The quality – profitability link in the US airline business: a study based on the Airline Quality Rating index

Abstract

One of the key tasks of an airline company and management is to ensure a high standard of service quality to the customers. Therefore, the paper deals with the importance of the quality-profitability link in the air transportation business. Although there are several quality indexes in the airline business, we are focusing exclusively on the Airline Quality Rating Index (AQR). The AQR includes four main aspects in the measurement, namely on-time performance (OT), denied boardings (DB), mishandled baggage (MB) and customer complaints (CC). The results of this study show a significant effect of the AQR on the US airlines’ profitability. On time performance, mishandled baggage and customers complaints also affect the profitability significantly, while a non-significant effect on profitability is given by the AQR component denied boardings. None of the previous researches took into account the link between the AQR index and the profitability of the US airlines. Therefore, this identified gap could encourage airline managers to invest more in quality and its related aspects, as far as the results confirm a significant impact on the airlines’ profit.