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Acknowledgment
Firstly, I would like to thank and dedicate this project to my husband and kids for their patience, love, and continuous support to me during the dissertation phases.
Also, I would like to thank Mr. Mark Burridge and Mrs. Helen Goworek for putting me on the right track and answering my queries. Their help, via Blackboard, was invaluable in coping with the challenges I have encountered in this research work. Their contribution was vital for me in the preparation of this thesis.
Finally, I would like to express my gratitude to those who have obliged me by spending their precious time in answering the questionnaire and to those researchers past and present for their research papers I have referred to.
Executive Summary
This research aims to analyze the service quality perceptions of Airline Passengers and to link these perceptions to their satisfaction and loyalty. Other objectives are to examine whether there is any inconsistency between consumers perceptions of service quality and its standard provided by the airlines. By affirming the necessity to maintain quality of service the airline industries can very well generate more satisfaction among the airline passengers by improving the organizational thinking and management strategy through constant identification of service quality factors. This is essential for the progress of any service industry in the present times of globalization.
The required data for this research was gathered from both the primary and secondary sources, in which the primary sources are customer perceptions on service quality obtained through questionnaires. Secondary data was collected from literature and academic reviews on service quality as well as European standards on service quality which gave an understanding of the written quality standards. In choosing the appropriate research methodology the collection and analysis of data were streamlined, and that determined the sample of the study. The sample of the study was based on the customers who use the various airline companies that are operated from or via Cyprus. The non-probability sampling technique helped to determine selected samples of the population that were adjudged to be a typical representation of this population.
To analyze the qualitative information that has been collected in the study, the most suitable data analysis method was adopted by using the statistical measurements derived from the Likert scale. The SPSS computer program provided a descriptive analysis of the standard deviations, and the frequencies were calculated for the five dimensions of the SERVQUAL scale which included airline tangibles, personnel, and empathy along with image and terminal tangibles. From the research findings, it was clear that the airlines consumer incentives and marketing activities were only done during high seasons. Consumers were not segmented and hence services meant for one group were mistakably given to another. The personnel was not adequately equipped and motivated to provide quality services to the clients, which in turn contributed much to the poor services offered. Moreover, the lack of individual attention also influenced the perception of the customers. The airline firms should proactively seek to identify and satisfy consumer needs and priorities instead of reacting to external pressures of competition.
The airline firms need to segment their customers according to their similarities which are based on their needs, expectations, and satisfaction. To get customer satisfaction and loyalty, the firms must ensure that their employees are satisfied. This process starts with hiring quality personnel and providing them with incentives that drive them towards achieving customer satisfaction. Services offered can be communicated effectively to the consumers through the technique of making the services tangible by associating the service to particular tangible evidence. Also, there should be proper and concrete steps to make Customer relationship management (CRM) a major tool for maintaining strong customer relationships. It is because CRM is a holistic strategy and must be regarded as such in the service sectors where quality and customers perception are the elements that pave way for the success of the industry. Being the main decisive factor, Customer Segmentation must be based on values and needs.
Introduction
Globalization has reduced the realms of the world virtually, and airlines have contributed much to save time and distance from one part of the globe to the other. The travel environment has advanced considerably during the past two decades and the resultant competition is demanding delivery of quality in all modes of passenger services. The success and growth of the service industry depend on the quality of comfort and values extended to the passengers and their perception of what they have received as service. This sort of growth in the satisfaction and loyalty level of the customers applies to all of the service industries, and the airline industry is a prime example to be pointed out.
According to Park et al. (2004); Morash and Ozment (1994), the airline industry faces increased challenges that warrant the advancement of the satisfaction level of the passengers. It is because service quality elements decide upon the passengers patronage failing which the perception of the quality of service and loyalty will be thwarted. Therefore, the loyalty to a passenger service provider is directly proportional to the perception of the quality of service given to the users, irrespective of whether it is internal or overseas. Various studies conducted on other service industry sectors have established that quality of judgments is crucial in satisfying the expectation of the customers before the availing of service and the actual service imparted to them.
The survival of an airline in a changing environment is the outcome of the loyalty of the passengers to the company. As such, this research focuses on the ability of the airline industries in imparting the quality of service to the passengers and analyzes the customers expectation management of service in the context of organizational strategic thinking. The analysis is meant for deriving quality in service to the airline passengers in comparison to the value of service that is provided to other service sectors. The airline industry is a major sector of the world economy and is vital in determining the progress and prospects of a country. This in reality underlines the truth that the survival of the industries is founded on how the environmental uncertainty is managed for elevating sustainability (Daft, 2006).
Background
The global marketplace has progressed a lot at a quick pace influencing the working of every industry and the progression itself has invited intensification of overall competition in the business sector. The incessant change or evolution in technology, needs, and preferences together with the customers urge for getting more and more value-based service, propels the advent of innovated marketing strategies and philosophy of service quality concept. The responsibility to provide quality is not limited to the manufacturers alone, but also is the concern of the air carriers (Ostrowski et al., 1993). To make the competition advantageous, and to retain the customers patronage to maintain the market share consistently, proper balancing of service standards is imperative (Park et al., 2004).
Robledo (1996, 1998) states that Customer satisfaction and loyalty secured through high-quality products and services providing value for money for the consumer, are essential for long-term survival, let alone long-term success. As such, to invoke better performance, several studies have been made about the service quality segments, but many of them have ended up in controversies (Parasuraman, Berry & Zeithaml, 1988). The findings reveal the reality that conventional and obsolete marketing strategies require total revamping to accommodate effective management of service quality on par with the expectations of airline passengers. It is because the quality is identified as the causation to satisfaction (Zeithaml and Bitner, 2000).
Significance of the Study
The previous study conducted by Nadiri et al. (2008) has established that the main element that affects the customers satisfaction, loyalty, and intention to repurchase a particular airliner service is the fruitful culmination of the airline tangibles. Mouth to mouth communication from the customers side has a direct and positive impact on the purchasers to become lenient to the service provider. This denotes that the core objective of any organization is retention and acquisition of new clients, and such retention and acquisition of clients are based on the quality of service rendered to satiate their anticipated service standards. For, the success of every industry lies in the management of an effective quality provision that is extended to the customers, and the airline industry is not at all an exception.
In the case of airline passengers, identifying and prioritizing the factors that are decisive in the matter of their satisfaction level during the course and after the utilization of service are of utmost importance. To make consumer sovereignty effective, consumer satisfaction must be considered as the fundamental principle and guide. According to Bloemer and Kasper (1995), customer satisfaction is simply, but mainly, the judgment resulting from an encounter with a particular service, wherein loyalty and satisfaction are interdependent on the very judgment. The present study is significant as it analyzes the service quality perceptions of airline passengers and links these perceptions to their satisfaction and loyalty levels. Additionally, this will enhance the scope of previous studies and has the potential to contribute much to the airline industry.
Aim and Objectives
The concept of customer satisfaction is inherent in all sorts of service industries and the act of providing quality in service is the cardinal rule that leads such industries to survive the ever-increasing competition. The industrial development during the past few decades has only extended more comfort and usability to the end-users, and their likings and patronage are analogous to the intensity of quality added package of service. Frequent monitoring of quality essentials is mandatory for the streamlining of airline services. This is required because the current analytical phases are rampant with wrong speculations and incompatible services that jeopardize the passengers expectations. Therefore, pragmatic and reliable research is necessary to give enlightenment about the conditions that affect the perception of the passengers which in turn tells upon their loyalty. To achieve the above outcome, the research paper focuses on the following aim and objectives:
Aim of the research
To analyze the service quality perceptions of Airline Passengers and to link these perceptions to their satisfaction and loyalty.
Research objectives
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To examine whether there is any inconsistency between consumers perceptions of service quality and the quality standards offered by the Airline industries.
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To affirm the necessity to maintain service quality standards by the airline industries to generate more satisfaction among the airline passengers.
Area of Study-Sources
This study diagnoses service quality perceptions of customers using different airline companies, especially those that are operated from Larnaca Airport (Greek site). The airline companies put to study here are (i) Cyprus Airways (ii) Austrian airlines (iii) Olympic Airlines (iv) Malev airlines (v) Lufthansa (vi) Chech airlines (vii) Easyjet (viii) Ryanair (ix) Etihad (x) Emirates, and (xi) British Airways. Most of the Cypriots avail the passenger service for leisure and business and are very sensitive to the quality of service rendered to them. A few other service-oriented industries are also selected for comparing the quality of service they generally provide in comparison to these airliners.
This research study compares the actual reported data (written standards) on service quality factors with the results of an exploratory questionnaire on customers perceptions. To meet the objectives of the research, it was decided to use a combination of both secondary and primary data as effective tools for data collection.
The primary means of investigation would be from the customers perspective, being answers to the questionnaire, as the consumers are the ideal persons to evaluate service quality as they are bound to be the direct receivers. To get maximum output from the target group, a group of passengers is randomly selected from the economy class. It is assumed that the Business class usually gets more quality service than the economy class. Hence their perception may be identical, whereas, those of economy class will be mixed. Secondary data will include various literature on the airlines and their service quality provisions. It also covers relevant academic review on service quality aspects.
Why is this study interesting?
The airline industry has a leading role to play in the travel and tourism industry of countries of the world. In Cyprus, due to its vantage location on the globe, the tourist arrivals are found to be comparatively higher than that of the neighboring countries. Therefore, the sample for this study is found, categorized, and centered at Larnaca airport of Cyprus and some of the flights that are operated from there, as it is impractical to focus the study at various airports and numerous airlines. In the wake of increasing competition and the acceleration in the service provisions, there is an urgent need for airline managers to recognize the importance of service management improvements. It is evident that service quality promotes customer satisfaction, and it stimulates the intention to return. Customer satisfaction increases profitability, market share, and return on investment. As such, airline managers have to find result-oriented and innovative ways to make their services stand out amongst the others. To achieve this, they must explicitly identify and prioritize service quality factors and then use the resultant information to manage customers expectations.
Structure of the Dissertation
To find out answers to the research questions and objectives several constituents relating to the airline industry and perceptions of passengers on service quality are keenly studied and analyzed in this research paper. The effectiveness of the quality of services and the loyalty of passengers are appraised with a critiques mind and approach by comparing the different departments of services of the airlines. The study is thus compartmentalized and is brought under separate chapters including what is stated in the previous pages. The chapters conceived are:
Introduction
This chapter gives the background of the issue and leads to the specific elements that throw light on the outcome of the research paper.
Literature Review
The entire literature and other data accessed on the issue are reviewed under this chapter. This will enable the researcher to strengthen the grip over the topic towards answering the research question and achieving the objectives. With the proper review, the researcher can identify the areas to be tested as there may be gaps between the literature standards and the real-time application.
Methodology
Under this chapter are detailed the application of research methods, description, and reasoning of such methods, including data collection and its modes. A brief analysis of the data collection procedure is also given here. For this study, both the qualitative and quantitative approaches are used meaningfully. The case study and survey methods are adopted to test the real and unique practices existing in the area of this research.
Findings & Discussion
Research findings are discussed in detail in this chapter about the content of the previous chapters. The results of the survey of passengers of various airline companies operated from Larnaca and the graphical presentation of survey findings are added and featured here.
Conclusion
An interpretation of the inherent problems and solutions to them are given in this chapter. The conclusion is drawn from the evidence elaborated in the previous chapters and indicates problems, if any, that have been identified.
Recommendation
The recommendation section delivers a few suggestions for the furtherance of the remedial measures to the discussed issues and also proposes some new programs and strategies for the development of the airline industry.
Reflections
This chapter contains the evaluation of the research procedures and an account of limitations of the research study such as constraints encountered during the study process and how these were overcome to fulfill the research.
Literature Review
Introduction
The success of businesses in general and service industries, in particular, are dependent on the satisfaction of the customers achieved through innovation and exploitation of pragmatic ideas relating to a service. The measuring of customer satisfaction in service businesses is largely determined by the perception of the customer on the service delivered. Therefore, the gap between the perception of customers and their expectation levels of a service denotes the amount of their satisfaction with the service and the service provider. Several types of research were conducted earlier and models like SERVQUAL were adopted to determine and narrow the gap between the customers perception and the actual service quality of an industry (Cauchick et al., n.d.). Responding promptly to the customers expectations with a positive gesture is what the customers expect from the service providers. The perception originated thereon, builds up the desired bond that leads to their loyalty (Hunt, n.d).
Since the quality of service is neither intangible nor quantifiable, the companies lean to certain parameters that can elucidate service quality attributes for evaluation and monitoring. It is evident that service quality is the basis to achieve success and overall efficiency, and therefore, it is vital for them to fulfill the customers expectations and lead them towards the required satisfaction level (Churchill, 1979). It is on this foundation that the service quality in airline companies is constructed, by which, the level of satisfaction acquired through the flight experience makes the customer return to the same airline afterward.
To evaluate the service quality of airlines, it is necessary to determine the key factors associated with the perceived quality of service from the consumers perspective. Of these, the elements that weigh more require prioritization while imparting innovation and improvement to the quality of service (Nadiri, Hussain, and Ekiz, n.d). The airlines used to monitor their service standards frequently, by implementing certain procedures and standards to avoid preferences on individual approach and uncertainties. There are always differences between the perception of an airline company management and that of the customers, and their expectations as well. When the gap between these perceptions of the two entities and the non-consummation of the customers expectations are at a minimal level, the customers tend to prefer certain airlines. There is enough proof available from the previous studies on service quality and customer satisfaction that preference, loyalty, and repurchase intentions are the result of customers perceptions of service quality and the satisfaction derived out of the previous experience of the same service (Carman, 1990; Legoherel, 1998; Singh, 1988; Smith et al., 1999; Zeithaml and Bitner, 2000).
Since satisfaction is considered purely as the umbrella concept and the given service quality relates to the particular service attributes (Nadiri et al., 2008) Word of Mouth communication (WOM) is also considered as contributive to customer perception and loyalty. Kau and Loh (2006, p. 103) demarcate WOM as & the informal communication between consumers about the characteristics of a business or a product . Schiffman and Kanuk (2004) affirm that WOM communication is very persuasive and effective. This literature review, hence, strives to identify and evaluate the factors that are critical in the service quality of airline companies and the customers perception of their services in general, with particular mention to the airline services that are operated from Larnaca Airport.
Necessity to maintain service quality to generate more satisfaction among the airline passengers
In a study conducted by Nick Johns and Antony Howard (1988), it was revealed that the customers used to construct service perceptions on certain generalized aspects of their expectation from the service provider, and accordingly have contributed the quality attributes to it, where the attributes were either elements that gave satisfaction or dissatisfaction. The study has inadvertently established that it is possible to gather and analyze the expectation and perception without prompting any pre-assumptions on their satisfaction levels. The outcome of the study applies not only to the tangible goods-producing industries but also to any other service industries including the airlines (Johns and Howard, 1998). Therefore, to become successful in the industry, airline companies must market their services effectively among the target groups by adding value to their service and at the same time avoiding chances of negative perception by the customers.
This has to be taken into account because the Air travel industry, driven by liberalization and globalization, continues to remain the fast-paced developing market. According to IATA (2007) report, it was estimated that over 2.1 billion passengers have undertaken air travel during the year 2006, which marked a growth rate of 5.9% than the previous year. The progress was achieved in the milieu of market liberalization, long-range and fuel-efficient airplanes to accommodate thinner air routes. This development convinced that improvement of service quality was essential to gain a better market share and greater financial achievement in domestic as well as international markets (Khan et al., n.d.)
Quality of service & customer perception General concept
Quality of service is fundamental to get a competitive edge in achieving market leadership among service organizations. Therefore, it is imperative that they have to maintain a stable relationship with the customers. The ability of such organizations to retain a benefitting relationship with the customers is the result of long-term service superiority, and it becomes mandatory for the survival of any sort of service industry. And this, inter alia, is service devotion that promotes customer loyalty. It is true that loyal service gives an organization the advantage of an understanding of the present needs of the customers and instills in them the capability to anticipate their futuristic and long term needs, which in turn delights the customers to be responsive to offer sustained dedication and patronage.
In other words, while a service organization endeavors to earn its customers loyalty, the customers are found to be lenient to believe that the organizations service allegiance is the commitment of delivery of superior service to them in real times of the present and that of the future. The primary aim of any of the service providers is identical to that of any of the tangible product manufacturers who yearn to satisfy their customers needs to reach economic survival. To facilitate this objective, every service provider must realize that long-term patronage of the customers is attained only by the evaluation of the rendered service and the preference they give for a particular service provider (Kandampully, 1998). It is so because a business is virtually run by the customers when their expectations are fulfilled by its management through the process of constant monitoring of their perception and enhancement of the service or the product, with quality orientation.
Services are something that a consumer buys and are not necessarily be tangible items. Kotler (2003) considers services on par with consumer goods as intangible, perishable, inseparable, and variable. Usually, services are offered along with some tangible items which are included in the form of a service package, but the very services are distinct from tangibles (Stevenson, 2009). These are consumed as soon as they are produced, and are quite different from the products or goods that people buy. Services do not allow any physical ownership of any of the service items, and on the contrary, the tangible products deliver physical ownership to the buyer (Render and Heizer, 2008). Moreover, the services bring satisfaction or satiation of the requirement of an individual, irrespective of whether it is hired or bought (Churchill, 1982). It is something that provides experience or skill set, or even it may be the required space to carry out a particular task. Service is thus referred to as an act or performance of an individual or an organization that involves interaction with the customer for initiating satisfaction and perception in them about its quality. For, it is the customer who rates and evaluates the quality of a service rather than a quality control system meant for a product of a manufacturing company (Avrikan, 1999).
According to (Parasuraman et al.,1991a), Delivering superior quality of service has been recognized as the most effective means of ensuring that a companys offerings stand out from a crowd of look-alike competitive offerings (Parasuraman et al., 1991a). But Berry et al.(1988) regard service quality as a weapon by which many organizations lead. Whatever it is, the customers think that the deep relationship with a supplier is instrumental to the firms involvement whenever something goes wrong. This is an emotional bond that is evolved in the customer which is considered high in professional services such as medical and legal services. This relationship is developed through personal interaction by the employees of the service provider with the customer than its management personnel (Parkingston and Schineider, 1979).
About what is stated above, the service quality can be defined as the residual obtained, after the prudent comparison of service expectations and perceptions of the customer against the actual delivery of performance. It is ultimately a multidimensional concept (Parasuraman et al., 1985). The physical intangibility that is coherent with the supply of services and the continual non-standardized product added by the interactive production process, emphasizes the necessity of a certain perceived quality profile that fits any services. However, the term of perceived service quality is commonly understood as the variable between the expectations of the customer against the customers perceptions on performance (Carman, 1990).
Quality of service, customer satisfaction, and loyalty in the airline industry
Concepts and contrasts
Innovation is the keyword for the exploitation of new thinking styles, which is more applicable to service areas, especially to the airline passenger service. It is the common driver for quality and novelty to meet the challenges that face the industry. The introduction of new air routes and air carriers demand competition among the flight services, which in turn necessitates higher quality service output (Prayag and Dookhony-Ramphul, n.d.). Since airline passenger service is the total of new business models, the delivery of service, customers satisfaction and their perception together with the application of advanced technologies used to pave the way for innovation which is essential for the proper and prompt working of both the airports and the operating airlines (Huang, n.d.). While focusing on the delivery of quality service, any airline needs to improve its market share and enhance financial performance. To meet this end, there should be certain reliable measures that can lead to the understanding of the variables that tell upon the service quality based on the expectations and perceptions of the passengers (Khan et al., n.d.).
Khan and Dutt (2006) state that the winds of competition in the service industry have changed altogether in these times, and as a result, more and more middle-income people prefer to travel by air, after the airfare drop that augments service quality instead of the competition. But Parasuraman et al. (1985) counter this argument by stating that the mere reduction of fares cannot bring a competitive edge, whereas, it is the service quality that decides upon the competitive edge in marketing. Nevertheless, service quality is an indefinable intangible construct that is immeasurable within the given norms (Cronin et al., 2000). Therefore, it can be stated that service quality is the difference between the customers expectations and perception of the service delivered by the airline. If the expectations are greater than the performance, then it is clear that the perceived quality is less than satisfactory level and it results in customer dissatisfaction (Lewis and Mitchell, 1990).
The passengers evaluate the services of airlines based on their satisfaction relating to the in-flight service (Park et al., 2004). That means service quality in an airline is the perceived quality of service by the passengers (Garvin, 1984). But, according to Gronroos (1978), a service is not at all ambiguous and has different components such as technical and functional qualities, which when allowed interaction, brings out the overall quality. However, Parasuraman et al. (1985) after several previous studies have summarized service quality in three specific terms first, service quality is more difficult for the consumer to evaluate than goods quality; second, service quality perceptions result from a comparison of consumer expectations with actual service performance; third, quality evaluations are not made solely on the outcome of a service, and they also involve evaluations of the process of service delivery.
This statement is now widely accepted as the foundation of service quality, though there are two conceptualizations in this regard. The first one is the disconfirmation approach. The other one is the performance-only approach. The disconfirmation service quality model implies a situation where-in the overall expectation of the customer in the matter of service is surpassed by the service delivered, which impacts service quality. Due to this, service quality requires continuous refinements. Academically, the service quality which is based on SERVQUAL considers disconfirmation and other service attributes, to link them with management performance using a gap framework (Parasuraman et al., 1985).
The previous researchers accepted the disconfirmation model that assesses the gap between the expectations and perceptions of customers (Santos, 2003). In contrast, Parasuraman et al. (1985) adopted a stand that evaluation of service quality is founded on the gap that can evolve between the customers expectations and performance. Based on this approach, Parasuraman et al. (1988b) devised the multi-dimensional tool namely, SERVQUAL, for measuring service quality. SERVQUAL focuses on the principles of tangibles, responsiveness, reliability, assurance, and empathy, which are categorized as 22 scalable elements of expectations and performance. However, Carman (1990) questioned the validity of the above SERVQUAL principles and opined that these factors would not support any well-defined assessment of service quality and customer satisfaction and that these are inapplicable to all of the service industries until further modifications on it are made. Despite the st
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