U.S. domestic airline performance in 2012 was the second best in the 23 years researchers have tracked such information, yet customers still weren’t all that satisfied, according to the annual Airline Quality Rating, a joint research project funded by Purdue and Wichita State universities.

"Passengers are experiencing better performance by the airlines, although it might cost more to fly," said professor Brent Bowen, head of Purdue University's aviation technology department.

The airline industry as a whole improved in two of the four elements covered in the AQR: on-time performance and baggage handling. Customer complaints and involuntary denied boardings, by contrast, were up slightly in 2012.

The rankings released Monday show that, of the 14 carriers rated for performance in both 2011 and 2012, seven improved and five declined. Two carriers were new to the list in 2012, including the top performer, Virgin America.

Bowen noted that further airline consolidation will continue to reduce the number of air carriers ranked in the AQR.

"Past AQR data suggests that the combining of two large air carrier operations often results in subsequent decreases in AQR rankings,” he said.

United Airlines (NYSE:UAL) , for instance, plummeted down the list after its merger with Continental, and came in dead last on the 2012 rankings. Bowen said researchers will keep an eye on two highly rated carriers, former No. 1 AirTran and Southwest (NYSE:LUV), to see if they can reverse this trend.

Dean Headley, associate professor of marketing at the W. Frank Barton School of Business at Wichita State, noted that airlines faced tougher conditions in 2012, having to serve customers adequately while operating in a capacity-limited air travel system.

"As the system adjusts to increasing demand for air travel with a limited capacity of seats available, operations must be carefully handled for things to go as planned for travelers," Headley said. "During 2012 the industry improved the mishandled baggage rate by 8 percent, suggesting that most airlines are working hard to accommodate customers. Still, nearly a third of the customer complaints for 2012 were for flight problems, such as unplanned schedule changes, delays and cancellations.”

Headley noted that, over the past 13 years, the airline industry has traditionally performed most efficiently when high passenger volume and a high number of airplanes in the air didn’t stress the system.

“Every time there are more planes in the sky and more people flying, airline performance suffers,” he said.

Thus, the challenge remains whether airlines can maintain performance as more people choose to fly.

Virgin America certainly did. The airline had 83.5 percent of all flights arrive on time in 2012. It also mishandled just 0.87 bags per 1,000 fliers, denied boarding to only 0.07 out of every 10,000 ticketed passengers and had just 1.5 complaints per 100,000 customers.

While Virgin America was easily the all-around winner for quality, other airlines came out on top for specific categories.

Here’s a breakdown of the 2012 AQR results:

Customer Complaints

Customer complaints climbed a whopping 22 percent in 2012, though quality remained largely unchanged. Increased traffic, mergers and bankruptcies all contributed to the increase.

Best: Southwest Airlines “is consistently the airline with the lowest customer complaint rate in the industry,” according to the report, and 2012 was no exception.

Worst: With an average of 4.24 complaints per 100,000 passengers, United Airlines customers were not happy with their service, perhaps due to merger-related issues with Continental.

Baggage Handling

Mishandled baggage rates improved in 2012 to an average of just 3.07 per 1,000 passengers. In 2011, airlines mishandled 3.35 per every 1,000 passengers.

Best: Virgin America had an extremely low mishandled baggage rate of 0.87 per 1,000 passengers.

Worst: American Eagle mishandled bags at a rate of 7.32 per 1,000 passengers, more than double the industry average.

Denied Boardings

Due to the trend of flying fuller planes, involuntary denied boardings climbed to nearly 1 per 10,000 passengers in 2012 from just 0.78 in 2011.

Best: Hardly any travelers (just 0.01 per 10,000 passengers) were denied boarding on a JetBlue (NASDAQ:JBLU) flight last year.

Worst: In a dramatic increase from 2011, SkyWest Airlines (NASDAQ:SKYW) denied an average of 2.32 per 10,000 passengers in 2012.

On-time Performance

Overall, the industry had an on-time arrival percentage of 81.8 percent in 2012, nearly 2 percent better than in 2011.

Best: Hawaiian Airlines maintained its long-running title as the most on-time airline in America, with flights on schedule 93.4 percent of the time.

Worst: ExpressJet and American Airlines had the worst on-time performance at just 76.9 percent.


American Eagle had the largest improvement in the 2012 rakings, climbing out of last place to No. 11. In its first year with Continental, United Airlines fared the worst overall.

1. Virgin America

2. JetBlue

3. Air Tran

4. Delta

5. Hawaiian

6. Alaska

7. Frontier

8. Southwest

9. US Airways

10. American

11. American Eagle

12. SkyWest

13. ExpressJet

14. United