uploads///Part_Customer Satisfaction

Highly engaged employees boost Alaska Airlines’s customer service

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Jan. 19 2015, Updated 9:22 a.m. ET

Alaska ranks highest in customer satisfaction

With an emphasis on customer loyalty, Alaska Airlines topped the list in customer satisfaction among North America’s traditional carriers for seven consecutive years. The airline also ranked highest for the best loyalty and rewards program. According to the J.D. Power survey, Alaska Airlines (ALK) achieved a satisfaction score of 737, much higher than Delta Air Lines’s (DAL) 693, American Airlines’s (AAL) 684, and United Continental Holdings’s (UAL) 658.

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Alaska Listens, a two-minute survey, receives feedback from more than 50,000 customers every month. Satisfied customers build brand recognition though word-of-mouth advertising, a powerful way to increase the customer base. For the last four years, Alaska has enjoyed one of the industry’s best on-time performance rankings, with an average on-time rate of 87.5%.

Employees on customer service front line

Employees play a critical role in ensuring passengers enjoy their travel experience. Not only do the employees work to offer high-quality service to customers, but increased employee productivity also translates to lower unit cost. Alaska Airlines estimates that every 1% improvement in productivity saves ~$11 million annually.

Alaska’s employee productivity measured as passengers per FTE (or full-time equivalent) improved by 28% to 194 in 2014 from 151 in 2008, which is a cost savings of ~$300 million. An important part of the company’s success, employees received around $100 million in profit sharing in 2013, or on average one month of pay per employee. Employee engagement rates increased from 66% in 2011 to 82% in 2014. Alaska Airlines’s goal is to improve productivity to 200 passengers per FTE and achieve an employee engagement rate of 85% in 2015.

Airline stocks are held by transportation ETFs such as the iShares Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN).

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