a recovery process from bad experiences (such as compensations after cancelled or
overbooked flight, lost baggage),
extraordinary services (services that excel in meeting customer preferences or solving
the problems so that the service seems customized).
This classification could help understanding a service in question to see its core elements, and
finding out where customer satisfaction may be created. For example, customers expect that
basic elements and basic support processes work on continuously good basis, and excelling in
them will not increase customer satisfaction, but will keep it as it is. Extraordinary services
would put customer satisfaction on completely new level, adding value in meeting customer
needs and expectations. Recovery processes could be most important as even if all other services
have been provided on superior level, bad experience can destroy customer satisfaction if not
handled properly.
Another way to handle customer satisfaction and service quality is to find out where customer
satisfaction lays. Silvestro & Johnston (1990) identified the following service quality factors:
hygiene factors, or dissatisfiers (what is expected by customer, but will not be a
source of satisfaction, e.g. clean service facilities)
enhancing factors, or satisfiers – (factors that leads to customer satisfaction but
failure to deliver does not cause dissatisfaction)
dual threshold factors (if such factors are failed to deliver, will cause customer
dissatisfaction. However, if delivered above the specific level will cause satisfaction)
Cadotte and Turgeon (1988) also added neutral factors, factors that are least sensitive to changes
in performance, i.e. have no impact on service quality perception. Also, Gummesson (1991) adds
the factor that he considers to be missing from all service quality research: love factor. It
constitutes the willingness to serve the customer, genuine empathy, caring personality.
According to Gummesson (1991), emotional ties can appear e.g. between a nurse and a patient, a
teacher and a student, thus adding to quality of interaction.
Jones & Sasser (1995) argue that only full customer satisfaction secures customer loyalty as well
as ensures long-term profitability. Especially it is important on markets with intense competition.
However, there is a difference between true long-term loyalty and false loyalty. The authors
argue that false loyalty is empowered by such factors as governmental regulations on
competition, high switching costs, proprietary technology or strong loyalty promotion programs
such as frequent flyer programs. They say that the customers remain loyal only when they are
completely satisfied. Therefore, when the customer uses up his frequent flyer miles, he or she
may not remain loyal and switch to another carrier, in case loyalty is false. However, if the
carrier keeps the customer happy not by only frequent flyer miles program, but by providing
superior services consistently, the loyalty is true, and customer will stay with the carrier. The
authors conclude that it is crucial for a company to excel in defining its target customers, and
deliver exactly the product that corresponds to their needs. Heskett et al. (1994) argued the same.
According to them, profit and growth are simulated by customer loyalty and loyalty in its turn is
driven by customer satisfaction, and customer satisfaction depends on the value customers
receive from the service.
Understanding importance and sources of customer satisfaction is important for any company in
any industry to grow and remain profitable, but in airline industry customers are carriers’ only
assets (Carlzon, 1987). Hence understanding and managing satisfaction through service quality is
essential, and requires greater attention from carriers nowadays, in struggling and challenging
environment. In the next chapter, service quality applied to airline industry will be discussed and
a process model as well as measurement criteria introduced.
3.4.
Service Quality in Airline Industry
Delivering superior service quality by understanding customer expectations is a key for success
and survival in very hectic and competitive environment of airline industry (Gilbert & Wong,
2003; Chen & Chang, 2005). High level of service quality is vital to acquire and retain loyal
customers (Chang & Yeh, 2002). Nevertheless, service quality in airline industry is widely
discussed and bad performance is often criticized publicly. The rate of mishandled baggage
reached 6.5 per 1000 passengers in 2006 and on-time arrival rates dropped significantly (Tiernan
et al., 2008/1) in US. In EU, several measures have been taken to improve service quality and
industry deregulation gave EU passengers more rights in case of delayed or cancelled flights to
compensate for failure of an airline to deliver good service. Since then, the number of complaints
has increased as the customers have felt more power over their own flight experience (Tiernan et
al., 2008/1).
Deregulation of the industry in Europe in 1990s and in US in the end of 1970s has changed the
view on service quality. Prior to it, service quality was seen as such managerial variable as flight
frequency, load factors, and aircraft type (Tiernan et al., 2008/1). Nevertheless, in today’s
liberalized industry, a focus of service quality has shifted towards customer satisfaction and
loyalty, which leads to improved competitive advantage. As service quality is more visible,
passengers may use it as a basis for judging the overall quality of an airline (Rhoades &
Waguespack, 1999).
According to Carlzon (1987), the only true assets of the airlines are their customers. Jon Carlzon,
former CEO of SAS, who led the company from near bankruptcy to profitable and successful
customer-oriented carrier within just two years, speaks about the importance of customer
orientation as a prerequisite for business development and profitability. Being successful in what
Carlzon calls ‘moment of truth’ (i.e. a first contact of a customer with an airline, remote or
personal, which forms customer impression of the airline) that defines customer experience as
well as creates customer loyalty. Furthermore, he states that the quality of services depend on
this first encounter greatly, and highlights the power of front line employees in creating and
shaping customer experience and perception. Babbar & Koufteros (2008) agree with Carlzon,
stating that the most visible service to the customers is the service that contact employees
provide. As Zomerdijk & Vries (2007) definite it, customer contact is a direct encounter between
a customer and a service provider that takes place at the same time, but not necessarily in the
same place, and has an opportunity for interaction.
The researchers define a number of key service quality attributes in airline industry that affect
customer’s perception of a service delivered and thus create the image of a carrier. The attributes
are summarized in Table 2 below.
Table 2 Service quality aspects in airline industry (multiple sources)
The importance of such attributes as safety, frequency, reliability, responsiveness, employee’s
appearance and attitude, facilities as well as customization will be tested in the empirical part of
this thesis. Based on the above table, service quality attributes can be roughly divided into
performance-related attributes (such as punctuality and safety), service-related attributes (on
board service, courtesy of staff, baggage transportation) and basic product attributes (seat
comfort, flight schedule etc.). In this study, service- and performance-related attributes will be
addressed. Service quality is a cornerstone to efficiency and through efficiency to profitability
(Carlzon, 1987). According to Parasumaran et al. (1991), continuously providing consistent,
reliable and fair services is a key to achieve customer loyalty.
3.4.1. Service process in airline industry
As Gliatis & Minis (2007) say, a service is a sequence of processes; and each of those processes
generates a different value for a service in question. The value of each service process depends
on service attributes (characteristics) as well as the way the process accounts for these attributes.
Similarly, Chen & Chang (2005) define airline service experience as a chain of services, each
service is made of a series of processes. Here, a service process is divided into ground and in-
flight services (sub-processes), and whereas Chen and Chang (2005) suggest that both have to be
evaluated separately (which they do in their article), a customer is not very likely to differentiate
between them. Thus, in this study, a service process is a descriptive service process from a
customer’s perspective, a process that coverts inputs to outputs through service steps that each
customer takes when using air transportation. Service process consists of sub-processes, each of
sub-processes contributing towards a service in question.
Furthermore, from the models introduced in Chapter 3.2, the following can be concluded:
here, the customer enters to a service process with certain expectations, created by e.g. word of
mouth, prior experiences, marketing campaigns etc. (as discussed by Gronroos, 1982 and
Parasumaran et al., 1985). The expectations (or expected service) have an impact on the process
itself as well as the output of the process, i.e. perceived service. As in Parasumaran’s (1985) gap
model, here, perceived service quality is a difference between expected and perceived services.
The service process steps are based on the airline passenger lifecycle suggested by Kelley (2012),
which consists of five stages (Figure 5).
The idea of airline passenger lifecycle is to evaluate the opportunities for value creation. The
author suggests that an airline has an opportunity to create value for the customer in between
each stage in this lifecycle. However, the cycle seems rather generalized and misses such value
creation a