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* AirTran is tops for 2nd year

* Smaller, discount carriers fare better

April 2 (Reuters) – U.S. airlines are doing a better job in

overall performance, improving on-time arrivals and handling of

lost bags, while drawing fewer customer complaints, an annual

report based on federal data shows.

An analysis of U.S. Department of Transportation airline

performance data shows that the industry’s overall quality

rating improved to -1.08 in 2011 from -1.20 in 2010. The

rankings are based on four factors: On-time performance, denied

boardings, mishandled baggage and customer complaints.

Dean Headley, associate professor at the W. Frank Barton

School of Business at Wichita State University and one of the

study researchers, said industry performance on all four factors

improved this year. Things have gotten better overall since

2007, when the airline quality score had its worst showing since

the yearly report was begun in the early 1990s, he added.

“Whether or not the consumer can actually notice this is

still kind of up for debate,” Headley said. “Sometimes small

changes don’t always translate to better expectations and better

perceptions of outcomes.”

Many U.S. airlines have cut costs and retired their least

fuel-efficient planes in recent years in a bid to return to

profitability.

“Fuel is one of those things they can’t do much about, but

they can control other things,” Headley said.

Among the 15 carriers rated in the latest year, 10 had a

better overall airline quality rating, the report said.

Smaller or discount carriers such as Hawaiian Holdings Inc

, JetBlue Airways and Alaska Air Group

had stronger showings than their bigger counterparts in the

current ranking.

AirTran, which was acquired last year by Southwest Airlines

, was No. 1 overall for the second-straight year as

customer complaints dropped and on-time performance improved.

Among more traditional carriers, Delta Air Lines

ranked sixth overall in quality of service, followed by

Southwest in seventh place and US Airways Group eighth.

Headley said Atlanta-based Delta was the only carrier to post

improvement in all four of the categories that influence the

report.

AMR Corp’s American Airlines, which filed for

Chapter 11 bankruptcy protection last year, ranked 10th overall,

with a slightly improved score. The report noted poorer on-time

arrivals and higher customer complaints for American, even as it

improved its handling of lost baggage.

United Airlines and Continental Airlines, which merged in

2010 to create United Continental Holdings, were near

the bottom in terms of overall ratings for 2011 as their scores

worsened from the year earlier. Headley said disruption in the

wake of changes stemming from the merger likely played a role in

their performance.

Continental ranked 11th among the 15 carriers in the study,

while United was 12th.

The report is conducted annually by Wichita State University

and Purdue University based on data from the U.S. Department of

Transportation.