Customers Still Love Alaska Airlines More Than Delta
Over the past decade, Delta Air Lines (NYSE: DAL) has made operational excellence a top priority, with the goal of boosting customer satisfaction. The carrier has succeeded in becoming one of the most reliable airlines in the world. Meanwhile, Alaska Air (NYSE: ALK) has struggled to integrate Virgin America -- a smaller rival it acquired in late 2016 -- into its core Alaska Airlines brand without alienating customers or allowing reliability to slip.
Based on some objective customer experience metrics, Delta is now a better airline than Alaska. Nevertheless, that's not how travelers see things. In the recently released J.D. Power 2019 North America Airline Satisfaction Study, Alaska Airlines won for the 12th consecutive year in the "traditional carrier" segment. Moreover, it actually widened its lead over Delta.
Delta Air Lines is doing all the right things
Over the past decade, Delta has invested heavily in equipment and processes to ensure that customers (and their bags) arrive at their destinations on time. It has gained recognition for its efforts in the annual Airline Quality Rating (AQR) report, which ranks airlines based on the rate of involuntary denied boardings, on-time performance, the frequency with which baggage is lost or damaged, and the number of official complaints to the Department of Transportation.
In the 2017 AQR report, Delta nearly took the top spot, coming in just behind Alaska Airlines. The margin separating the two rivals narrowed further in the 2018 report, with Alaska winning by a hair.
Delta Air Lines finally broke through in the 2019 report. The company was in the top third of the industry for all four metrics covered by the AQR study and led the way in terms of avoiding "bumping" customers from flights. Alaska Airlines didn't come close to matching Delta's performance, instead tumbling three spots to No. 4 in the industry.
Alaska Airlines still gets the nod from passengers
Whereas the AQR report scores airlines based on objective metrics, J.D. Power's annual airline satisfaction study is based on surveys of thousands of air travelers. That said, there are clear links between the four metrics tracked in the AQR study and customer satisfaction.
Not surprisingly, Alaska Airlines and Delta Air Lines have been closely matched in recent years. In the 2017 study, Alaska edged out its larger rival with 765 points (out of a possible 1,000) to Delta's 758. Both airlines improved their scores in 2018, but the margin of victory barely changed. That year, Alaska Airlines scored 775 and Delta scored 767.
Delta improved its score significantly in the 2019 J.D. Power survey, reaching 788 points. Yet Alaska Airlines made even bigger gains, achieving a new record for traditional carriers of 801 points. This allowed both carriers -- but especially Alaska -- to move a lot closer to the low-cost carriers that typically achieve the best overall customer satisfaction scores from J.D. Power.
Strong scores across the board
J.D. Power asks travelers about seven key aspects of the customer experience:
- Cost and fees
- In-flight services
- Flight crew
Among the five traditional carriers included in the rankings, Alaska Airlines received the best ratings for six of the seven criteria this year, with Delta taking second place each time. For the last criterion, the in-flight services category, Alaska and Delta received roughly equal marks.
This highlights just how clear the hierarchy is for customer satisfaction among U.S. airlines. Alaska Airlines has a comfortable lead over Delta Air Lines in terms of customers' perceptions, but the gulf between both of those carriers and American Airlines and United Continental is far wider.
Can Delta catch Alaska Airlines?
Despite Delta Air Lines' efforts, overtaking Alaska Airlines in the J.D. Power rankings will be tough to pull off. For one thing, Alaska is nearing the end of its merger integration process, which will probably lead to better customer service in 2019 and beyond.
Even so, Delta could quite conceivably match Alaska Airlines in many of the categories where it trails today. However, J.D. Power gives the most weight to the cost and fees category. Alaska Airlines is likely to enjoy a permanent advantage on this dimension, due to its positioning as a low-fare airline -- whereas Delta strives to earn a revenue premium. Still, from a shareholder's perspective, high fares are an excellent reason for falling short of the top ranking for customer satisfaction.
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Adam Levine-Weinberg owns shares of Alaska Air Group and Delta Air Lines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool recommends Alaska Air Group. The Motley Fool has a disclosure policy.