This research attempted to reveal the effect of air service and fare factors on image and customer loyalty in order to offer real evidence to assist airline marketing managers in their strategic development. Up to the mid 1970's, market share was beli...
This research attempted to reveal the effect of air service and fare factors on image and customer loyalty in order to offer real evidence to assist airline marketing managers in their strategic development. Up to the mid 1970's, market share was believed to drive profit and research on profit impact of market share was prevalent. But as it was revealed in real organizations, market share and cost savings theories were found to be situational and customer loyalty instead led to high profit and growth, and research on employee and customer satisfaction and loyalty began to gain momentum.
As service becomes more important in global economics and customers' desires regarding service firms becomes more specific and complex, organizations are expending much effort in retaining customers. Research shows that it costs several times more to attract new customers than to retain current customers.
However, in the airline service industry, research mainly consists of studies on customer satisfaction, airline selection attributes, employee satisfaction and service quality. More research has been published recently about airline service and customer satisfaction as well as studies about rebuy and loyalty. Research on the relationship between airline image and loyalty, however, is still rudimentary.
Thus this research drew upon previous research to discover air travel service and fare factors as well as image and loyalty factors, and conducted an empirical analysis in order to find out perceptional differences and relationships regarding these factors.
First, this study classified an airline's main users as travel agencies and passengers, and attempted to determine if there is a difference in perception between the two groups on the importance of airline service and fare. Second, this study looks at the effect of differences in perceptions about the important of fare and service and how this affects airline image and loyalty. Third, this study examined the characteristics of the above two main user grounds to see if there is a difference in perceptions about image and loyalty. Lastly, the effect of image on loyalty was empirically analyzed to ascertain the flow from service factors to loyalty.
The empirical analysis used survey responses from travel agency employees, and passengers of Thai Airlines flights. SAS Ver 8.2 was used for data analysis, and statistical analysis was conducted through descriptive statistics and variance and multivariate analysis. Frequency analysis was used for descriptive statistics for demographic data of subjects, with factorial experiment and Cronbach's a test was conducted to verify feasibility and reliability of measurement tools for air travel prices, air travel service and airline image, and airline loyalty.
To annalize the differences in perception, One-way ANOVA was performed. To compare the two groups, Turkey multiple comparison method was adopted. And also to prove the chained relation between the factors, Structural Equation was set up and checked the procedure. The following is the brief summary of the demonstrative analysis.
First, factorial experiment yielded four common factors regarding airfare, which were termed discount policy, extensibility, systemicity and diversity. Air travel service was also classified into four factors, namely operation service, auxiliary service, sales and check-in service and cabin service. Two common factors regarding airline image were material service image and human service image. Loyalty was termed by rebuy and attractiveness and recommendation.
Second, in the difference between perception of airfare and air travel service between agencies and passengers, both groups considered operation service as an important factor, confirming that diverse schedules and air travel safety were the most important factors in service. Travel agencies were found to consider air fare important, with passengers considered service as the factor of primary importance.
Third, regarding analysis on different perceptions on airfare and service between agencies and passengers, significant characteristic differences regarding service were minimal, but real differences were found regarding airfare. However, in the case of passengers, significant differences were found for both airfare and service, with awareness of the importance of service found to be higher than that of airfare.
Fourth, in the analysis of the effect of the perception of importance of airfare and service factors on airline image and loyalty, it was found that discount fares for airfare factors and operational service for airline service factors have the greatest impact on image. Regarding loyalty, auxiliary service affected rebuy rates, and operational service affected attractiveness and recommendation, with discount policies again having the greatest effect with regards to airfare, confirming the importance of discount airfare.
Fifth, the effect of airline image on loyalty was investigated, with image being found to generally affect loyalty, with great effect on attractiveness and recommendation.
As analysed thus, there are differences in perceptions of the importance on air service factors and airfares, with discernable difference on the effect of perceptions on image and loyalty. Image was also found to affect loyalty, and the existence of a relationship between service, image and loyalty was proven, calling for the need to determine industry-specific service items for the purpose of creating a long-term loyalty group.