A Critical Evaluation of U.S. Airlines’ Service Quality Performance: Lower Costs vs. Satisfied Customers

Abstract

Providing good quality services enables airlines to retain customer satisfaction, loyalty, market-share, and ultimately profitability. However, U.S. airlines compete primarily on price and are not known for good quality service. There have been a growing number of low-cost airlines. In such a business landscape, we study whether a full-service carrier indeed outperforms a low-cost carrier in terms of service quality when we control for the operational costs. We are also interested to find out which dimensions of service quality have the greatest potential for improvement and how these potential improvement areas differ for low-cost and full-service carriers. We contribute to the service operations literature that looks at efficiency by incorporating customer service quality outputs which has never been done before for the airline industry. We find that major airlines in the industry are lacking staff enthusiasm, adequate cabin presence, and behavioral consistency. Moreover, 33.3% of firms need to deliver more comfortable seats, better meals, in-flight entertainment, and cleaner surroundings. On the other hand, notably, U.S. airlines are operating quite efficiently when it comes to service supply chain quality. We also provide managerial guidelines for U.S. airlines to improve their service quality and overall customer satisfaction.