Southwest Airlines steals JetBlue's crown in the 2017 J.D. Power rankings


After taking a step backward in 2016, JetBlue Airways(NASDAQ: JBLU) improved its score significantly in the 2017 J.D. Power North America Airline Satisfaction Study.

However, that wasn't enough to keep JetBlue at the top of the J.D. Power rankings for a 13th consecutive year. Instead, Southwest Airlines(NYSE: LUV) continued a surge up the rankings that began last year, dethroning JetBlue as the industry leader in customer satisfaction.

What the study measures

J.D. Power's annual airline study investigates customer satisfaction by surveying more than 10,000 travelers each year. The survey covers seven factors, according to J.D. Power, listed in order of importance: "cost and fees, in-flight services, aircraf,; boarding/deplaning/baggage, flight crew, check-in, and reservation."

The airlines are scored on a 1,000-point scale. Since 2006, airlines have been split into two categories for the purposes of making rankings: "traditional carriers" and "low-cost carriers." The average score for low-cost carriers is routinely higher than that of the traditional carriers.

JetBlue bounces back

From 2005, the first year of the J.D. Power study, through 2016, JetBlue took the top spot every year. For much of that period, it steadily improved on its score, reaching 801 in 2015.

JetBlue had a setback in 2016, though. In last year's survey, its rating declined in everything except the "aircraft" category. As a result, its total score fell to 790, nearly allowing Southwest to overtake it with a score of 789.

However, JetBlue rebounded in the 2017 survey, posting a score of 803, slightly ahead of its 2015 mark. JetBlue improved year over year for six of the seven factors measured.

But Southwest's surge continues

Despite JetBlue's strong performance in this year's survey, it wasn't enough to fend off the challenge from Southwest Airlines. Southwest posted an extremely strong score of 807 and performed consistently well across all seven categories, according to J.D. Power.

It's not that surprising that Southwest Airlines has been moving up the rankings recently. First, its unique "no-fee" philosophy wins it a lot of points with customers. Second, it has finally moved past all of the operational disruption related to integrating its acquisition of AirTran Airways. Third, it has compromised on some of its cost-saving moves; for example, it still doesn't have seatback TVs, but it instead offers free streaming entertainment on customers' personal devices.

Alaska remains on top among traditional carriers

While Southwest Airlines achieved the best score overall, Alaska Air(NYSE: ALK) received top marks among traditional carriers. This was its 10th consecutive victory in the traditional carrier segment.

Alaska Airlines achieved a score of 765 this year, up from 751 last year. Still, while that may be better than the legacy carriers it's grouped with, Alaska still has a way to go to catch up with JetBlue and Southwest. It will be interesting to see if Alaska Airlines will move closer to the industry leaders in the coming years as it adopts some aspects of Virgin America's highly regarded passenger experience.

What's next?

While JetBlue executives were surely hoping for a 13th straight victory in this year's J.D. Power Awards, a bruised ego will probably be the only damage JetBlue faces from falling in the rankings. It still achieved one of its highest-ever customer-satisfaction scores in 2017. And just like last year, JetBlue and Southwest stand far ahead of the competition.

A big shakeup to the rankings could be coming in 2018, though. Consumer backlash against airlines has reached a new peak in the past two months, following a string of viral videos showing major customer-service gaffes at a variety of airlines. The worst of these was of course United Continental's infamous passenger-dragging incident.

Thus, airlines will be under the microscope for the foreseeable future. We will find out in a year if this heightened awareness of customer-service lapses has a measurable impact on airline industry customer satisfaction.

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Adam Levine-Weinberg owns shares of Alaska Air Group and JetBlue Airways and is long January 2019 $10 calls on JetBlue Airways. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy.

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