Study: Complaints up in 2007 for 15 airlines

Airline analysts looking out for investors may have been the only people yesterday celebrating a raft of bad news about the industry.

Skybus Airlines Inc., a year-old carrier that started flying less than a month ago from Wilmington's New Castle Airport, abruptly went out of business Friday, joining two other airlines that filed for bankruptcy protection last week. It was the first time in memory that three airlines quit flying in such a short span.

Yesterday, the annual Airline Quality Survey found that flight delays, lost bags and customer complaints all were up in 2007 over the year before.

And oil was still above $100 a barrel, and the economy weak.

Those were the main reasons that the three airlines failed and that the survivors would report first-quarter losses in coming weeks, industry officials and analysts said.

None of the three failed carriers served Philadelphia International Airport. But the demise of Skybus, in particular, will reduce competition for US Airways Group Inc. and Southwest Airlines Co., which carry almost three-quarters of the airport's passengers. JetBlue Airways Corp. and AirTran Airways also may be helped, the industry experts said.

The analysts, who follow stock in major airlines, told investors yesterday that the collapse of Skybus and the two others, Aloha Airlines and ATA Airlines Inc., is likely to benefit the survivors by reducing industry capacity, meaning the total number of seats for sale on all carriers.

With less competition, other airlines will be able to increase fares - on top of six increases the major carriers have already initiated this year.

"From an industry standpoint, we believe the most important issue for investors is capacity reduction," Lehman Bros. Holdings Inc. analyst Gary Chase said in a note to investors. "As with Aloha and ATA, we believe this is a positive additional step in the right direction toward our forecast of 3 percent capacity reduction over the next year or so."

Even more important than the end of Skybus will be the announced plans of Delta Air Lines Inc., Northwest Airlines Corp. and US Airways to reduce by at least 3 percent or 4 percent the number of seats for sale in the second half of 2008, said both Chase and William J. Greene, Morgan Stanley's airline analyst.

Greene said that, although Skybus' disappearance might help other carriers, it was probably not enough to give much help to airline stock prices. Most airline equities are trading just above their low points for the last 52 weeks.

Skybus' failure had a more immediate impact in Wilmington, where travelers who had purchased tickets from the discounter were showing up Saturday at New Castle Airport, only to find there were no flights.

"If you've been following the state of the industry, you're not really, totally surprised," said Steve Williams, aviation director for the Delaware River and Bay Authority, which owns the airport. "It's a moderate shock how quickly it unraveled."

Skybus, based in Columbus, Ohio, started service in mid-March between Wilmington and Columbus and Greensboro, N.C., its two hubs, with one-way fares as low as $10. The airline appeared to be doing "fairly well" in attracting passengers, at least at Wilmington, Williams said.

The small airport, which has seen service by five other airlines come and go in recent years, had spent more than $35,000 on new fencing, security facilities and painting in preparation for Skybus' service, Williams said.

As for the surviving carriers, the annual Airline Quality Rating survey found that more bags were lost, more passengers were bumped, more consumers complained, and fewer flights arrived on time than in the previous year. The overall "quality score" the researchers gave the industry (minus 2.16) was the lowest in the nearly two decades they have been studying the airlines.

In recent months, major airlines have slashed jobs while adding fees for second bags, traveling with pets, and booking tickets by phone. And American, Southwest, Delta and United have all had to cancel flights recently to perform safety inspections on some of their planes.

According to the study, the rate of consumer complaints was up 60 percent last year. US Airways had the most complaints. Southwest had the fewest. In all, complaints were up for 15 of the 16 airlines included in the study. Mesa Airlines was the exception.

About 37 percent of the complaints were for flight problems, including canceled or averted flights, said Dean Headley, an associate professor at Wichita State University and co-author of the study. About 20 percent of the complaints concerned baggage: stolen, lost or damaged. Another top complaint, about 11 percent, was poor customer service.

On-time arrivals dropped for the fifth straight year, with more than one-quarter of all flights late, according to the survey. Southwest had the best on-time performance; Atlantic Southeast Airlines Inc. had the worst.

For lost bags, the industry overall had about seven mishandled bags for every 1,000 passengers, up from 6.5 in 2006. AirTran had the fewest mishandled bags, four for every 1,000 passengers. Headley said AirTran's good showing helped propel the airline from the No. 3 spot in the 2006 rankings to No. 1 last year.

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2007 Ratings

Quality rankings are based on 15 factors important to passengers, including on-time arrivals and baggage-handling. Results among the 16 airlines surveyed.

1. AirTran

2. JetBlue

3. Southwest

4. Northwest

5. Frontier

6. Continental

7. Alaska

8. United

9. American

10. Delta

11. US Airways

12. Mesa

13. SkyWest

14. Comair

15. American Eagle

16. Atlantic Southeast

SOURCE: Airline Quality Ratings

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Contact staff writer Tom Belden at 215-854-2454 or tbelden@phillynews.com.

This article contains information from the Associated Press.