Americans love JetBlue Airways (NASDAQ: JBLU). The low-cost carrier known for comfortable leather seats with free, live television topped J.D. Power's 2016 North America Airline Satisfaction Study, beating low-cost rival Southwest (NYSE: LUV) for the top spot.
Continue Reading Below
The annual report measures passenger satisfaction with North American airlines in seven categories, with overall satisfaction reported on a 1,000-point scale. Listed in order of importance, the factors are: cost and fees, in-flight services, boarding/deplaning/baggage, flight crew, aircraft, check-in, and reservation.
JetBlue took the top spot for low-cost carriers (while posting the highest score for any airline) by putting up a 790 (down 11 points from 2015). The popular airline has topped the study for 12 straight years, but it did decline in six of the seven factors year over year, rising only in the aircraft category. Southwest, which had the second-highest score at 789, improved in all seven ranked categories. The two top traditional (full-cost) carriers were Alaska Airlines (NYSE: ALK) (751) andDelta Air Lines(NYSE: DAL)(725).
Among traditional carriers (the ones with a tradition of charging more) Alaska Airlines took the top spot for the ninth straight year with a score of 751. It performed particularly well in all seven factors of the study.In general, customer satisfaction with airlines has reached its highest score in the past decade.
"While the perception of the airline experience still has a lot of room for improvement, there is notable progress in terms of satisfaction among the highest-ranked airlines in the study due to their keen focus on meeting or exceeding passenger needs,"said Rick Garlick, global travel and hospitality practice lead at J.D. Power. "The airlines are clearly listening to their passengers and are taking action."
Customers love JetBlue despite its on-time arrival numbers. Image source: JetBlue.
Continue Reading Below
Does on-time arrival matter?
JetBlue scored the highest in customer satisfaction on the J.D. Power survey largely because of its customer service, in-flight perks, and well-appointed aircraft. Where the company does not score well is an area not specifically covered scientifically by the study: on-time arrival. While J.D. Power does include "timeliness of boarding/deplaning" in the "boarding experience" section of the full report,the ranking is based on customer experience, not tracking actual on-time arrivals.
That means that the responses that made up the survey -- from10,348 passengers who flew on a major North American airline between March 2015 and March 2016 -- scored the airlines based on perceptions that were not necessarily fresh. Additionally, even if flights were actually late, consumers might not have considered it a factor if the delay was not significant and the rest of their experience was good.
In a separate study on on-time arrival done by airline travel intelligence company OAG, first reported on by Skift, JetBlue ranked near the bottom. That report uses actual flight data and "is based on approximately 54 million flight records using full-year data from 2016." That's a time period that only overlaps with the J.D. Power survey by three months, so it's possible that any airlines' actual performance might have varied during the periods covered by the two surveys. (JetBlue, however, had a similar on-time record in the 2015 OAG report.)
Of the top companies listed above, Alaska Airlines had the most on-time arrivals at 86.05%, while Delta scored 84.29%, and Southwest came in at 81.04%. JetBlue, which came in at 75.25% on-time, only outscored five of the top 20 low-cost carriers tracked. It's worth noting that the OAG study covered global airlines, not just North American. And since there are more than 20 low-cost airlines globally, it could be argued that JetBlue's score was actually acceptable compared to that of the airlines that did not even make the top 20 (in the full OAG report, among the low-cost carriers as a whole, the lowest score was just over 60%). However, alongside its more well-known peers, JetBlue's performance paled in comparison.
What does this mean?
Consumers seem to value the flying experience more than they value getting to their destination on time. A company like JetBlue (or Southwest) has added leeway with its customers because of how it treats them as well as the quality of its planes, its crew, and the in-flight perks (like the free TV and nicer-than-average seats both low-cost carriers offer). In addition, OAG does not differentiate between flights that are just 15 minutes late (the minimum to be considered delayed in its study, which might not be long enough to impact a consumer's opinion) and those that are very late.
"Airlines are making positive strides by adding value to [their] products and services with newer and cleaner planes, better in-flight services, improving on-time arrivals and bumping fewer passengers from their flights," said J.D. Power in its press release."For airlines ranking below the study average, investing in product and service improvements now may reap big rewards in the future when it comes to retention, reputation and share of wallet."
These are areas where JetBlue excels, and clearly that has caused the company's passengers to cut it some slack when it comes to on-time arrival. There's likely a limit to that patience, so while JetBlue has clearly scored with consumers due to its overall experience, it would be smart to work on its on-time arrival rate in order to avoid testing the loyalty of its customers.
Ultimately any airline lives or dies based on customer perception, not studies on on-time arrivals. JetBlue has managed to keep its customers happy enough that they are willing to overlook flights that are late at a higher rate than other top carriers. Other, less-well-liked carriers may not get the same leeway from their passengers. That gives JetBlue a considerable market advantage where customers look to it when possible, not just for low prices, but also because they enjoy the experience. In theory, that should keep its planes full and its revenue growing even in a very competitive environment.
10 stocks we like better than JetBlue Airways
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and JetBlue Airways wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 6, 2017