downsizing," he says. "Service suffers."

To the surprise of skeptical passengers, the gripes aren't falling on deaf ears. After years of focusing on paring expenses, such major airlines as American, Delta, and Continental are stepping up their quality efforts. Cost-cutting "diverted our attention from the nuts and bolts of our business," concedes American Airlines Inc. Chief Executive Robert L. Crandall. "Our customers have noticed."

American, which once dubbed itself the "on-time machine," placed a dismal No.9 among 10 carriers in on-time rankings for the third quarter of 1996. So, Crandall told managers at a recent meeting that leading all industry-quality rankings is their job No.1 for 1997. An American spokesman won't provide specifics, but says: "We're talking about a lot of operational things, like customer comfort on board airplanes."

At Delta Air Lines Inc., customer complaints have nearly doubled since 1994--and CEO Ronald W. Allen blames the pursuit of lower costs. "In some cases, we did cut too deeply," he says. Trans World Airlines Inc., now in the cellar for on-time and customer complaint rankings by the Transportation Dept., is getting the message, too. After on-time arrivals dropped under 50% during the holidays, and cancellations climbed, managers warned workers to get back to basics.

With record profits of $3.5 billion last year and even better results expected in 1997, the industry can afford to give quality more attention. And with airfares rising, "they have to show customers they're getting more for those dollars, even if it's lip service," says Michael D. Boult, a manager at Rosenbluth International Inc., a travel agency. The airlines also are finding out that poor quality can be costly: American's expenses for lost and damaged bags jumped 25% last year, to $30 million. And because of slipping on-time performance, overtime rose 50% from 1994, costing an extra $27 million.

Fueling the quality drive is the stunning turnaround at Continental Airlines Inc., where for two years CEO Gordon M. Bethune has hammered away at the theme. Once near the bottom of Transportation rankings, Continental is now one of the best in on-time performance, baggage handling, and customer complaints. And last year it won the prestigious J.D. Power & Associates Inc. award for highest customer satisfaction on long-haul flights. Bethune claims to be grabbing market share among business travelers from American and others. "We've been kicking their butts," boasts Bethune.

Of course, the airlines won't return to the service wars that raged in pre-deregulation days, when carriers featured piano players on jumbo jets and free Chivas Regal. Instead, they are targeting such fundamentals as safety, reliability, and cleanliness. "Corporate clients are not only demanding [discounts], they're also demanding that the basics be done right," says travel consultant John W. Nelson.

CLEANER LAVS. In response to passenger surveys that linked cleanliness to quality and safety perceptions, Northwest Airlines Inc. recently beefed up its cleaning regimen. It now gives a steam cleaning and deodorizing to lavatories on its DC-10s every nine days instead of every 14. America West, which suffered service problems this summer due to rapid growth, has added 60 mechanics to speed repairs, upgraded food, and installed in-flight phones and entertainment systems at every seat. Delta says it wants to polish its image by restoring meals on some flights and by rehiring hundreds of baggage handlers, gate agents, and customer service reps.

Jaded coach passengers aren't expecting first-class treatment anytime soon. "The product is bad, and it's going to stay that way, as near as I can tell," says Ed Perkins, editor of Consumer Reports Travel Letter. It's up to the airlines to prove such doubters wrong.By Wendy Zellner in Dallas, with bureau reportsReturn to top