Pacific Business Review International
Volume 11 Issue 9, March 2019
Service Quality and Customer Satisfaction in Low Cost Airlines:
A Critical Review of Extant Literature
Matloob Hasan
Abstract
Research Scholar
Faculty of Management Studies & Research
Aligarh Muslim University,
Aligarh – (UP), India
The purpose of the paper is to comprehensively review the extant
literature on the level of satisfaction of passengers in India from
in–flight quality of services provided – for passengers travelling with
different purpose – Business or Leisure in the low cost carriers and the
passengers' re-flying intention with the same airlines. A total of 180
research papers related to the study were accessed and only 84 papers
were found to be relevant. Most of the studies conducted on airlines
services quality are focused on the North American, European and
South-east Asian countries, but there are limited studies on the
emerging markets of the Asian region like India. SERVQUAL,
SERVPERF and AIRQUAL have been used extensively as relevant
tools for service quality measurement. The review of existing literature
also suggests that statistical techniques mostly used for analysis
included Structural Equation Modeling (SEM) and Regression
Analysis.
Dr. Mohammed Naved Khan
Associate Professor
Faculty of Management Studies & Research
Aligarh Muslim University
Aligarh – (UP), India
Dr. RahelaFarooqi
Professor
Centre for Management Studies
JamiaMillia Islamia,
New Delhi, India
Keywords: Low cost airlines, service quality, customer satisfaction,
customer loyalty
Introduction
The history of low cost carrier (LCC) in India goes back to only 16
years when Air Deccan started its operations in 2003 and since then,
there have been changes in the dynamics of the industry characterized
by the entry of new airlines, exit of certain airlines and also mergers
and acquisitions in this period. The year 2007 was a year of
consolidation with Jet Airways acquiring Sahara Airlines and
Kingfisher Airlines acquiring Air Deccan. Kingfisher, however, got
bankrupt in the year 2012 and there have been no takers for the assets of
the beleaguered company.
Despite the mergers in the initial years of the advent of LCCs, the
airlines sector in India is less concentrated as there has been continuous
entry of new players. In the year 2005, five airlines that included
Kingfisher, SpiceJet, IndiGo, GoAir and Paramount started their
operations in the LCCs segment. Air Asia India, a joint venture of Air
Asia Malaysia and Tata, entered the low cost segment in 2014 and TataSingapore Airlines venture Vistara made its entry in the Full Service
Carriers (FSCs) segment in the year 2015.
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International
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The dynamism of the Indian domestic airlines could also be
seen from the fact that both full service and low cost
carriers from India are expanding in the international
markets to stimulate revenues and to overcome stagnant
and competitive domestic markets and as a result, the share
of domestic airlines in international traffic increased to
39.6 percent in March 2018 quarter compared to 38.5
percent in March 2017 quarter (Directorate General of
Civil Aviation, 2017-18). IndiGo operates about 15 percent
of its capacity in international markets and by the end of
2019, it will have a reach of 24 destinations. Currently,
SpiceJet operates an average of 402 flights daily covering
51 destinations, including seven international ones.
According to the estimates from CAPA (Centre for Asia
Pacific Aviation), Indian low cost carriers will develop
additional capacity for 2 million travellers annually to
cities such as New York and Sydney (Live Mint, 2018). In
order to generate revenues from different sources, the
Indian domestic airlines are also actively engaged in inflight sales that include food and beverage and consumer
goods like watches, eyewear, bags and other gift items.
The airlines industry has a major role in the services sector
of any economy and contributes significantly to the growth
of the services sector. Globally, the revenues from the
airlines industry is an estimated USD 854 billion in 2018,
growth of 8.6% over 2017, according to International Air
Transport Association (IATA). Accounting for 3.4% of
global GDP, the airlines industry is a highly competitive
industry, characterized by volatile pricing of fuels, high
v o l u m e a n d a l s o l o w m a rg i n s ( Ts a f a r a k i s ,
Kokotas&Pantouvakis, 2017). Airlines majorly focus on
pricing and service quality to remain competitive and the
service quality provided can impact the carriers'
competitive advantage (Ozment&Morash, 1994).
Many studies are focused on management of service
quality in the services sector, but there are limited studies
on the quality of services in the aviation sector. Further,
most studies conducted on airlines services quality are
focused on the North American and European markets
(Gursoy, Chen & Kim 2005; Tiernan, Rhoades &
Waguespack 2008), but there are limited studies on the
emerging markets of the Asian region (Suki, 2014) and
very limited studies on the Indian market, as presented in
Table 1 and Table 2. The Asian airlines market holds
immense significance with the emergence of low cost
airlines and the huge growth of air passenger traffic.
The objective of the research paper is to (i) present the
advent and dynamism of the Indian low cost airlines (ii)
review existing studies and classify the service quality
dimensions, measurement model and statistical method of
analysis (iii) assess the evaluation criteria used in airlines
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service quality in existing studies and (iv) propose a
conceptual model for measuring service quality in Indian
LCCs.
Literature Review
The LCC model was pioneered by Southwest Airlines in
the USA and was followed by a number of North American
airlines such as AirTran, WestJet and JetBlue and in Europe
by Ryanair and easyJet. (Graham &Vowles, 2006). The
LCC business model developed by Southwest Airlines has
been replicated around the world with a number of
common features such as minimized inflight services, high
capacity utilization, flexible staffing structure and point to
point (Ching&Waring, 2010).
The Indian civil airlines sector, monopolized by the
government owned Indian Airlines used to be the mode of
transportation for the elite class. However, with
deregulation, ease of restrictions and lesser cost of
operations, the sector witnessed entry of many private
players. Ease in FDI regulations led to influx of many
scheduled air carriers and thereafter, a spate of mergers and
acquisitions followed with Air Deccan-Kingfisher, Air
India-India Airlines and Jet Airways-Air Sahara mergers
(Amana, 2015).
The Indian low cost airlines are competing primarily on
pricing, but the scheduled airlines also known as the full
service carriers (Jet Airways, Vistara, Air India) pursue a
differential strategy with focus on frequent flier
programmes (FFPs), major meals on-board and hub and
spoke networks. Many FSCs in India opted for stripping
away complimentary or free in-flight meals in short routes
to cope with the growing fuel cost (Bansal, S. C., Khan, M.
N., &Dutt, V. R, 2008)and also these FSCs have started
competing with low cost carriers on pricing as the
competition for market share has intensified. This trend is
being witnessed in Europe as well as USA, where full
service carriers are competing directly with low cost
airlines in the short haul routes. However, in long-haul
routes, carriers like Aer Lingus and British Airways in
Europe and United and Delta in the USA have adopted
service differentiation strategy (Rhoades & Waguespack,
2008). Low cost airlines emerged with the concept of
providing airlines travel at the low fares with no frills and
limited facilities (Kim & Chan, 2014). The low fare
charged by the airlines encourages air travel but to cover
their operational costs and breakeven, the airlines need
high passenger load factor (Jiang, 2007). And in order to
bring in more passengers on board an intensely competitive
market, the airlines need to provide quality of service that
could result in increased customer satisfaction (Hung,
2003).
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Volume 11 Issue 9, March 2019
Airlines Industry and Service Quality
Service quality has become an important and pertinent
corporate strategy for decision makers in the services
sector, be it the healthcare sector or the airlines sector, as a
result of the intense competition for the share of the market
In the marketing literature, there is a general consensus that
service quality is a critical success factor in this era of
i n t e n s e c o m p e t i t i v e e n v i r o n m e n t ( Ts o u k a t o s
&Mastrojianni, 2010). And in order to differentiate
themselves, service quality is an important tool for
organization operating in the service industry (Olorunniwo
2006; Ekiz 2006). And in a very dynamic industry like
airlines, there is a need for continuous evaluation of service
quality (Ali, Dey&Filieri, 2015).
In the airlines industry, with deregulation and intense
competition, it is pertinent for the service providers to
improve the quality of services to satisfy their customer
(Nadiri, 2008). The service quality attributes which are
considered important by airlines passengers include both
tangible and intangibles (Gourdin, 1988; Elliott & Roach,
1993). Theintangibles include interaction with airlines
cabin crew and overall service performance and the
tangibles include the comfort of seats, quality of food and
in-flight entertainment among others (Rust,
Zahorik&Keiningham, 1996).
Further, it is of importance to the academicians and
researcher to understand and comprehend the dynamics of
the relationship between the quality of services offered, the
level of customer satisfaction and the behavioral intentions
or loyalty of the buyers (passengers). For the stakeholders,
what is important is how the customers (passengers)
perceive the quality of services that are offered by the
airlines and based on that perception, did it result in
customer satisfaction and finally if the customer is
satisfied, will he or she take the services of the same airlines
for future air travel? (Murti, Deshpande&Srivastava,
2013).
Service Quality, Satisfaction and Loyalty
The findings of the studies by Cronin & Taylor (1992),
Chandrashekaran, Rotte, Tax &Grewal (2007) and Curry
&Gao (2013) suggest that improvement in the quality of
services result in increase in satisfaction which in turn
directly leads to favorable outcomes and ultimately
increased loyalty. The findings of Curry &Gao (2013) on
the low cost carriers operating in Dublin (Ireland) and
Manchester (UK) suggest that satisfaction is more
influential than quality of services in retaining customers
for future travel. Research also suggests that management
of low cost airlines has been successful in modifying the
customer behavior to accept fewer privileges at lower
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prices. However, airlines must strive to improve customer
satisfaction. Most of the studies have indicated customer
satisfaction as antecedent to customer loyalty as satisfied
customers are more loyal to service providers than other
customers, in the airlines industry as well as other
industries (Saha&Thengi, 2009).
Studies have indicated a positive relationship between
service quality and customer satisfaction as well as
tendency of repeat purchases (Chen & Hsieh, 2007).
However, the effect of service quality on customer loyalty
could also be a direct one with consistent and significant
relationships between service quality and customer loyalty
(Ostrowski, O'Brien & Gordon, 1993). Airlines can
improve satisfaction of passengers by improving the
quality of services that include training employees to be
courteous to the passengers, addressing their issues and
responsive to their requirements.
Low cost airlines must endeavor to retain its customer base
and improving upon the passenger's loyalty to the airlines.
If the passengers are not loyal to the airlines, they will
easily switch over to other low cost airlines or full service
carriers. The low cost airlines must work on improving
their loyalty generation strategies such that passengers
become less price sensitive. And in order to effectively
boost passenger loyalty, airlines should improve upon the
in-flight core product performances (cleanness, ambience,
food and beverage and in-flight entertainment) and
encounter service performance (mutual understanding,
meeting customer expectations, appearance of service
providers) as suggested in a Cross-National (China/Korea)
Study of Travelers Using Low-Cost Carriers (Han, Hyun &
Kim, 2014). A study of low cost carriers in South Korea has
also pointed out that in-flight physical surroundings and
ambient conditions like air quality, temperature, odour, and
noise has a significant impact on satisfaction of passengers
(Hana &Hwangb, 2014).
In another study that compared the level of satisfaction of
passengers who travelled in three full service carriers – Air
India, Jet Airways and Sahara Airlines, it was found that
the purpose of travel and 'length of usage of airlines'
significantly affected the level of customer satisfaction and
future usage (purchase intentions). Also, the study that
measured service quality on 21 variables, provided
recommendations as to which areas the particular airlines
should focus on to improve the quality of services. For
example, while Jet and Sahara performed strongly in the
areas of friendly staff and on-time flights, Indian Airlines
was advised to focus more on people related areas to
improve on customer satisfaction (Baisya&Sarkar, 2004).
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Phases of Airline Travel
The three main phases of airline traveller include Check-in
and boarding (Pre-Flight Phase), in-flight phase and postflight or leaving the airport (Cunningham & Young, 2002;
Kiatcharoenpol&Laosirihongthong, 2006; Jiang 2013).
The experience of passengers begins with the pre-flight
phase when the passenger enters the airport. The
infrastructure of the airport that includes the lounge, the
retail outlets (food and non-food), the washrooms, the
signage and all kind of amenities that engages the
passengers during the stay becomes relevant. A passenger
spends a minimum of one hour in the airport and the
amenities available in the airport that engages the
passenger during the stay leads to the level of satisfaction
(Fodness& Murray, 2017). The quality of pre-flight, inflight and post-flight services has a statistically significant
effect on passenger satisfaction.
Most of the research studies carried out on airlines service
quality includes all the typical service items offered during
pre-flight, in-flight and post-flight phases. This research is
focused on the in-flight service quality and aims to
contribute to the contemporary understanding of specific
in-flight dimensions that impact passenger's satisfaction
and loyalty with the services, followed by
recommendation.
Pricing and Brand Image
Previous studies indicate that pricing of ticket along with
service quality are the major triggers in choosing airlines
(Balcombe, Fraser & Harris, 2009). The idea of low cost
carriers emerged from low prices with high fares
negatively impact passenger's overall experience (Bowen
& Headley, 2007; Bowen et al., 1991; Park et al., 2004,
2009). Many airline companies have focused on service
quality on the basis of consumers' perceptions of flight
schedule, on-time flights and price (Headley & Bowen
1997; Tiernan et al. 2008; Gnanlet&Yayla-Kullu 2013).
However, many airlines are aiming to provide high level of
service quality and build an image and brand that can
replace the reputation of LCCs as low fare benefit
(Holtbrugge, Wilson & Berg, 2006).
The image of the airlines influences the passengers' repurchase intentions and resultant recommendations to
friends and business associates (Park et al, 2004). Chen and
Tseng (2010) went to the extent of referring brand image as
the strongest driver of airlines loyalty. In the long-term
airlines should develop a service-oriented corporate
culture to develop customer loyalty (Ostrowski, O'Brien &
Gordon, 1993).
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Many research studies have considered airline pricing or
fares as construct for satisfaction and loyalty to the airlines
as low cost carriers primarily compete on the basis of
pricing. Also, the brand image, a construct of AIRQUAL
model, influences the decision making of airline
passengers. The dimensions of airline pricing and image
have been considered for measuring customer satisfaction
and loyalty to the airlines.
Methodology
A total of 180 research papers were reviewed and among
them, 74 papers were related to service quality and
customer satisfaction in the context of low cost carriers.
The other research papers were related to services industry
(e.g. hospital industry, hospitality and retail sectors) but not
to airline industry. The research papers were accessed using
journal databases like ScienceDirect, Emerald, Sage
Publications, Taylor & Francis and Elsevier. The keywords
that were used to access the reports included low cost
carriers, airlines service quality and Indian low cost
airlines. The 74 relevant papers were comprehensively
reviewed to identify the country of study, the year of study,
selection of constructs and variables, the measurement
models employed for determining service quality and also
the statistical tools relied upon.
Analysis of Results
Among the 74 relevant research papers, in 66 studies
(around 90 percent), passengers were interviewed at the
airports while waiting for the flights at the airport. The
journals that covered the maximum papers on low cost
carriers and passengers' perceptions and expectations of
services provided included Journal of Air Transport
Management (6 studies), Total Quality Management &
Business Excellence (3 studies), Journal of Services
Marketing (3 studies), Journal of Advances in Management
Research (2 studies), Cornell Hospitality Quarterly (2
studies), Services Marketing Quarterly (2 studies),
Transportation Research (2 studies).and Managing Service
Quality (2 studies).
A number of research studies have been conducted in North
America, Europe and other countries to examine the effect
of service quality offered by airline companies on customer
satisfaction. For example, Olorunniwo et al (2006) carried
out the study in the US, Namukasa (2013) in Uganda,
Gures and Others (2014) in Turkey and Etemad-Sajadi et al
(2016) in Germany.
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Table 1 and Table 2 show that the relevant research
conducted on service quality, customer satisfaction and
customer loyalty in low cost carriers in different countries
of the world. The area of research is found to be more
popular in countries like United States, Turkey, South
Korea and Malaysia. The sample size varies mostly in the
range of 300-500. The measurement model of service
quality that is mostly used is SERVQUAL, followed by
SERVPERF and AIRQUAL. In most of the studies,
researchers have used Structural Equation Modeling
(SEM), a combination of factor analysis and regression
analysis to test their models and to analyze structural
relationships and lately it has emerged as the most widely
and relevant statistical and data analysis technique (Khan
& Adil, 2013).
Archana&Subha (2012) conducted a study on airlines
service quality and passenger satisfaction at Chennai
international terminal with sample of 270 respondents and
three service quality dimensions (in-flight service, in-flight
digital service and back-office operations) and 27
variables. The in-flight service quality variables included
crew friendliness, cuisines, seat comfort, cabin cleanliness,
toilet cleanliness among others. Mohamed & Rani (2016)
carried out a study to identify customer satisfaction in
airline services. With a sample size of 382 passengers
travelling by Air India from Tiruchirappalli airport, the
researchers selected the AIRQUAL model presented by
Ekiz (2006) with dimensions like Airline Tangibles,
Terminal Tangible, Personnel Quality, Empathy and
Airline Image.
Predictors of Service Quality and Conceptual Model
The predictors that are most commonly used in research
studies on airlines service quality, satisfaction and
behavioral intentions include tangibles (seat comfort, food
and beverage, clean interiors, in-flight entertainment) and
service encounter with crew members (prompt service,
willingness to help, knowledge, communication skills etc).
As observed in Table 3, the predictor that is most
researched in different studies include on-time arrival and
departure (22 times), comfortable seats (13 times), food
quality (11 times), reasonable fares (11 times) and clean
interiors (8 times).
Predictors of Service Quality in the Airlines Sector
Different research studies have used different criteria for
evaluation of service quality of airlines. In most studies, the
quality evaluation criteria is flight safety, in-flight
entertainment, seat comfort, food quality, service attitude
of cabin crew and cleanliness among others. Saha&Theingi
(2009) selected 21 service quality characteristics that
included factors such as seats, air conditioning, dress and
appearance of flight attendants and convenience of flight
schedule.
Similarly, Su (1995) selected 30 items such as the flight
safety, pilot skills, on-time flights, ticket prices, etc. that
influenced corporate image. Huang (1996) concluded from
his study that friendly attitude, safety, clean and
comfortable cabins are important and the least important
ones include provision of books, newspapers, neat and tidy
apparel and appearance. Hsu et al. (2009) pointed out that
the passengers consider safety as the most important
parameter followed by comfort, convenience and service
attitude.
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Conceptual Model for Measuring Service Quality in
Indian LCCs
Based on the review of the previous research studies with
regard to service quality, airline prices, airline image,
customer satisfaction and loyalty, a conceptual model has
been developed to study the effects of airlines service
quality on satisfaction and loyalty for passengers of low
cost carriers. Most of the studies have selected the
Airline Image dimension has been adopted from
AIRQUAL model developed by Hussain&Bavik (2006)
and the dimension of Airline Pricing adopted from Chen et
al (1994). The variables like Pricing and Image have often
been ignored in previous studies on service quality of low
cost airlines and considering these important variables in
this study may raise the predictive power of the conceptual
model. Therefore, it is necessary to consider important new
variables that can explain the behavioral intentions of
customers accurately and also to contribute to the
knowledge of airlines services in the future.
For measuring customer expectations, perceptions and
overall satisfaction in service industries, a number of scales
have been proposed in the past, but SERVQUAL and
SERVPERF are the most prominent. For this study,
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dimensions of Tangibles, Reliability, Responsiveness,
Assurance and Empathy adopted from Parasuraman et al.
(1985, 1988) to measure the airline service quality. Besides
these five service quality dimensions, we have identified
Airline Image and Airline Pricing as important variables as
customer behavior may also be determined by these
variables (Bloemer et al., 1998; Andreassen&Lindestad,
1998; Nguyen LeBlanc, 1998; Oh, 1999; McDougall &
Levesque, 2000; Varki& Colgate, 2001).
SERVPERF scale, developed by Cronin & Taylor will be
used as it is considered a better measure of service quality,
especially in emerging countries such as India (Jain &
Gupta, 2004; Adil, 2012). The survey, designed for airline
setting will be conducted at the domestic terminal of New
Delhi airport and the survey questionnaire is based on
multiple items, adopted from previous research. For this
study, five constructs (service quality, airline pricing,
airline image, customer satisfaction, customer loyalty) will
be measured using a set of 35 items in the questionnaire
with seven point Likert-type scale. This will involve airline
tangibles (seven items), reliability (three items), assurance
(five items), responsiveness (three items), empathy (four
items), pricing (three items) and airline image (three
items). Customer satisfaction is to be measured using three
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items as proposed by Westbrook & Oliver (1991) and
customer loyalty using four items, adopted from Caruana
(2002) and Dehghan&Shahin (2011).
Conclusion
Across the world, the research on airlines service quality
has generated tremendous interest as the delivery of high
quality of services is essential for airline companies to
compete and survive in this highly capital intensive
business (Archana&Subha, 2012). The airlines industry is
highly capital intensive and fiercely competitive and in
order to sustain in this industry, the companies should
endeavor to provide excellence in their services by
continuously improving upon them as comparatively better
service quality results in customer satisfaction, retention,
revenue, market share and profitability (Paparoidamis,
Chumpitaz& Ford, 2015).
Jan Carlzon, turned around the fortunes of the ailing
Scandinavian Airlines when he became the CEO of the
problem-ridden airlines in 1981. And when Carlzon left the
company in 1994, he turned the airlines around by focusing
on what he later called “moments of truth'. 'Moments of
Truth' is about the importance of responding to a changing
marketplace. And the Indian domestic airlines industry is
very dynamic with major changes happening in its
landscape. In the Indian domestic airlines industry, new
players enter the market (e.g. Vistara, Air Asia) and old
players also get defunct (e.g. Kingfisher Airlines). It is
imperative for the airlines companies to understand the
level of customer satisfaction from the services provided in
the flights so that they could develop strategies and execute
those to retain their customers in the future travel.
The most direct airline service to customers is in-flight
service by in-flight attendants, as passengers tend to
evaluate airlines based on their degree of satisfaction with
the in-flight service. Accordingly, improving the in-flight
service quality is one of the most critical success factors of
airline companies. Also, the relationship between ticket
prices and other constructs such as customer satisfaction
and airline image will also be investigated and this will be a
significant factor for airline companies to assess their
pricing strategies. The relationship between these variables
has been overlooked in airline studies especially for Indian
low cost carriers.
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services: prospects and challenges for the Indian
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Anderson, Eugene W., and Mary W. Sullivan.The
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