Cost Airline Industry PDF
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Measuring Service Quality in the Low-‐Cost Airline Industry Jonavan Barnes A thesis submitted to the Stirling Management School in fulfilment of the requirement for the Degree of DOCTOR OF PHILOSOPHY Stirling Management School University of Stirling January 2017 2 STATEMENT OF ORIGINALITY This assignment was prepared by Jonavan Barnes, for submission of the Ph.D. at the University of Stirling. This is entirely my own individual work, all resources have been acknowledged and it has not been submitted previously for any other academic award. Student signature: ………………………… Date: …………………………………. 3 ACKNOWLEDGEMENTS To Leigh Sparks: Thank you for your impressive patience and taking the chance on me, at a time when no one else would. To Ahmed Hegazy and Alexandra Webb: My Brother and Sister, thank you for sharing an office with me for four years. Your companionship has enlightened me in way you cannot imagine. I am a better person because I have you as friends. To my best friend and lovely wife Katie: Meeting you was a miracle. Without your support, I would not have finished the Ph.D. - I only hope that somehow I enrich your life as much as you have mine. You are my favourite person in the world. To my Mother: Even from 4,000 miles away, you never cease to be a mother. You have been the greatest support through any of my numerous endeavours. I have been extremely fortunate to have your hard work and vigilance as a positive example in my life. To my Father: I am sure that you never completely understood what I was doing or why I needed a Ph.D. However, I know that you wanted me to finish and I hope that you would be proud. 4 CONTENTS ABSTRACT ........................................................................................................................... 11 CHAPTER ONE: INTRODUCTION ........................................................................................... 12 1.1 INTRODUCTION .................................................................................................................................... 12 1.2 WHAT IS SERVICE QUALITY? ............................................................................................................... 14 1.3 SERVICE QUALITY IN CONTEXT ............................................................................................................ 15 1.4 JUSTIFICATION ...................................................................................................................................... 17 1.4.1 IMPORTANCE TO THE SERVICE QUALITY LITERATURE ...................................................................... 17 1.4.2 IMPORTANCE TO THE AIRLINE INDUSTRY ......................................................................................... 18 1.5 STRUCTURE .......................................................................................................................................... 20 1.5.1 CHAPTER TWO: THE AIRLINE INDUSTRY .......................................................................................... 20 1.5.2 CHAPTER THREE: SERVICE QUALITY IN THE AIRLINE INDUSTRY ...................................................... 20 1.5.3 CHAPTER FOUR: MEASURING SERVICE QUALITY ............................................................................ 20 1.5.4 CHAPTER FIVE: METHODOLOGY ...................................................................................................... 21 1.5.5 CHAPTER SEVEN: FINDING THE DETERMINANTS OF AIRLINE QUALITY .......................................... 21 1.5.6 CHAPTER SIX: HIQUAL ................................................................................................................... 21 1.5.7 CHAPTER EIGHT: ALSI ..................................................................................................................... 22 1.5.8 CHAPTER NINE: DISCUSSION AND CONCLUSION ............................................................................. 22 CHAPTER TWO: THE AIRLINE INDUSTRY ............................................................................... 23 2.1 INTRODUCTION .................................................................................................................................... 23 2.2 AIRLINE HISTORY ................................................................................................................................. 25 2.2.1 BEFORE 1942 .................................................................................................................................. 25 2.2.2 POST-‐WAR ....................................................................................................................................... 27 2.2.3 BILATERAL AGREEMENTS ................................................................................................................. 29 2.2.4 POST-‐DEREGULATION ...................................................................................................................... 32 2.2.5 GLOBAL ALLIANCES .......................................................................................................................... 34 5 2.2.6 THE NEW GENERATION ................................................................................................................... 35 2.3 THE TRADITIONAL BUSINESS MODEL ................................................................................................. 37 2.3.1 REGIONAL AIRLINES .......................................................................................................................... 39 2.4 THE LOW-‐COST CARRIER .................................................................................................................... 40 2.5 THE LOW-‐COST CARRIER BUSINESS MODEL ..................................................................................... 43 2.6 TYPES OF LOW-‐COST CARRIERS .......................................................................................................... 49 2.6.1 SOUTHWEST COPYCATS ................................................................................................................... 49 2.6.2 SUBSIDIARIES .................................................................................................................................... 50 2.6.3 COST CUTTERS .................................................................................................................................. 50 2.6.4 DIVERSIFIED CHARTER CARRIERS ..................................................................................................... 51 2.6.5 STATE SUBSIDISED COMPETING ON PRICE ...................................................................................... 51 2.7 CURRENT CHALLENGES FACING THE LOW-‐COST CARRIER INDUSTRY .............................................. 51 2.8 THE MODERN AIRLINE INDUSTRY ....................................................................................................... 53 2.9 CONCLUSION ........................................................................................................................................ 54 CHAPTER THREE: SERVICE QUALITY IN THE AIRLINE INDUSTRY ............................................ 57 3.1 INTRODUCTION .................................................................................................................................... 57 3.2 PHASES OF THE AIR TRAVEL EXPERIENCE ........................................................................................... 58 3.3 AIRPORT PHASE ................................................................................................................................... 59 3.3.1 TICKETING ......................................................................................................................................... 60 3.3.2 SECURITY ........................................................................................................................................... 61 3.3.3 AIRPORT RETAILING ......................................................................................................................... 62 3.3.4 AIRPORT SERVICE QUALITY .............................................................................................................. 64 3.4 THE IN-‐FLIGHT PHASE ......................................................................................................................... 65 3.5 THE AIRLINE “PRODUCT” .................................................................................................................... 66 3.5.1 SERVICE QUALITY IN THE LOW-‐COST CARRIERS .............................................................................. 67 3.5.2 IN-‐FLIGHT RETAILING ....................................................................................................................... 70 3.5.3 THE IMPORTANCE OF SERVICE QUALITY TO PROFITABILITY ............................................................ 72 6 3.6 CONCLUSION ........................................................................................................................................ 74 CHAPTER FOUR: SERVICE QUALITY ...................................................................................... 78 4.1 SERVICE ATTRIBUTES ........................................................................................................................... 78 4.1.1 CHARACTERISING SERVICES .............................................................................................................. 78 4.1.2 CLASSIFYING SERVICES ..................................................................................................................... 80 4.2 THE ROLE OF CUSTOMER SATISFACTION ........................................................................................... 82 4.3 MEASURING SERVICE OUTPUTS ......................................................................................................... 84 4.4 THE NORDIC SCHOOL IN-‐DEPTH ........................................................................................................ 87 4.5 THE AMERICAN SCHOOL IN-‐DEPTH .................................................................................................... 89 4.5.1 SERVQUAL ..................................................................................................................................... 90 4.5.2 CRITICISMS OF SERVQUAL ............................................................................................................ 93 4.5.3 SERVPERF ...................................................................................................................................... 96 4.5.4 SERVPEX ......................................................................................................................................... 99 4.5.5 BRADY AND CRONIN’S HIERARCHICAL MODEL (HIQUAL) ......................................................... 100 4.6 OTHER MODELS ................................................................................................................................. 102 4.6.1 ATTRIBUTE SERVICE QUALITY MODEL .......................................................................................... 102 4.6.2 SYNTHESISED SERVICE MODEL ..................................................................................................... 103 4.6.3 IDEAL VALUE MODEL OF SERVICE QUALITY ................................................................................. 104 4.6.4 EP FRAMEWORK AND THE NORMED QUALITY MODELS ............................................................. 105 4.6.5 IT-‐SPECIFIC MODELS ..................................................................................................................... 105 4.6.6 THE ATTRIBUTE AND OVERALL EFFECT MODELS ......................................................................... 105 4.6.7 MODEL OF SERVICE QUALITY AND SATISFACTION ....................................................................... 107 4.6.8 P-‐C-‐P MODEL OF SERVICE ATTRIBUTES ....................................................................................... 108 4.6.9 RETAIL SERVICE QUALITY AND PERCEIVED VALUE MODELS ........................................................ 109 4.6.10 SERVICE QUALITY, CUSTOMER VALUE AND CUSTOMER SATISFACTION MODEL ...................... 109 4.6.11 ANTECEDENTS AND MEDIATOR MODEL .................................................................................... 110 4.7 AN INDEXING APPROACH TO SERVICE QUALITY MEASUREMENT .................................................. 111 7 4.7.1 CUSTOMER SATISFACTION INDEXES .............................................................................................. 111 4.7.2 THE AIRLINE QUALITY RATING ...................................................................................................... 112 4.8 MEASURING SERVICE QUALITY IN THE AIRLINE INDUSTRY ............................................................. 117 4.9 CONCLUSION ...................................................................................................................................... 119 CHAPTER FIVE: METHODOLOGY ........................................................................................ 123 5.1 INTRODUCTION .................................................................................................................................. 123 5.2 RESEARCH AIM AND OBJECTIVES ...................................................................................................... 124 5.3 RESEARCH PARADIGM ....................................................................................................................... 126 5.4 ACHIEVING THE OBJECTIVES ............................................................................................................. 129 5.5 THE SUBJECTS .................................................................................................................................... 135 5.5.1 RYANAIR ........................................................................................................................................ 135 5.5.2 EASYJET ......................................................................................................................................... 137 5.5.3 JET2.COM ...................................................................................................................................... 139 5.5.4 BMIBABY ........................................................................................................................................ 140 5.5.5 FLYBE ............................................................................................................................................. 140 5.6 CONCLUSION ...................................................................................................................................... 140 CHAPTER SIX: A QUANTITATIVE MEASUREMENT ............................................................... 142 6.1 INTRODUCTION .................................................................................................................................. 142 6.2 HIQUAL FRAMEWORK ..................................................................................................................... 144 6.2.1 INTERACTION QUALITY .................................................................................................................. 144 6.2.2 SERVICE ENVIRONMENT QUALITY ................................................................................................. 145 6.2.3 OUTCOME QUALITY ...................................................................................................................... 148 6.3 SURVEY CONSTRUCTION ................................................................................................................... 150 6.3.1 INITIAL QUESTIONS ........................................................................................................................ 150 6.3.2 HIQUAL QUESTIONS .................................................................................................................... 150 6.3.3 ADDITIONAL QUESTIONS ............................................................................................................... 155 8 6.4 DATA COLLECTION ............................................................................................................................. 156 6.4.1 THE POPULATION .......................................................................................................................... 156 6.4.2 THE SAMPLE .................................................................................................................................. 156 6.4.3 ANALYSIS OF THE DATA ................................................................................................................. 158 6.4.4 DISTRIBUTION ................................................................................................................................ 159 6.4.5 DEMOGRAPHICS OF RESPONDENTS .............................................................................................. 161 6.5.1 ADJUDGING MODEL FIT ................................................................................................................ 163 6.5.2 PATH ANALYSIS ............................................................................................................................. 165 6.6 DISCUSSION ........................................................................................................................................ 172 6.7 LIMITATIONS ...................................................................................................................................... 174 6.8 IMPLICATIONS FOR FUTURE RESEARCH ............................................................................................ 174 6.9 CONCLUSION ...................................................................................................................................... 175 CHAPTER SEVEN: FINDING THE DETERMINANTS OF SERVICE QUALITY IN THE LOW-‐COST AIRLINE INDUSTRY ……………………….……………………….……………………….……………………….………176 7.1 INTRODUCTION .................................................................................................................................. 176 7.2 INDUSTRY WATCHERS ....................................................................................................................... 177 7.2.1 WHICH? ......................................................................................................................................... 177 7.2.2 SKYTRAX ......................................................................................................................................... 180 7.2.3 TRIPADVISOR ................................................................................................................................. 182 7.3 CONTENT ANALYSIS STUDY ............................................................................................................... 183 7.4 THE DETERMINANTS .......................................................................................................................... 185 7.4.1 OVERVIEW: RYANAIR AND EASYJET .............................................................................................. 185 7.4.2 BAGGAGE HANDLING AND POLICY ............................................................................................... 187 7.4.3 BOARDING AND CHECK-‐IN ............................................................................................................ 188 7.4.4 PENALTY FEES AND APPLICATION OF POLICY ............................................................................... 191 7.4.5 STAFF BEHAVIOUR ......................................................................................................................... 193 7.4.6 WORD FREQUENCY QUERY RESULTS ........................................................................................... 194 9 7.5 OTHER FACTORS ............................................................................................................................. 196 7.5.1 CONSUMER’S KNOWLEDGE AND EXPERIENCE .............................................................................. 196 7.5.2 FELLOW PASSENGERS .................................................................................................................... 197 7.5.3 THE AIRPORT EXPERIENCE ............................................................................................................ 199 7.5.4 VALUE FOR MONEY ....................................................................................................................... 200 7.6 LIMITATIONS ...................................................................................................................................... 201 7.7 CONCLUSION ...................................................................................................................................... 201 CHAPTER EIGHT: THE AIRLINE SERVICE QUALITY INDICATOR ............................................. 204 8.1 INTRODUCTION .................................................................................................................................. 204 8.2 THE VARIABLES .................................................................................................................................. 206 8.2.1 ON-‐TIME PERFORMANCE ............................................................................................................. 208 8.2.2 TICKET PRICE ................................................................................................................................. 208 8.2.3 ROUTE CAPACITY ........................................................................................................................... 209 8.2.4 LOAD FACTOR ................................................................................................................................ 210 8.2.5 ALLOCATED SEATING ..................................................................................................................... 210 8.2.6 BAGGAGE ....................................................................................................................................... 211 8.2.7 AVERAGE AGE OF AIRCRAFT ......................................................................................................... 213 8.2.8 NUMBER OF ACCIDENTS ............................................................................................................... 213 8.2.9 EMPLOYEE CONTENTMENT ........................................................................................................... 214 8.3 METHODOLOGY ................................................................................................................................. 215 8.3.1 THE WEIGHTS ................................................................................................................................ 216 8.3.2 GATHERING THE DATA .................................................................................................................. 217 8.3.3 MEASURING THE IMPACT ON ANCILLARY REVENUE .................................................................... 220 8.4 ALSI RESULTS .................................................................................................................................... 221 8.5 DISCUSSION ........................................................................................................................................ 226 8.5.1 THE RELATIONSHIP BETWEEN QUALITY AND VALUE ................................................................... 227 8.5.2 MEASURING THE IMPACT ON ANCILLARY REVENUE .................................................................... 228 10 8.7 CONCLUSION ...................................................................................................................................... 229 8.7.1 SHIFTING RESEARCH PHILOSOPHY ................................................................................................ 231 8.7.2 LIMITATIONS .................................................................................................................................. 231 8.7.3 IMPLICATIONS FOR FURTHER RESEARCH ...................................................................................... 232 CHAPTER NINE: DISCUSSION AND CONCLUSION ................................................................ 233 9.1 INTRODUCTION .................................................................................................................................. 233 9.2 THE LITERATURE REVIEW .................................................................................................................. 234 9.2.1 THE AIRLINE INDUSTRY ................................................................................................................. 234 9.2.2 SERVICE QUALITY .......................................................................................................................... 236 9.3 THE RESEARCH ................................................................................................................................... 237 9.3.1 THE CONTENT ANALYSIS STUDY ................................................................................................... 237 9.3.2 THE HIQUAL STUDY .................................................................................................................... 241 9.3.3 THE ALSI STUDY ........................................................................................................................... 244 9.3.4 RELATIONSHIP BETWEEN STUDIES ................................................................................................ 248 9.4 CONTRIBUTIONS ................................................................................................................................ 249 9.4.1 CONTRIBUTIONS TO THE SERVICE QUALITY LITERATURE ............................................................. 249 9.4.2 CONTRIBUTIONS TO PRACTISE ...................................................................................................... 251 9.4.3 CONTRIBUTIONS TO INDUSTRY ..................................................................................................... 251 9.5 LIMITATIONS ...................................................................................................................................... 253 9.6 IMPLICATIONS FOR FUTURE RESEARCH ............................................................................................ 255 9.7 CONCLUSION ...................................................................................................................................... 256 BIBLIOGRAPHY .................................................................................................................. 258 APPENDIX: SURVEY ........................................................................................................... 270
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