and consistently on high levels. According to the authors this would lead to high customer
satisfaction.
2.2.2. Male vs. female customers
An interesting aspect concerning differences in male and female service values was brought up
by Westwood et al. (2000). According to the article, travel is widely associated with masculine
values such as adventure and pleasure, and numerous researchers do not recognize gender-
specific concerns and incorporate gender-neutral values into travel. Many women feel
discriminated and perceive airlines as masculine organizations. Thus, there is a need to
understand and satisfy the needs of female travelers. And, as roles of women in business and
hence business travel grow constantly, it is dangerous customer segment to overlook nowadays.
Furthermore, customer retention is important, as keeping an old customer is less expensive than
acquiring a new one, and female travelers who are not satisfied with the services, may switch to
another carrier. However, as authors claim, the airlines keep seeing air travel as a gender-neutral
experience and despite the research on the subject of female travelers, refuse to cater to women’
needs.
Another issue, which rose up in the surveys conducted by Westwood at al. (2000), is the attitude
of flight attendants that tend to pay more attention to men and assume that women are not
travelling on business. Furthermore, the research criticizes design of lounges and aircraft, and
this leads to higher level of dissatisfaction in air travel and mostly would push female customers
to try other carriers. As the article shows, females value such things as comfort, safety, and staff
attitude more than male travelers. Another important point brought up in the article, is that the
end of flight experience should not end at the aircraft door. Female travelers are keen on
receiving more help upon arrival from a carrier, as they may feel less secure at the destination
country. Male/female and business/leisure/commuting customer segmentation is used for the
purposes of this study.
2.3.
Service Development and Innovation in Airline Industry
Today, the competitive advantage that services bring to a company cannot be underestimated
(Kandampully, 2002). Service innovation is capable to open new markets, especially when
technology is developing fast and constantly providing new opportunities to develop new service.
Service innovation also happens through networks and knowledge development (Kandampully,
2002). As discussed previously, one of the examples of such innovation is airline industry
alliances. With joint efforts, alliance can offer its customers greatly extended network of flights
and wider range of services and benefits, compared to what a single airline is able to offer (for
example, Star Alliance has 26 member airlines and reaches 1290 airports in 189 countries).
Airline offering contains both service and product components (Kostama & Toivonen, 2012).
Here, airline seats are product component and an airline chooses seat modification and level of
comfort when purchasing aircraft. Once the cabin design is chosen, it cannot be changed easily,
so the decision making here affects the total offering quite heavily. Kostama & Toivonen also
give an example of how an airline approached the seat selection by installing a test area at the
airport and chose 38 customers to test it and give their comments.
Some service innovations have become more of commodity nowadays, e.g. electronic ticketing
and self-service check-in. In 2004, IATA launched a project to implement such innovations as
electronic ticketing, common-use self-service kiosks (CUSS), bar-coded boarding passes and
RFID-enabled baggage handling (IATA.org, 2004). Now, those innovations have transformed
the industry, making processes faster, cheaper and more efficient.
Furthermore, customers themselves play a central part in service innovation. According to
Kostama & Toivonen (2012) there are three ways to involve users in service design: listening to
users, understanding users and having a dialogue between a service provider and a user. An
excellent example of user-based innovation is Quality Hunters project by Finnair (Finnavia,
2011/1). The airline selected a number of participants, who were travelling the world on Finnair
(and Oneworld alliance’s flights) to discover what constitutes quality and how to improve
customer satisfaction. Based on their research, Finnavia introduced picture gallery and book
swap at Helsinki-Vantaa airport in Finland (Finnavia, 2001/2). In addition, social media is
widely used in service innovation. Such example is KLM Meet & Seat (KLM.com, 2012/2). The
idea of the service is to allow the passengers on long-haul flights to check the other passengers’
social media profiles (such as Facebook and LinkedIn) and choose their seat next to people they
seem to like based on this data. KLM offers an option to manage what kind of information a
passenger wants others to see as well as removes all data 48 hours after the flight. Very recently,
AirBaltic introduced similar program, called SeatBuddy (Simpliflying.com, 2012). Instead of
sharing social media profiles of passengers, SeatBuddy offers to choose whether you would like
to take a rest during the flight, have a business talk or concentrate on working. Moreover, the
program takes a step further, asking whether a neighbor should speak the same language, work in
the same industry or share the same hobby. Furthermore, a passenger can save a profile of his or
her preferences and use it on another frequent flyer programs, given that they have implemented
similar system. Such programs may also bring airlines extra revenue if made paid program, but
in any case they will make airline travelling a completely new social experience.
Another example of social media in services was introduced by Lufthansa, when the company
decided to use social media in its brand new service called FlightGreetings (Flight-
Greetings.com, 2012), enabling passengers to share destination their trip destination and get
advice from their friends in e.g. Facebook about the interesting places to visit or good restaurants
at one’s destination directly onboard.
However, not all service innovations succeed. An example of failed service innovation was
Finnair’s Spa& Saunas service at Helsinki-Vantaa airport, Finland. Spa opened in the end of
2009, being a unique service offering worldwide. However, due to its unprofitability and lack of
customer interest, it was closed in March 2012 (TicketCorporateTravel.fi, 2012).
These new services represent new generation of service innovation and their impact on customer
satisfaction and service quality is yet to be discovered. In this research, such services are not
taken into account due to very limited media as well as scientific community coverage.
According to Teichert et al. (2008), service innovation is a key for airlines to succeed in their
market. Price-quality preferences of all customers should be known and services tailored to
deliver superior service and achieve loyalty.
3. SERVICES AND SERVICE QUALITY
Plenty of research exists on services and service quality. This chapter aims to provide an
overview of the literature in this field. Firstly, services and various service characteristics are
discussed. Next, several service quality models are discussed and summarized, showing different
perspectives on the subject. After this a concept of perceived service quality is reviewed.
Discussion on customer satisfaction and expectations adds to understanding of importance of
customer satisfaction and explains service elements. Next, service quality in airline industry is
discussed, connecting the theoretical models to the case industry, and details relevant to airline
business are added. Finally, service process model is introduced, and service quality attributes
and dimensions are discussed. The literature review serves as a basis for the model, which takes
customer perspective on the air transportation.
3.1.
Defining Services
Service is an activity that is intangible (as opposed to physical products) and cannot be stored.
An example of service is a visit to a bank, where a customer receives an information he or she
nees. For example, American Marketing Association defines service as intangible products or as
activities that accompany the sale of a product. Quinn, Baruch and Paquette (1987) provide a
definition that is more detailed (quote): services are economic activities whose output is not a
physical product or construction, is generally consumed at the time it is produced, and provides
added value in forms (such as convenience, amusement, timeliness, comfort or health) that are
essentially intangible concerns of its first purchaser. However, nowadays the borderline between
products and services has become vague and most of the offerings of any company include some
components of both. E.g. Cusumano et al. (2006) claim that services offered by a manufacturing
company, are usually complimentary to its products, assisting in promoting adoption of a product
or enhancing a product. Moreover, many companies have adopted such concept as solution – a
complete package that includes products, services, best practices etc. and is aimed to solve a
customer’s problem. Such concept originates from sales and marketing operations (Temple,
2009).
Parasuraman et al. (1985) suggest that service has the following characteristics that also
influence the understanding and measurement of service quality:
Intangibility – as service is an intangible performance, it is hard to measure it the same
way as a product quality.
Heterogeneity – services vary from time to time, from customer to customer and from
producer to producer. Thus, consistency of service delivery is hard to achieve;
Inseparability – production and consumption of a service cannot be separated. Thus, the
quality occurs while a service is delivered, which reduces managerial control o