The increase of the international oil price, economic depression, wars, SARS, and the increase of currency exchange rates are some of the main causes of difficulties faced by the airline industries around the world. In the midst of such environmental ...
The increase of the international oil price, economic depression, wars, SARS, and the increase of currency exchange rates are some of the main causes of difficulties faced by the airline industries around the world. In the midst of such environmental volatilities, the emergence and growth of the low price airlines are noticeable.
Since 2001, airline deregulation and the open skies contract have expanded in Asia, most notably across Korea, China, and Japan in 2010. The severe competition among domestic and overseas low price airlines prompts companies to develop strategies to differentiate their services and prices to induce the customers, which demands new item development centered on customers satisfaction.
The present study seeks to identify some of the factors contributing to customer expectations and subsequently satisfaction in the fundamental no-frills policy which is the characteristic of the business structure of the domestic low price airlines. In other words, this study aims to examine the formation of service quality, customer satisfaction and customer loyalty through brand image in the domestic low-fare airline industry, and to offer managerial insights about maintaining good customer relationships.
We reviewed the relevant literature to develop our conceptual model and performed empirical analysis of data collected via surveys of low-fare airline customers. More specifically, the study proceeds as follows:
First, our conceptual model is developed by consulting various types and bodies of relevant literature with a particular focus on topics such as customer satisfaction, customer loyalty, service quality and brand image. Then we came up with hypotheses regarding relationships among these variables.
Second, we collected data through surveys and used the data to test our hypotheses. The results of the analysis indicated following relationships among the tested variables:
First, there was a positive correlation between service quality (human service, convenience, additional service, on time service, and safety) and brand image and customers’ satisfaction with notable effects of human service and additional service. Second, there was a positive correlation between service quality (human service, convenience, additional service, on time service, and safety) customers loyalty with noticeable effects of the human service and the convenience factors.
Third, brand image is positively (+) correlated with customer satisfaction and customer loyalty.
Fourth, customers’ satisfaction is positively correlated with customers loyalty.
Finally, since the competition between the airlines are getting more severe with the expansion of the choices of airlines due to the recent domestic and overseas airline market opening, the study suggests the following strategic implications to reconsider the differentiated service quality and the brand image from the competitive airlines as follow.
First, the airline staff members working on the site are the very important element which is connected directly to the airline image of the human service since they have the direct relation with the customers experiencing a series of service processes in the closest distance. Also, additional services allow companies to differentiate themselves from each other. For instance, complimentary beverage services, diverse discount programs, special event programs, and so on are some of the examples of additional services firms can use to set themselves apart from their competitors.
Second, since the human service factor was shown to have a positive effect on brand image and customer satisfaction while having no effect on customer loyalty. This suggests that the positive effect of human service does not necessarily transfer to positive customer loyalty. However, since the convenience factor was shown to have a positive effect on customer loyalty, firms seeking to boost their customer loyalty should work to increase their customers’ perception of convenience.
Third, since brand image has been shown to be positively correlated with customer satisfaction and customer loyalty, each airline should develop unique and differentiated brand image that fits their target customer segments. This can be achieved through special customer system, active customer participation, local society participation.
Fourth, since there is a positive relationship between customer satisfaction and customer loyalty, we suggest that companies should make it possible for customers to directly voice their opinions about their traveling experiences through different venues, such as websites and customer service centers.