Customer Loyalty in Aviation Industry - Research Proposal Example

LOYALTY IN THE AVIATION INDUSTRY Affiliation LOYALTY IN AVIATION INDUSTRY Introduction Since the inception of flight in 1903, air travel has developed as an essential means of transportation for people and commodities. The years following the first aircraft have brought about a transformation in the way people travel. Air transportation is estimated to increase at a growth rate of approximately 5% per year over the next two decades throughout the world (Boeing, 2011). The airline is a major industry, relied upon by millions not only in transportation but also as a way of life in the modern day commerce. The airline business is a major industry, relied upon by millions not only for transportation but also as a way of life in the world of modern commerce. Customer loyalty is defined as being both a behavioral and attitudinal tendency to prefer one brand to another (Dahlgren, 2011). This could be because of satisfaction with the product or service provided, its convenience or performance, or it may just be familiarity and comfort with a particular carrier. With increasing customer demands and competition it is vital for these airlines to know not only what they should continue to do in order to gain new customers but also what they could do retain current ones. Researchers have shown that it costs five times more to attract a new customer than to keep an existing one (Holmund & Kock, 1996:289). They need to know what they are currently doing that is causing them to lose people who would otherwise be loyal customers and what they could do to reverse that trend. Therefore, for airline companies, understanding passenger expectations, satisfaction and loyalty relationship has become very important because of stiff competition within the industry. Justification of the Study There are several reasons why airlines should grasp the service dimensions, which in turn, lead to customer satisfaction. The knowledge would assist them to make the right decisions regarding the management of their operations and the positioning of their brand to their customers. Secondly, customer satisfaction tends to lead to customer loyalty, something that in this day and age is difficult to secure (Bae & Han, 2012). Thirdly, unhappy customers tend to complain to other potential customers and thus discourage them from choosing to fly that airline (Bejou & Palmer, 1998). Purpose of the Study This professional paper seeks to analyze what is most important to the consumer when making their decision on which particular airline carrier to use. It shall use the five service dimensions to analyze the top three airlines in the United States. These service dimensions are responsiveness, reliability, assurance, empathy and tangibles (Parasuraman, Zeithaml, & Berry, 1988). At the end of this study, airline operators can apply this information as a foundation to improve their services, which may lead to higher levels of customer satisfaction. A correlational study shall be employed to narrow down on what the most influential drivers of service dimensions are for the average airline consumer when choosing a particular carrier to fly. Research Question This research proposal’s objective is to gain discernments into the underlying forces of customer‐brand affiliations in the airline industry and the consequence these can have on the loyalty of a customer. To attain the specified objective, this research emphasizes on the identification of the significant drivers of airline customer loyalty. This further institutes a more insightful understanding of customers’ evaluation of precise airline brand features. Additional deliberation of customers’ persuasive role in interpersonal exchanges provokes the need to pay exceptional attention to those physiognomies that distinguish airline customers from one another. The information obtained from this research study affords an underpinning on which commendations focused at airline managers can be constructed. Subsequently, this research proposal approaches the research question from the five service dimensions listed above. Research Methodology Our randomized sample will be composed of airline customers who have traveled on a flight in the past 12-8 months. The data will be collected by a web-based survey agency that has access to thousands of hotel and airline customers. Our analysis will focus on the respondents who have traveled within the last 12-8 months for both business and leisure. Our instrument of research will be a questionnaire that will allow us to single out the most influential drivers people have when choosing an airline to be loyal to. The following are some of the questions that we will feature when final distribution of the survey takes place. During the past 12 months, have you traveled on a flight? – Yes or No Gender – Male or Female Year of birth – seniors or Baby Boomers or Gen X or Millennials Household annual income- ($200,000+; $150,000 - $199,999; $100,000 - $149,999; $75,000 - $99,999; $50,000 - $74,999; $25,000 - $49,999 or under $25,000) My employer is a- (Large corporation/business (1,000+ employees); Small company (less than 1,000 employees); Self-employed Government/Education; Not employed or others) I live in- (West (AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY); South (AL, AR, DC, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV); Northeast (CT, MA, ME, NH, NJ, NY, PA, RI, VT) or Midwest (IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI)). Marital status- (Married; Single; divorced; living together as a couple or other) Which of the following describes your purpose of air travel during the past 12 months?(Business or Leisure) What class of travel do you most frequently use when you fly? (Domestic Travel-Business or Leisure; International Travel-Business or Leisure; First Class or Business Class or Economy) On an average, how many flights did you take each month during the past 12 months?(1 to 3; 4 to 6; 7 to 9 or 10+) Which of the following channels do you use frequently for booking airline tickets? (Select all that apply)- (Airlines website; Travel website; Travel agent; Airlines reservation 800 number; other or Airline Ticket Booking) Please indicate how frequently you act in the following ways before/while/after reserving airline tickets/hotel rooms? Have you downloaded at least one airline software application to your web-enabled smartphone? (Yes or No) During the past 12 months, which of the following online activities have you done either on a computer or a web-enabled smartphone, for either business or leisure travel?(Online activities performed by airline travelers; Researched information about flights; Made a flight reservation; Made a hotel reservation; Researched information/reviews about hotels; Checked on a flights status (estimated time of arrival or departure); Researched information about entertainment/activities related to a specific trip; Searched for flight updates; Made/changed/upgraded a seat assignment on a flight; Reserved a car through a car rental agency; Used GPS functionality to find way to business destination; Written a review about a hotel; Downloaded an airline boarding pass to a mobile device; Used a social media site (e.g. Facebook, Twitter or Trip Advisor) to research and/or plan travel; Referenced a hotel companys social media page; Received a mobile text marketing message from a hotel company or None of the above) Please select the number of airline loyalty programs that you are a member of- (0; 1; 2; 3 or 4) Please select the number of airline loyalty programs that you have participated in the past 6 months- (0; 1; 2; 3 or 4) How often do you fly on the same airline? (Rarely or Never) Please rate the following attributes based on their importance to you while choosing an airline for business and/or leisure: Attribute 1-Not Important - 2 – 3 – 4 – 5 – Very Important – (Distinct from other airlines; Ability to address problems in a fair manner Ability to value me; Availability of business or first class Check-in convenience; Consistency of service; Fleet quality; Free parking; Loyalty program; On-time arrivals/departures; Reputation of the airline Service; Strive to enhance my experience; Value for money and ability to understand my needs; Access to executive lounge and VIP privileges; Baggage handling (ease and cost); Comfort; Deliver on promise; Free meals; In-flight technology; Network of routes serviced; Recent flying experience; Safety; Staff attitude and Promotions with other travel companies (International airline partners/hotels/car rentals) How satisfied are you with these attributes with regards to your preferred airline? Attribute 1-Very Dissatisfied – 2 - 3 – 4 – 5 –Very Satisfied: (Distinct from other airlines; Value for money; Ability to address problems in a fair manner; Ability to understand my needs; Ability to value me; Access to executive lounge and VIP privileges; Availability of business or first class; Baggage handling (ease and cost); Check-in convenience; Comfort; Consistency of service; Deliver on promise; Fleet quality; Free meals; Free parking; In-flight technology; Loyalty program; Network of routes serviced; On-time arrivals/departures; Recent flying experience; Reputation of the airline; Safety; Service; Staff attitude; Strive to enhance my experience; Promotions with other travel companies (International airline partners/hotels/car rentals) Please indicate how much you agree or disagree with the following statements about your preferred airline: Attribute - Strongly Agree – Agree - Neutral - Disagree - Strongly Disagree (It is distinct from other airlines; It has the best loyalty program in the airline industry; The brands image resonates with my personality; I have built a personal relationship with the brand and its people; I provide constructive criticism and feedback to help the airline improve its services; I will recommend this airline to my friends and relatives; I will not shift to a competing airline brand to benefit from a limited period discount; I will be a brand ambassador for this airline, if asked; I will always fly this airline in the future, if the route is available; I will give first priority to this airline brand, even when I visit a foreign country; I travel by the same airline for both business and leisure, if the route is available; I will not switch to a competing loyalty program even after achieving highest status level) Please rate the following attributes based on their importance to you while choosing an airline loyalty program: Attribute 1-Not Important 2 – 3 -4 -5 – Very Important (Distinct from other loyalty programs; Access to airport lounges; Ease of redeeming points; Option to exchange points for taxi miles, free nights at hotels, etc.; Rewards focus on providing experiences; More opportunities to redeem points; Ease of earning points; Redemption value per point; Options to redeem points for merchandise; More opportunities to earn points) How satisfied are you with these attributes with regards to your preferred airline loyalty program? Attribute 1-Very Dissatisfied 2 – 3 – 4 – Very Satisfied (Distinct from other loyalty programs; Access to airport lounges; Ease of redeeming points; Option to exchange points for taxi miles, free nights at hotels, etc.; Rewards focus on providing experiences; More opportunities to redeem points; Ease of earning points; Redemption value per point; Options to redeem points for merchandise; More opportunities to earn points) During the past 12 Months, what proportion of your flight miles was on your preferred airline? (Less than 25 percent; 25-50 percent; 51-75 percent; 76-100 percent) Please indicate how frequently your preferred airline engages you or interacts with you in the following ways (Engage via Facebook; Engage via Twitter; Attribute; Always Often; Sometimes; Rarely; Never; Engage via other location-based social media channel, via telephone; rewards with the help of points/miles; Reward with the help of free upgrades and nights; Send discounts and news via postal mail; Send discounts and news via email; Send destination suggestions; Provide opportunity to earn rewards via partners; Provide opportunity to earn rewards via non-partners; Make me feel valued as a customer; Make the purchase process to be secure and easy; Contact me after purchase; Provide opportunity to redeem rewards from a partner or credit card company; Send personalized messages that meet my travel needs). Lastly, a survey can also be conducted on the efficiency, punctuality, comfort, price, performance and flexibility of the airline. This will help to determine the services that are most important to the leisure traveller as opposed to the business traveller. Literature Review Considering a service is an experience rather than a physical item, service quality is strictly associated with customer satisfaction. In fact, the perception that a customer develops regarding quality of service is an antecedent of the extent he or she is satisfied with that service (Bezerra & Gomes, 2015). In particular to air transportation, passenger satisfaction and service quality are two aspects that have progressively attracted immense research interest. This can be attributed to the constant changes that have been made in recent years, especially in relation to rapid growth of low-cost carriers and the intense competition that has ensued. For an airline to survive and grow, it becomes imperative for managers to identify factors of their services that contribute to satisfying and retaining customers, with attention being given to the linkage existing among service quality, customer satisfaction, and the consequent airline performance (Vlachos & Lin, 2014). The delivery of high-quality service has predominantly grown into a marketing requirement due to competitive pressure in various industries. In attempting to define service quality, Munusamy, Chelliah, & Mun (2010) begin by acknowledging that customer expectations involve beliefs regarding a service, which serve as standards against which consumers judge service performance. In this case, it relates to what the consumer thinks a service provider ought to offer and not what is likely to be on offer. Munusamy, Chelliah, & Mun (2010) interpret service quality as the difference between the expectations that consumers have regarding a service encounter and the perception that they hold regarding the service received. Consumers tend to judge the quality as “low” if its performance fails to meet their expectations and as “high” when performance has exceeded their expectations (Munusamy, Chelliah, & Mun, 2010). According to Namukasa (2013), service quality entails the overall impression that a consumer makes regarding the efficiency of an organization and its services. As well, service quality is acknowledged as a chain of services through which the whole service delivery is split into a series of processes. Namukasa (2013) notes that various attempts to define service quality are dependent on the context, and thus they focus on satisfying the needs and requirements of the customers in relation to the appropriateness with which the delivered service matches the consumers’ expectations of it. Ensuring quality service emerges as a critical aspect of survival for any industry or business dealing in service offerings, and airlines are not exceptions (Namukasa, 2013). In their study aimed at examining the relative significance that perceived service quality has, Kim & Lee (2011) observe that customer satisfaction tends to be a compelling issue because customer retention in the service industry tends to be more crucial that the attraction of new customers. Such is because retaining customers tends to have a stronger influence on a company’s performance than attracting new customers, prompting the focus to striving for zero defections through customer service. Thus, understanding various aspects of passenger satisfaction would be critical for their retention in the airline market (Kim & Lee, 2011). Kavitha (2012) observes that when many firms are offering nearly identical services and compete within an area, focusing on improving service quality is likely to be only opportunities available for differentiation. The differentiation has the potential of yielding increased proportion of consumer choices, translating to the difference between a firm’s financial success and failure. In particular, quality becomes an aspect of interest considering its capability in delivering repeat purchases, attracting new customers, and retaining the existing ones. In particular, repeat customers tend to confer numerous benefits on the firm, such as considering that the cost of marketing spent on them tends to be low in comparison to new customers. In particular, service quality tends not to be a specific program or goal that can be completed or achieved. Rather, improving service quality in an organization would be an ongoing part of the entire service production and management (Kavitha, 2012). However, Munusamy, Chelliah, & Mun (2010) observe that even though the contribution that high-quality service makes in enhancing competitive advantage is acknowledged, difficulties tend to hinder efforts to measure service quality because of the unique characteristics of services, which include heterogeneity, intangibility, inseparability, and perishability. These complexities have prompted the development of various measurement models to measure perceptions of service quality and one of the models involves the SERVQUAL model proposing a five-dimensional construct of the perceived service quality: reliability, tangible, assurance, and responsiveness and empathy. These items of the constructs reflect expectations as well as perceived performance. In the past, SERVQUAL has been extensively applied in a broad range of service settings for different industries, which can be linked to the benefits that it affords because of its ability in allowing researchers to examine various service industries (Munusamy, Chelliah, & Mun, 2010). In a bid to evaluate the role played by the five drivers of service quality and perceived winning in relation to the gaming behavior demonstrated by table game players, Jeon et al. (2013) found that among the five dimensions of service quality, tangibles proved to be the dimension with the highest likelihood of enhancing the satisfaction of table gamers. Such findings are likely to be interpreted as exhibiting the need for the casino operators to focus emphasis on the enhancement of table game satisfaction through offering a broad range of state-of-the-art gaming equipment, attractive game areas, and maintaining clean game areas. Furthermore, assurance, responsiveness, and empathy were identified to influence the satisfaction of the table games significantly (Jeon et al., 2013). Kim & Lee (2011) acknowledge that the budget airlines are based on the aspect of low fares being a major determinant of a consumer’s decision. Without a doubt, it is a strategy that numerously has been used for satisfying customers and encouraging them to travel with the same airline again. Nevertheless, Kim & Lee (2011) provide instances where the perceived quality of an airline’s service is more a crucial factor over the low fares, with quality being the key attraction to passengers to a point that the attractiveness of an airline can decline if its fares were to be lowered. From these, it becomes apparent that the competitive advantage of an airline lies in the perceived service quality held by the passenger. According to Kitapci, Akdogan, & Dortyol (2014), significant attention in regard to addressing the perceived service quality is to enhance the crucial repurchase and word-of-mouth communication that have been determined to be consequences of the perceived quality perceptions. In this case, the customer satisfaction is identified directly to predict repurchase and word-of-mouth communications (Kitapci, Akdogan, & Dortyol, 2014). Prentice (2014) notes that most research efforts on service quality approach the construct of service quality as one-dimensional or as an approach to convey the entire quality of an organization through its delivery of high-quality services. However, such an approach is countered by the view of service quality being multi-dimensional and approaching it from a uni-dimensional perspective would be simplistic. This sets the basis of SERVQUAL, which is a service quality model made up of five drivers of service dimensions: reliability, assurance, responsiveness, empathy, and tangibles (Prentice, 2014). Tangibles In their research on the relationship that service quality dimensions have with customer satisfaction in the banking sector, Munusamy, Chelliah, & Mun (2010) observed that tangibles, encompassing the appearance of a firm’s facilities, representatives, equipment, and material, have a positive correlation and exhibit a high significance with customer service. Krystallis & Chrysochou (2014) sought to address the intangible nature of services, which stresses the significance of service brands as opposed to the case of physical goods brands. Hereby, with service lacking the tangibility necessary to permit labeling, packaging, or display, it becomes imperative to strengthen the brands because they are particularly crucial for service organizations in increasing the trust that consumers have on “invisible” purchases. In this case, lacking physical properties in the case of service offerings tends to facilitate more emphasis to the role that branding plays as a differentiation mechanism. Bearing in mind that the concern behind service branding is to communicate the benefit of buying an offering, securing a strong brand qualifies as a crucial component of a service provider’s effort in distinguishing oneself from the competition (Krystallis & Chrysochou, 2014). Empathy In regard to empathy, Munusamy, Chelliah, & Mun (2010) found no significant positive relationship existing between empathy and customer satisfaction. The study observed that even though most customers were keen on using new facilities that banks establish, there are groups of people who still preferred receiving face-to-face service, while in some instances customers would be forced to resort to the traditional way of queuing because there are no other alternatives than making contacts with staffs. Thus, empathy is still a critical dimension because personal contact tends to be very influential in direct marketing. Responsiveness In the case of the dimension of responsiveness, Munusamy, Chelliah, & Mun (2010) found that it tends to have a relationship to customer satisfaction, but not with considerable effect. This renders responsiveness a need in the provision of quality service, even though not a must. Hereby, consumers were found to be understanding when it comes to a machine breaking down in the bank, but would not accept if their requirement fails to be addressed timely by the staffs (Munusamy, Chelliah, & Mun, 2010). Reliability In the airline industry, Kim & Lee (2011) consider the reliability dimension to entail the ability that an organization has in performing a service accurately and dependably. It addresses aspects such as efficiency, punctuality, accuracy, and convenience of ticketing and reservations. Whereas, the focus on the assurance dimension was related to the ability that an organization has in inspiring confidence and trust and exhibiting courtesy towards service consumers (Kim & Lee, 2011). Assurance The study by Kitapci, et al. (2014) on the effect of service quality dimensions on satisfaction establishing the effect that satisfaction has on word-of-mouth communication and repurchase intention in the healthcare industry shows how consumers assess the services difference. In acknowledging that past studies have established a linkage existing between service quality and satisfaction, Kitapci, Akdogan, & Dortyol (2014) observed that assurance and empathy dimensions that primarily represent the word-of-mouth communication strongly influenced the willingness that a patient has in returning to a hospital. A notable observation by Kitapci, Akdogan, & Dortyol (2014) is that while the rest dimensions emerged as relatively influential on patient satisfaction, the tangibles dimension in public hospitals were observed to exert no considerable influence on consumer satisfaction. The utilization of the knowledge regarding the service quality dimensions lies in enabling effective marketing to be able to retain the existing passengers while attracting new passengers. In attempting to evaluate the differences in attitudes held by passengers of low-cost carriers and airlines, Mikuli & Prebezac (2011) observes the need to understand the driving forces that underlie customer loyalty. In their finding, Mikuli & Prebezac (2011) observe the existence of a significant difference in relation to perceptions of service reliability. In this case, customers of the low-cost carriers were observed to be relatively more concerned regarding the safety of an airline relative to on-time performance. On the other hand, passengers of the traditional aircrafts were observed to give more emphasis on on-time performance over airline safety. With airline reliability being one of the most influential service components in understanding passenger’s perceived service quality, the knowledge is relevant in informing a firm’s marketing strategy as well as public relation strategies (Mikuli & Prebezac, 2011). In a study aimed at examining how service quality perceptions tend to differ among different cultures, Guesalaga & Pitta (2014) found that reliability tends to be the most critical service quality dimension in different societies under study, followed by responsiveness. However, even though reliability and responsiveness emerge as the two main service-quality dimensions in the two countries under study, Chile and the USA, it is in these two dimensions that the relative significance of the dimensions between the countries ends up differing with responsiveness being more important in the USA while reliability being given more weight in Chile. Notably, this difference can be attributed to differences in cultural dimensions influencing the perceived importance of service-quality dimensions. In particular, Guesalaga & Pitta (2014) suggest that the cultures that are identified to be more uncertainty avoidant have a tendency of assigning more significance to reliability in comparison to those cultures that are not. Whereas, they suggest that the cultures identified to be more individualistic are observed to assign more weight to responsiveness over cultures that are not Guesalaga & Pitta (2014). Based on this knowledge, Guesalaga & Pitta (2014) observe that organizations need to assess each service quality dimension vis-à-vis each cultural variant to be marched to the preferences of each culture. From the above literature, it is apparent that customer satisfaction is a multidimensional construct. However, service quality has widely emerged as a dimension that strongly influences the overall customer satisfaction. With service quality being a multi-dimensional construct, the main question that arise relates to establishing the most influential service dimension that drives an average airline consumer when choosing the particular airline, which can also be interpreted as the dimension of service quality exhibiting the strongest effect on customer satisfaction. This study seeks to address this literature gap with awareness of the contribution it would facilitate in enhancing an organization’s competitive advantage. Constraints of the Study There are some limitations that can be seen when analyzing the specificities of this study. Some of these limitations are as follows: On what basis were the “top three” airlines chosen and why did you only use three? Was it the size of their area of coverage? How many flights do they run a day? The amount of staff they employ within their company? Could it be the airlines that carry more passengers per day? While all these reasons could be valid to put certain carriers in the “top three” category you will always have a bias as to which should be there. It is also important to look at the number of travels certain people have done within the chosen sample as the opinion of a seasoned flyer versus someone who has only been on one or two flights will be vastly different. A survey of how many different airlines the people in the sample size have flown would also be conducted and a variety of opinion could be difficult if most have only flown on one or two carriers. References Bezerra, G. C., & Gomes, C. F. (2015). The effects of service quality dimensions and passenger characteristics on passengers overall satisfaction with an airport. Journal of Air Transport Management, 44-45, 77-81. BOEING, (2011). Current Market Outlook 2011-2030. Settle: Boeing Commercial Airplanes. Dahlgren, S. (2012). Brand loyalty and involvement in different customer levels of a service concept brand. 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Service Quality Delivery and Its Impact on Customer Satisfaction in the Banking Sector in Malaysia. International Journal of Innovation, Management and Technology, 1(4), 398-404. Namukasa, J. (2013). The influence of airline service quality on passenger satisfaction and loyalty. The TQM Journal, 25(5), 520-532. Prentice, C. (2014). Who stays, who walks, and why in high-intensity service contexts. Journal of Business Research, 67, 608-614. Vlachos, I., & Lin, Z. (2014). Drivers of airline loyalty: Evidence from the business travelers in China. Transportation Research Part E, 71, 1-17. Read More