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Consumer Confidence Gains In First QuarterMay 19, 2009 By: George Dooley
Passenger satisfaction with airlines improved for the first time since 2003, up 3 percent to an American Customer Satisfaction Index (ACSI) score of 64, ending a downward slide that, with few interruptions, began in 1994. High fuel price volatility, indifferent service, labor problems, congested airports and financial challenges have plagued the industry for a long time and, even with the current improvement, airlines remain one of the lowest scoring businesses in ACSI. ASCI also ranked hotels and fast food restaurants.
American Airlines is the only major carrier to drop, falling 3 percent to 60. Southwest continues to lead the industry for a 16th straight year, reaching an all-time high of 81. By contrast, United Airlines anchors the bottom, unchanged at 56.
“Southwest appears well prepared for today’s economic conditions with its no-frills approach, low fares and reliable service,” said Claes Fornell, founder of the ACSI. “The airline has a record of being able to deliver the basics well – getting both passengers and their luggage to the same destination on time.”
Airlines that have had the most significant customer service problems in the past improved the most. Continental is up 10 percent to 68, erasing a similar decline from a year ago, and US Airways is up 9 percent to 59, also erasing a similar drop in passenger satisfaction. Delta improved 7 percent to 64 in the wake of its merger with Northwest, while Northwest itself remained unchanged near the bottom of the industry at 57, just ahead of United.
Overall, the ACSI continues to climb, registering a second straight quarterly improvement after a period of decline preceding the recession. For the first quarter of 2009, the Index jumps 0.4 percent to 76 on ACSI’s 100-point scale, according to the report released today by the University of Michigan.
“Stock prices have been rising, real estate is showing signs of life, consumer confidence is up, corporate earnings are mixed but generally better than expectations and inventories are becoming more in line with demand and, above all, consumer spending rebounded in the first quarter,” said Fornell. “It is too early to predict whether the recession has bottomed out, but since ACSI is usually a precursor to increasing consumer demand, it could very well be signaling a revival for a very depressed U.S. economy.”
ACSI says the hotel industry is facing a difficult time as consumers and businesses tighten spending on travel. In the wake of a sharp downturn in business, budget hotels have fared the best by offering low rates and even adding a few perks to boot. For the more up-scale hotels, the picture is more mixed.
Hilton leads the category, up 1 percent to 79, followed closely by Marriott, down 1 percent to 77. Two economy hotels, Best Western and Choice Hotels, surge to the middle of the industry, up 7 percent to 76 and 75 respectively by keeping rates low and maintaining service. Hyatt, historically among the industry leaders, drops 5 percent to 74 by lowering both price and service.
Fast food is unchanged at 78, matching its highest score ever, while full-service restaurants jump 5 percent to 84. As the recession has driven business away from the pricier sit down restaurants to the cheaper fast food alternatives, full-service restaurants have had to try harder to compete. Similar to airlines and some of the hotels, service to customers has improved, at least in part, because there are fewer customers to serve, but it is also true that there have been menu changes to the liking of diners and a lowering of price in some instances.
Domino’s is on top at 77. Wendy’s and Taco Bell make the biggest gains, each up 4 percent to 76 and 73 respectively. McDonald’s continues to do well, passing both Burger King and KFC, up 1 percent to an all-time high of 70. Over the past 4 years, the world’s largest fast food chain has improved customer satisfaction more than any other fast food business and at a rate more than 4 times the industry average.
The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. It is updated each quarter with new measures for different sectors of the economy replacing data from the prior year.