BSc (Honours) Tourism Management

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1 Faculty of Organisation and Management BSc (Honours) Tourism Management Title A study to investigate the service quality perceptions of Cathay Pacific Airway passengers Name Au Wai Ho, Alex Student No Month Year April 2009

2 Sheffield Hallam University Faculty of Organisation and Management Title A study to investigate the service quality perceptions of Cathay Pacific Airway passengers FULL NAME Au Wai Ho, Alex STUDENT No Supervisor: Dr. Connie Mok In partial fulfilment of the requirements for the degree of Bachelor of Science in Tourism Management. Month Year April 2009

3 Acknowledgements I would like to thank Dr. Connie Mok who supervised the whole process of this dissertation with patience, guidance and assistance. I would also like to give thanks to Ms. Jorica Fok and Ms. Elaine Yip for their great support and suggestions for this dissertation. Finally, the researcher would like to thank all the respondents who had participated in the survey of this study for providing valuable information for the primary research. I

4 Abstract The airline industry was undergoing a very difficult time and the highly competitive market environment pressurized airline to deliver high quality services. It was very important for developing marketing strategies, service quality management, service segmentation strategies and product development to obtain the new customers and retain the exceeding customers of different groups of passengers. To achieve this ultimate goal, this paper had investigated passengers perceptions by 22 SERVQUAL attributes on five service quality dimensions: Tangibles, Reliability, Responsiveness, Assurance and Empathy (Zeithaml, Parasuraman and Berry, 1990).The result demonstrated that Empathy was the most important service quality dimension. And Tangible got the highest mean score of service quality perception of Cathay Pacific Airways passengers. Cathay Pacific Airways also needed to understand the significant difference among airline service quality perception, demographic characteristics and travel patterns. One-way ANOVA and an independent sample t-test were applied to the data collected from the passengers who traveled with Cathay Pacific Airways in the past 12 months and their age were all above 18 years old. The result revealed that passengers perception were significantly different across age, nationality, occupation, class of cabin, frequency of travel and purpose of travel. Based on the finding on this research, the researcher also recommended some improvement strategies to Cathay Pacific Airways to enhance the service quality perception of the passengers. II

5 Table of Content Page Title Page Acknowledgements Abstract Table of Contents List of figures List of Tables List of Abbreviations I II III V VI VII Chapter 1 Introduction 1.1 Introduction of Cathay Pacific Airways Service quality of Cathay Pacific Airways The key challenges of Cathay Pacific Airways Aim & objectives of the research 6 Chapter 2 Literature Review 2.1 Characteristics of tourism services Dimensions of service quality SERVQUAL gap model Perception of service quality Importance of marketing strategies Importance of service quality Airline service quality study Service quality dimensions in airline industry 21 Chapter 3 Methodology 3.1 Secondary research Limitations of secondary research 26 III

6 3.3 Primary research Sampling and data collection Survey instrument Limitation of primary research 31 Chapter 4 Results 4.1 Demographic results Travel pattern results Importance of service quality dimensions Means of perceived service quality Means and Rank of 22 SERVQUAL service quality statements Passengers perception differences by genders Passengers perception differences by age Passengers perception differences by nationalities Passengers perception differences by education level Passengers perception differences by seat class Passengers perception differences by occupation Passengers perception differences by frequency of travel Passengers perception differences by purpose of travel 64 Chapter 5 Conclusions and Recommendations 5.1 Conclusion Recommendations for the further studies Recommendation for Cathay Pacific Airways 72 Reference 75 Appendices I: Market share of Top 10 Airlines used by visitors 2006 & II: 22 SERVQUAL service quality perception statements 85 III: Questionnaire compiled in Chinese and English version 86 IV

7 List of Figure Figure 1 SERVQUAL gap analysis model V

8 List of tables 4.1 Demographic results 4.2 Travel pattern of Cathay Pacific Airways passengers 4.3 Importance of service quality dimensions 4.4 Means of perceived service quality 4.5 Means and Rank of 22 SERVQUAL service quality statements 4.6 Passengers perception differences by genders 4.7 Passengers perception differences by age 4.8 Passengers perception differences by nationalities 4.9 Passengers perception differences by education level 4.10 Passengers perception differences by seat class 4.11 Passengers perception differences by occupation 4.12 Passengers perception differences by frequency of travel 4.13 Passengers perception differences by purpose of travel VI

9 List of Abbreviations ANOVA One-way analysis of variance CX Cathay Pacific Airways SPSS Statistical Package for the Social Sciences HKIA Hong Kong International Airport HKSAR Hong Kong Special Administrative Region HKTB Hong Kong Tourism Board VII

10 Chapter 1 Introduction 1.1 Introduction of Cathay Pacific Airways Cathay Pacific Airways had been serving and growing with Hong Kong for 60 years. Cathay Pacific's development was a typical Hong Kong success story. From Shanghai where they were originally based they moved to Hong Kong and started managing the airline. Nowadays, they owned more than 100 aircraft employed over 23,000 people and it was one of the largest airways in Hong Kong. (Cathay Pacific Airways, 2009). It was also an international airline registered and based in Hong Kong, offering scheduled cargo and passenger services to over 90 destinations around the world. Nowadays, Cathay Pacific Airways currently is ranked as the world s 7th most profitable airline (net profit) by operating revenue. Also, Cathay Pacific was ranked 17th-largest in the world in terms of revenue passenger kilometers. (Air Transport World, 2008). Cathay Pacific's success was a major driving force behind Hong Kong's aviation development, which in turn supported Hong Kong s continued trade and economic growth. Sultan and Simpson (2000) stated that the major airline industry competitors, seeking to gain or expand market share globally or regionally, provided an 1

11 opportunity to explore the service expectation and perception of customers of different nationalities. Cathay Pacific had the biggest market share in Hong Kong s airlines industry, 32.4% in 2006 and 30.5% in 2007 respectively. Based on the market share, it showed that Cathay Pacific Airways was a successful airline in Hong Kong. (Hong Kong Tourism Board, 2007). (Appendix I). 1.2 Service quality of Cathay Pacific Airways Cathay Pacific Airways set Providing service straight from the heart and Encouraging product leadership as their mission. With its outstanding safety record, quality management and remarkable service, Cathay Pacific Airways awarded Airline of the Year award runner-up in 2008, Best Airline Economy, Business and First Class in2008, and other service award and honors. (Cathay Pacific Airways, 2008). Cathay Pacific Airways was a brand name that Hong Kong people could be proud of. In order to maintain the customer s loyalty, Cathay Pacific Airways provide two types of frequent flyer programs to the frequent travelers. They were the Marco Polo Club and the Asia Miles which was an affiliated program with other airlines. With Cathay Pacific's worldwide network, Dragonair's extensive coverage of 2

12 Mainland China, and both airlines' affiliation with the oneworld alliance, made the Marco Polo Club be the most powerful airline loyalty club in Asia. The Marco Polo Club let passengers enjoyed a world of benefits, convenience and personalized service wherever they go, included: Priority check-in and boarding, in-flight duty-free specials on Cathay Pacific and Dragonair, the club magazine and other services. Asia Miles was a travel reward program which the passengers could fly with 20 Asia Miles partner airlines to earn Asia Miles towards flight awards, upgrades, companion tickets and other lifestyle awards such as dining coupons and free accommodation. Cathay Pacific Airways was one of the members of the oneworld alliances. The oneworld brought together ten of the worlds biggest and the best airlines and other 20 affiliates, including British Airways, Japan Airlines and American Airlines. There were many benefits not only for customers, but also airlines through the formation of alliances. The passengers could use different airlines within their journeys as alliances allowed them to transfer between member airlines easier. Customers could also get benefit substantially from the cost reduction possibilities afforded by alliances. Furthermore, it was more easily for people to travel to more places for greater value. The presence of alliance was due to the constraints of flying regulations or economic concern to serve 3

13 all markets in the world. 1.3 The key challenges of Cathay Pacific Airways The airlines industry in Hong Kong faced intensive competition. There were almost 90 airlines operated flights in the Hong Kong International Airport (HKIA) (Airport Authority Hong Kong, 2008). Consumer would like to seek for information through the internet, magazines or other sources of information so as to compare the service quality of Cathay Pacific Airways with other airlines. As a result, the tools to maintain customer loyalty and market share were the most challenge for full services carriers like Cathay Pacific Airways. Hui (2006) who was the former Chief Secretary of HKSAR government stated that this might be an increasing challenge as Cathay Pacific became not just a regional, but a truly global and international operator. There were significant implications in a wide range of policy matters involving leadership, management, services, image, commitment and balance between commercial and public interests. Chan (2009), Bloomberg reporter stated that Cathay Pacific Airways Ltd., and other Asian carriers will all post losses next year as the fallout from the global economic crisis curbs demand for air travel and the fuel price at the higher 4

14 level. In August 2008, Cathay Pacific posted its first half-year loss in five years, an interim loss of 663 million Hong Kong dollars and recently issued a second profit warning for its full results in Harbison (2009), managing director of the centre for Asia Pacific Aviation stated that demand has fallen off very fast. This is a global problem and it's not going to be resolved in three months. It's going to be here for a year or maybe two years.'' The multinational company and the business travelers would like to reduce the spending on business travel. Chan (2009) stated that Merrill Lynch & Co., UBS AG and JPMorgan & Chase Co. were telling senior bankers in Asia to fly coach on short-haul flights and reduce non-essential travel. Airlines today are facing the difficult challenges of simultaneously maximizing the customers satisfaction and minimizing the production costs and it is hard to make a balance, and survive in the financial tsunami. The reason was that when enhanced the service quality to satisfy the customer expectation, at the same time the production costs was raised as well as the costs would affect the price of the product or services. Indeed, it affected perception of passengers on the service quality. 5

15 1.4 Aim & objectives of the research Due to the importance of service quality to airline industry, the researcher was to investigate the performance of Cathay Pacific Airways as perceived by its passengers, to suggest improvements to increase the repeated customers, to maintain the market share and build up the brand loyalty. The following are the objectives of the research: Objectives: 1. To review and integrate the recent research in service quality; 2. To examine the service quality perception of Cathay Pacific Airways passengers through a quantitative research; 3. To explore the dimensions of service quality in evaluating the service quality of Cathay Pacific Airways; and 4. To recommend improvement strategies to Cathay Pacific Airways based on the findings of this study. 6

16 Chapter 2 Literature Review The theme of the research was to evaluate the service quality perception of Cathay Pacific Airways passenger, so the researcher would like to mention service quality perception concept of airline s passenger in large proportion of the study. Firstly, the researcher mentioned the characteristics of the tourism service and the base concept of service quality- SERVQUAL model. Then the researcher would like to mention the service quality perception and concentrate on the investigation of the service quality concept in the airline industry. Finally, the researcher defined four hypotheses for the further research in this study. 2.1 Characteristics of tourism services Reisinger (2001) stated that tourism services are primarily intangible. This mean that tourism services did not have a physical dimension: could not be touched, seen, tasted, felt, heard, or smelled in the same way as goods before they were purchased. Williams and Buswell (2003) stated that the intangibles were: inseparability, perishability and heterogeneity. Chang and Yeh (2002) argued that quality in airline services was difficult to describe and measure due to its heterogeneity, intangibility and inseparability. 7

17 Reisinger (2001) argued that production and consumption of tourism services were inseparable. Tourism services could not produce in one place, transported for sale in another, and sold and consumed again in another. Williams and Buswell (2003) stated that tourism services were perishable, this mean that the services could not be stored. Reisinger (2001) argued that tourism services were heterogeneous. They vary in standard and quality over time because they were delivered by people to people and were a function of human performance. 2.2 Dimensions of service quality Wuest (2001) stated that service quality was the result of a complex network of several dimensions. Parasuraman, Zeithaml and Berry (1988, 1994a) were among the most recognized researchers in the area of service quality. Their development and refinement of the SERVQUAL model produced generic measure of service quality through examination of twenty two service items and were categorized into five dimensions of service: tangibles, reliability, responsiveness, assurance and empathy. Tangibles consisted of the appearance of physical facilities, equipment, personnel and communications materials (Berry and Parasuraman, 1991). 8

18 Reliability reflected the service provider s ability to perform service dependably and accurately (Parsuraman, Zeithaml and Berry, 1988). Furthermore, they stated that responsiveness represented the willingness to help customers and provide prompt service. Assurance reflected the knowledge and courtesy of employees and their ability to inspire trust and confidence. Empathy involved the caring, individualized attention the firm provides its customers. 2.3 SERVQUAL gap model Parasuraman, Berry and Zeithaml (1985) argued that service quality was the difference or gap between customer expectations and perceptions of the service. It was known as the Gap5 of the SERVQUAL gap analysis model (Figure 1). The service quality gaps could be generated both internally and externally to the organization. Gap 5 was external: customer expectations of the service judged against perceptions of the service were affected by word-of-mouth opinions, customers personal needs and their past experiences of their current and previous service providers (Zeithaml, Parasuraman and Berry, 1990). 9

19 Figure 1: SERVQUAL gap analysis model. (Source: Zeithaml et al., 1990) The purpose of this study was to examine passenger perceptions of airline service quality, the researcher wanted to recommend the further research on the passenger expectation of Cathay Pacific Airways services, to compare the result of this study and to adopt the SERVQUAL gap analysis model (gap 5) to analysis the service quality of the Cathay Pacific Airways. Sultan and Simpson (2000) stated that it was essential to know to what degree customer perceptions of existing service fail to meet expectation. 10

20 2.4 Perception of service quality Berry and Parasuraman (1991) argued that guests were the judges of service quality. Williams and Buswell (2003) stated that customer perceptions were based on the actual service delivered, whilst customer expectations were based on past experiences, word of mouth and personal needs. Service quality perceptions were often defined as the difference between what a customer expected and what they actually perceived as outcome (Headley and Bowen, 1997). There were number of writers included Peter (1987) suggested that if customer perception of a service was excellent and that was consistently met their needs, the organization would establish a reputation for excellence, e.g. Ritz Hotel or Disneyland. The service quality perceptions of the guests vary widely. Similarly, guests perceived satisfaction with performed services also varies widely. Wuest (2001) stated that there were two distinct variables influence guests perceptions: customer expectations and service standards. Parasuraman, Zeithaml, and Berry (1994b) stated that the gap between expectations and service standards/performance was the primary indicator of overall service quality. Wuest (2001) stated that guests expectations of service quality influences their 11

21 resulting level of satisfaction. Lewison (1997) categorized service expectations in three levels: essential, expected, and optional. Zeithaml, Berry, and Parasuraman (1993) stated similar model of customer service expectations: predicted, adequate, and desired. Expected services were those which guests assumed the service provider should offer in order to provide adequate service. (Wuest, 2001) Moreover, the expected services needed to provide beyond the essential services by the company to stay in business in order to be competitive in the industry. But the needs of the customers were changing all the time, simultaneously expected services increased, guests became more demanding, requiring the service provider to move beyond what is common place. (Wuest, 2001) The service companies needed to be continuous improving their service quality to maintain the market share and the service quality perception of the consumers. Juran (1988) argued that the only appropriate goal in the quality function of the organization was continuous improvement. Service standard were changing benchmarks as customer s expectations increase and the organization responds to such changes. (Callan,1994). Appropriate service standards depended on the mission of the organization 12

22 and further depended on two factors: the service policies of the organization and the actual performance of the service procedures. (Wuest, 2001) And the service organizations established their service policies were based on their company s image and appropriate to their target market. But in the real world the service standard and the policies established by the service organization, but the personnel might not perform adequately. Dailey (1997) argued that relay and motivate employees were more likely to capture the essence of a quality service plan, and Starbucks was a good example. Their early company goal was to provide excellent service and led to success in a pricey coffee market. Tsaur, Chang and Yen (2002) stated that different individual usually had wide range of perceptions toward quality service, depending on their preference structure and roles in process (service providers/receivers). There were many possible aspects that could influence the airline consumer s perception of quality at different times in the consumption process (Headly and Bowen, 1997). Customer constantly complained about the quality of service provided by the airlines, and their perceptions were that it was deteriorating at a significant rate 13

23 (McCollough, Berry and Yadav, 2000). The perception was that the increase in air rage incidents arise from the increase in poor service (Brady and Cronim, 2001). Furthermore, the employee s behavior was critical and could be directly correlated to shaping the perception of the organization s image (Hunter, 2006). 2.5 Importance of marketing strategies Customers perception of service quality and the satisfaction levels were affected by media advertising, employees emotions, and service guarantee (Parasuraman et al, 1985). Park (2007) also stated that a range of airlines marketing strategies and particular marketing variables influencing airline choice. Passengers identified the relative strengths and weaknesses of these factors among airlines with their perceptions varying across airlines. If the airlines wanted to identify their competitive position, they needed to understand passengers perception of choice factors. Therefore, companies got the competitive advantages in these three areas will become success. The delivery of high- quality service became a marketing requirement among air carriers as a result of competitive pressure (Ostrowski, O Brien and Gordon, 1993). There were some of the empirical studies about 14

24 the demand for airline services showed that service quality was central to the choice of airlines for both business and leisure travelers (Bureau of Transport and Communications Economies, 1994). Airlines introduced many promotional incentives such as frequent flyer program- Asia Miles, Marco Polo Club, Mileage Plus Frequent Flyer Program and so on. Tsaur, Chang and Yen (2002) stated that airline hoped to consolidate the market share and enhanced profitability by the marketing strategies. However, the marginal benefits of marketing strategies gradually reduced because most of the airlines acted similarity. The airlines recognized the limitation of the marketing strategies, some of the airlines tended to focus on the commitment of improving customer service quality, such as Cathay Pacific Airways. 2.6 Importance of Service Quality Pakdil and Aydin (2007) stated that understanding, building and maintaining quality were the main concerns of business. In the real world, providing quality was not a concern of manufacturing companies alone. Akan (1995) argued that delivering quality service was also important for many service firms. In the recent years, there were many service organizations recognized service 15

25 quality as potential source of sustainable competitive advantage. (Kuei, 1998). Gilbert and Wong (2003) suggested that delivering superior service quality was a prerequisite for success and survival in today s competitive business environment. It was generally acknowledged that the only appropriate goal in the quality function of the organization was continuous improvement (Juran, 1988). Service quality was the difference between consumers perceived service performance and their expectations (Parasuraman, Zeithaml, & Berry, 1985). If the customers received the service met or exceeded their expectations, customers had high perceptions of service quality, customers were satisfied and felt happy, and they would continue to buy from you, or to buy another product or service from you or recommended your services to others. On the other hand, if the services received lower or out of their expectation, they had low perception of service quality. So that better service quality would bring in more revenue and higher profitability. Reichheld (1996) stated that in United States, the companies lose their customer about 68% would leave on average base over five year time because of a bad service experience. And the main point was that it cost five 16

26 times more to acquire a new customer than to keep an existing one. Providing excellent customer service could make the different, to change the bad service quality perception of airline passengers and to capture the business opportunities. In Taiwan, the air travel market, both domestic and international, had been experiencing great competition due to both the deregulation and the increasing of customer s awareness of service quality (Tsaur, Chang and Yen, 2002). The US carriers saw the airline alliances as a way of improving their service quality, but in the long term, the success of an alliance may be jeopardized if partners were perceived not to offer the same level of service (Sultan and Simpson, 2000). Gilbert and Wong (2002) stated that improvement in service provided improved profit due to increasing the customer base through new and repeat purchase from more loyal customers. Gale (1992) indicated that companies that offer superior service were able to charge 8 per cent more for their product. 17

27 2.7 Airline service quality study There were a range of services provided by the air carriers to the customers including ticket reservation, purchase, airport group service, on board service and service at the destination. It also consisted of the assistance associated with disruption such as lost-baggage handing and service for delayed passengers (Tsaur, Chang and Yen, 2002). The researcher would like to mention the service quality more specific in the airline industry. Providing superior service quality was the most important blocks of gaining competitive advantages to retain and expand the market share and earn more profit in the service industry, especially in the airline industry. However, there were some study did not agreed with this. Gilbert and Wong (2003) stated that some passengers might feel price was an important aspect of demand. Most air passengers were sensitive to airline ticket price and airlines thus used pricing as a marketing tool to differentiate market based on elasticity of demand. Park (2007) stated that prices were determined based on different fare sensitivities of business and leisure passengers. Collis (1998) stated that IATA in 1997 carried out research in North America, Europe and Asia and found passengers favored punctuality (65 percent) and 18

28 scheduling (52 percent) over price (37 percent). But this was not to say that providing superior service quality was the secondary concern to airlines, and for this study, the researcher was emphasis on improving the service strategies. Moreover, service quality also affected passenger s choices, seen as referring to passengers overall impressions of the relative quality of airlines and their services. It could influence an airline s competitive advantage (Morash and Ozment, 1994) and could be the driver of passenger satisfaction, loyalty and passenger s choice of airline (Ostrowski et al.). In the airline industry, understanding the passenger s perception and expectation was essential to providing desired service quality. There were many possible aspects that could influence the airline consumer s perception of quality at different times in the consumption process. (Headly and Bowen, 1997) Customer constantly complained about the quality of service provided by the airlines, and their perceptions were that it was deteriorating at a significant rate (McCollough, Berry and Yadav, 2000). The perception was that the increase in air rage incidents arise from the increase in poor service (Brady and Cronim, 2001). Furthermore, the employee s behavior was critical and could be directly 19

29 correlated to shaping the perception of the organization s image (Hunter, 2006). Clifford, Cunningham and Moomkyu (1994) stated that in the pre deregulation era airline service quality was assessed with respect to industry and managerial variables such as flight frequency, load factors, transit times and aircraft type. But in the post deregulation environment, superior service quality has been accepted as an important source of customer retention and loyalty, which may ultimately lead to superior competitive performance (Parasurman et al., 1985, 1988; Zeithaml, Berry and Parasurman, 1996; Dawkins and Reichheld, 1990; Reichheld and Sasser, 1990; Berry and Parasurman, 1994). There were further studies on airline service quality concept. Parasurman et al. (1991b) argued that customer loyalty could be achieved by organizations that display consistency, reliability and fairness in the provision of their services. It was mean that these three elements were the major component of achieving superior airline service quality. A commercial market research which called Zagat Research (2005) produced a report on airline service quality, and the data was presented in four categories: Comfort, service, food and website. 20

30 2.8 Service quality dimensions in airline industry Chang and Yeh (2002) argued that quality in airline services was difficult to describe and measure due to its heterogeneity, intangibility and inseparability. And SERVQUAL had been proposed as a valid and reliable model in airline service quality studies (Gilbert and Wong, 2003; Park, Robertson and Wu, 2004). Pakdil and Aydin (2007) mentioned that the problem in airline sector was whether the management could correctly perceive what customers wanted and expected, and the voice of customer should be taken into the design process. After delivering the services, services providers should monitor how well the customers expectations had been met. SERVQUAL was the model that providing the foundation for evaluating customers expectation and perception. SERVQUAL had five dimensions to measure service quality: tangibles, reliability, responsiveness, assurance, and empathy (Zeithaml, Parasuraman and Berry, 1990). And customers evaluated the quality of service by determining whether there was any gap between their expectation and perceptions (Gap 5). SERVQUAL was based on the idea that quality was a subjective customer evaluation, as service was not a physical item, but an 21

31 experience ( Parasuraman et al., 1988; Gronroos, 1990). So that customers perception was a better measure than other performance measures (Akan, 1995). Previous studies found that individual dimensions of service quality in addition to overall quality influence passenger buying behavior (Park, Robertson and Wu, 2005). Based on the airline service quality report from SKYTRAX, passengers opinions and experiences toward different airline services and perception of different airline service dimensions had a direct or indirect effect on buying behavior (Park, 2007). The recent study by Park (2007), he investigated Korean and Australian international airline passengers perceptions of 11 factors that might influence their buying behavior, there were: in flight service, reservation-related service, airport service, reliability, employee service, flight availability, perceived price, passenger satisfaction, perceived value, airline image, and overall service quality. The result revealed that passenger perceptions were significantly different across seat class and usage frequencies Sultan and Simpson (2000) investigated the perceptions of European and US passengers and found that the two passengers groups had significant 22

32 difference in the perception of the airline service quality, excepted in the responsiveness dimension. It was mean that service quality perceptions vary by nationality. Gilbert and Wong (2002) stated that there were three major reasons passengers needed to travel: namely for business, for holiday and to visit friends / relatives, and it was believed that each group s perceptions would be different. If passengers needs for travelling were different, then there would be a significant difference in their perceptions of airline service quality. Clifford, Cunningham and Moomkyu (1994) also used the SEEVQUAL scale found that reliability was the dominant predictor of satisfaction while both reliability and empathy influenced customer intention. Sultan and Simpson (2000) found the SERVQUAL factor of reliability was the most important dimension among air passengers. There were many SERVQUAL related studies measured airline service quality through various quality dimensions. Gourdin (1988) proposed airline service quality in terms: price, safety, and timelines. Elliott and Roach (1993) categorized timeliness luggage transport, food and beverage quality, seat comfort, the check in process, and in- flight service dimensions. Furthermore, 23

33 Ostrowski et al. (1993) stated that to measure service quality with timeliness, food and beverage quality, and comfort of seat dimensions. Truitt and Haynes (1994) defined the convenience of transit, check-in process, timeliness, the seat cleanliness, the processing of luggage, food and beverage quality, and handling of customer complaints as the standards of service quality. Bowen and Headley (2000) indicated on-time arrival, mishandled baggage, being denied boarding, airline safety. Passenger complaints on items also included to measured the service quality, such as flight, reservation, ticketing. Moreover, the boarding problems included: fares, refunds, customer service, frequent flyer programs and advertising also indicated in the service quality evaluation. Besides the scholar s argument, the US Department of Commerce monitored schedule, non- stop flight availability, safety reputation, on-time reputation, in-flight service reputation, and frequent flyer program as variables were affecting the passenger s choices. Pakdil and Aydin (2007) stated that the quality dimensions used in evaluating airline services vary extensively, but could be classify comprehensively within the SERVQUAL dimensions. And in this study, the researcher was based the SERVQUAL dimensions and the 22 SERVQUAL service quality perception 24

34 statements (Appendix II). Passenger perceptions of key factors of buying behavior for different segments of air passengers were explored. 25

35 Chapter 3 Methodology 3.1 Secondary Research Before conducted the primary research, the researcher firstly reviewed and integrated the secondary data first. To organize the study, the researcher gathered different sources of information from electronic database which included the academic journal and electronic books. Those materials provided a base concept and theories on service quality and service quality perception of the airline passengers. The researcher not only obtained the theoretical expertise about the service quality, but also got the useful and general information from the internet. Internet was the convenient channel to do the research and the researchers conducted the research by entering the company websites of Cathay Pacific Airways and evaluated its company annual report. The newspapers and magazines could provide more updated information about the airline service quality, especially those related to the Cathay Pacific Airways. 3.2 Limitations of Secondary Research Clegg and Hardy (1996) stated that data were originally collected for another purpose was called secondary data. The secondary data could be referenced 26

36 not really as the same as what the researcher wanted. Furthermore, the economic environment was changing due to the global financial crisis, the data and concept might not be applied probably in this study. The researcher found that different empirical studies had different results and it was difficult to find similar study or research on the service quality perception of airline passengers. In this way, it was necessary to adopt the primary research to enhance the reliability and validity of this study. 3.3 Primary research In the primary research section of this study, the researcher adopted the questionnaire survey to collect the data. Cowton (1998) stated that questionnaire surveys were typically the quickest and easiest of the tools to use. In order to get the service quality perception of Cathay Pacific Airways passengers, the questionnaire with bilingual language description was designed to get the information (Appendix III). Those questionnaires were based on the SERVQUAL 22 instruments (Zeithaml, Parasuraman and Berry, 1990). The questionnaire was initially tested by 10 tourism-related employees who had traveled by Cathay Pacific Airways at least once in the past 12 months to 27

37 test how comprehensible the questionnaire was. After these procedures, minor changes were incorporated into the final version. It was also known as the quantitative method and using the questionnaires to collect data was the most useful and convenience way to finish the study under the time and money constraint. 3.4 Sampling and Data collection The survey was conducted by convenience sampling method by face to face format to collect the information. To make the sample more representative and in order to enhance the validity, the sample was taken from the passengers who traveled with Cathay Pacific Airways in the past 12 months and the age was above 18 years old. Choosing those samples because of their memories was fresh and the data might be much more representative than those traveled for a long time ago. It took place at the Hong Kong International Airport (HKIA). The survey was administered 3 days in February. A total of 100 completed samples were collected. To reduce the refusal survey, the researcher contacted the passengers politely by explaining the purpose and the contribution of this research. If the uncompleted survey were found, then the next available was replaced until the total of 100 completed 28

38 questionnaires were collected. 3.5 Survey instrument The questionnaire contained an introduction at the beginning of the questionnaire to explain the objective of the survey and ensure the confidentiality of respondents (Appendix III). The questionnaire contained three sections. Section 1 was the 22 statements of the service quality perception (Zeithaml et al, 1990). Section 2 asked respondents to prioritize the five service quality dimensions in order of importance. Section 3 gathered the demographic information from respondents such as gender, age, nationality, educational level, job position, average use of airlines services, travelling class and the purpose of last trips. The researcher designed the questionnaire in several steps in light of the previous literature. Firstly, the researcher adopted the Zeithaml et al. (1990) Operational SERVQUAL airline service quality perception 22 statements as the foundation of the questionnaire. The 22 statements had five main dimensions to measure airline service quality: tangibles, reliability, responsiveness, assurance and empathy (Zeithaml et al., 1990). Under the 22 -item questions, Question 1 4 analyzed how customers face on 29

39 the tangibles items of Cathay Pacific Airways; question 5 9 analyzed how customers feel on the reliability of Cathay Pacific; Questions analyzed the responsiveness; question analyzed the assurance of Cathay Pacific Airways and finally, question analyzed the empathy of Cathay Pacific Airways. The questionnaire designed in this way was more reliable and valid which could provide a better understanding on the determinants of service quality perception of Cathay Pacific Airways passengers. In section 1, the 22 statements were rated by using 5 point Likert scale to measure the level of agreement to the 22 statements. Perceptions were rated from 1 = strongly disagree to 5 = strongly agree. The possible answers of this part questions were pre-code thus all the interviews need to do was circle the most suitable answers. In section 2, the respondents needed to prioritize the service quality dimensions in order of importance by using Ordinal scale to rank-orders them from 1 = the least importance to 5 = the most importance. In section 3, it contained 9 questions were structured as closed questions. The possible answers of these questions were pre code and the respondents needed to tick the most suitable answers. The structured questions were 30

40 easier to make analysis. 3.6 Limitation of Primary Research Due to the limited financial and human resources, convenience sampling was used in the research and the sample size was not big. The data might only reflect a part of the Cathay Pacific Airways passengers attitudes and opinion. Besides, it could provide generalize service quality perception. However, the researcher believed that the findings were useful for further research for the larger or bigger sample size. The questionnaire of this research was compiled in two languages Chinese and English. Due to the language constraints, some of the respondents might not understand these two languages and became restricted to answer the questions (Appendix III). 31

41 Chapter 4 Result and Analysis After collecting a total of 100 completed questionnaires from the sample population of Cathay Pacific Airways passengers, data were generated by SPSS In this chapter, the findings of the study were discussed. 4.1 Demographic results Eight demographic variables were analyzed in the study by frequency and the percentage of the sample size. Table 4.1 summarized the demographic characteristics of Cathay Pacific Airways passengers of the sample size. There were 46 males (46%) and 54 females (54%) by gender from the completed questionnaires. The listed information showed that several age groups of passengers had been interviewed. The age group of 18 to 29 was (34%); the age group of 30 to 39 was (24%); the age group of 40 to 49 was (23%); the age group of 50 to 59 was (16%) and the age above 60 was (3%). Besides, most of the respondents were Chinese (36%). The other nationalities were American (17%), British (14%), Canadian (11%) and Southeast Asian (6%) respectively. And the others were Australian and New Zealander (16%). 32

42 Table 4.1 Demographic characteristics of Cathay Pacific Airways passengers Demographic characteristics Frequency (N = 100) Percentage (%) Gender Male Female Age over Nationalities Chinese Japanese 0 0 French 0 0 Canadian American British German 0 0 Southeast Asian Other (Australian and New Zealander ) Educational level Primary Secondary Tertiary, non-degree course Tertiary, degree course Postgraduate or above Occupation Managers and administrators Professional Associate professionals Clerks Service workers and shop sales workers Craft and related workers 0 0 Plant and machine operators and assemblers 0 0 Non-skilled workers Students Housewives

43 As Cathay Pacific Airways was an international airline, it was expected that the respondents belonged to different nationalities all over the world. More than 85% of the respondents were at least tertiary educated of non degree course / degree course and postgraduate or above. According to the table 4.1, 37% of the respondents were managers and administrators / professional / associate professionals, 19% were students, 15% were clerks, 14% were service workers and shop sales workers, 13% were housewives and 2% were non-skilled workers. 4.2 Travel pattern results Respondents were asked to state their travel pattern and the results were summarized in Table 4.2. There was a very high proportion of respondents travelling by Economy Class (81%), 19% of respondents were travelling by Business Class and there were no respondents travelling by First class. The results were quite reasonable as the seat capacity was in uneven distribution pattern. The economy class was definitely the highest proportion of seat capacity compare with other cabins in an aircraft. The result showed that the study could not comprehensively to evaluate the perceptions of service quality in various categories of cabin class. It was 34

44 because there was missing the first class profile. Besides, due to limitation of time and the number of interviewers, the researcher could only collect the data for 3 days. The researcher reached the respondents who were traveling in first class and business class. Therefore, the researcher recommended that the further research interview could be conducted with Cathay Pacific Airways passengers in all cabin class. Table 4.2 Travel pattern of Cathay Pacific Airways passengers Demographic characteristics Frequency (N = 100) Percentage (%) Class of cabin First Class 0 0 Business Class Economy Class Frequency of travel 1-6 flights flights More than 12 flights 0 0 Purpose of travel Company business Education Attend trade show / convention Migration 0 0 Visiting friends and relative Package holiday Independent holiday Other 0 0 Travel plan on future Yes No 0 0 May be

45 The results in Table 4.2 showed that 85% of the respondents who traveled with Cathay Pacific Airways were about 1 to 6 times in the past 12 months. The rest of the respondents (15%) stated that they traveled abroad with Cathay Pacific Airways at about 7 to 12 times in the past 12 months. Regarding the respondents purpose of travel for the current trip, some respondents had chosen more than one purpose but the interviewer immediately clarified on the question. The purposes of travel fell into the following categories: Over 85% of the respondents reported their purpose of travel for the current trip was enjoying holiday. For those with holiday purpose, 39% of the respondents were package holiday travelers and 37% of the respondents were independent holiday travelers and 9% of the respondents were with the purpose of visiting friends and family. There were 13% of the respondents were on business purpose, which 8% of respondents were for company business and 5% of respondents were for attending trade shows or conventions. The remaining 2% respondents were for education. The results indicated that all those with business purpose, either for company business or attending trade shows or conventions were the most popular travelling purpose of the Cathay Pacific Airways passengers. These 36

46 results might due to the period of surveying. Since the survey was conducted in February, it was the peak season of holiday travel. No respondents stated that they would not travel by Cathay Pacific Airways in the future. 62% of respondents indicated that they would travel by Cathay Pacific Airways and the remaining 38% stated that they might consider Cathay Pacific Airways as their carriers. The results showed that all the passengers of Cathay Pacific Airways perceived a high quality service. And they were willing and expecting to travel by Cathay Pacific Airways again. It indicated that the service quality perception of Cathay Pacific Airway passengers was positive. 4.3 Importance of service quality dimensions The questionnaire also asked the respondents to prioritize the service quality dimensions, from 1, being the least importance, to 5, being the most importance and the findings are given in Table 4.3. In the table, it showed that Cathay Pacific Airways passengers thought the most important dimension of service quality was Empathy, followed by Tangibles, Reliability, Responsiveness and Assurance. It was unmatched the findings of Sultan and Simpson (2000). Sultan and Simpson (2000) found 37

47 that the SERVQUAL factor of Reliability was the most important dimension of service quality among air passengers. This might imply that the Cathay Pacific Airways passengers were likely to concern about the personal services and attentions by the airlines and they were the most important elements for their choices of an airline. Therefore, the customer services which provided by the airlines was a very important element to retain the customers. Table 4.3 Importance of service quality dimensions Service quality dimensions N Mean Std. Deviation Empathy Tangibles Reliability Responsiveness Assurance Mean: 1 = the Least important; 5 = the most important 4.4 Means of perceived service quality Customer perceptions were measured on a 5-point Likert scale, the highest of score, and the greater level of agreement. The mean and average mean scores of the 22 SERVQUAL statements were shown in Table 4.4. Respondents presented their perception of service quality with different levels of agreement. 38

48 The dimension of Tangible got the highest average mean scores (3.92). By contrast with Table 4.3, Tangible was the second highest important dimension of service quality, it showed that the respondents agreed that Cathay Pacific Airways could provide a high standard of service quality of what the respondents needed. Comparing with other five service quality dimensions, the dimension of Responsiveness obtained the lowest average mean (3.55). It indicated that it was the area that Cathay Pacific Airways needed to improve their service. Many respondents raised that the employees of Cathay Pacific Airways were always too busy to respond to customer requests. Although the respondents stated that the dimension of Responsiveness was relatively unimportant when comparing with the others service quality dimensions (Table 4.3).The employee s behavior was a critical factor and could be directly correlated to shaping the perception of the organization s image. If Cathay Pacific Airways aimed to provide excellent service quality to their passengers, it is essential to improve those service areas. 39

49 Table 4.4 Means of perceived service quality (N = 100) Attribute Mean Average Mean Tangible Up to date aircrafts and in-flight facilities Physical facilities are visually appealing Employees appear neat The aircraft has clean and comfortable interiors and seats 3.89 Reliability When Cathay Pacific Airways promises to do something by a certain time, they will do so 6. When a customer has a problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable Maintains a punctual flying schedule Ensures safety of flying 4.17 Responsiveness Employees of Cathay Pacific Airways tell its customers exactly when services will be performed Employees of Cathay Pacific Airways give prompt service to customers Employees of Cathay Pacific Airways are always willing to help customers Employees of Cathay Pacific Airways are never too busy to respond to customer requests 3.32 Assurance You can trust employees of Cathay Pacific Airways You feel secure and safe during the payment transactions with Cathay Pacific Employees of Cathay Pacific Airways are polite and courteous Employees of Cathay Pacific Airways have the knowledge to answer customers' enquiry 3.55 Empathy Cathay Pacific Airways gives you individual attention Employees of Cathay Pacific Airways give you personal attention Cathay Pacific Airways has convenient flight schedules and enough frequencies Cathay Pacific Airways has your best interest at heart Employees of Cathay Pacific Airways understand your specific needs

50 4.5 Means and Rank of 22 SERVQUAL service quality statements 5-point Likert scale was used to measure the level of agreement of each statement, from 1, being strongly disagree to 5, strongly agree in Table 4.5.The higher mean indicated the attribute had reached the higher level of agreement. To find out the customer perception of each statement, the means of 22 SERVQUAL statements had been ranked and also been shown in Table 4.5. All the items scored 3 or above on the 5-point Likert scale, indicated that respondents had the perception of above average for all dimensions. On the other hand, Cathay s passenger perception of its service was excellent and it could provide their service consistently in order to meet the passenger s needs. Delivering superior service quality was a fundamental factor for success and survival in today s competitive business environment. That was the reason of why Cathay Pacific Airways had established a reputation for providing excellent service quality, as the same as what the researcher mentioned before in the introduction of this study. Question 9, the attribute of Ensure safety of flying had the highest mean scores in those 22 SERVQUAL statements, which indicated that the safety attribute was respondents most concerned area to choose Cathay Pacific 41

51 Airways as their carriers. This was consistent with Cathay Pacific s mission to maintain an excellent safety record. Consisted with other four statements which ranked the top five in Table 4.5, which were Employees appear neat (mean = 4.01), Up to date aircrafts and in-flight facilities (mean = 3.97), Cathay Pacific Airways is dependable (mean = 3.96) and The aircraft has clean and comfortable interiors and seats (mean = 3.89). The top five attributes were the service quality components that Cathay Pacific Airways dedicated to maintain their reputation. From the above findings, it showed that passengers had a high impression on the dimension of Tangible. Because the top five attributes which were consisted three of the Tangible components. Table 4.5 Means and Rank of 22 SERVQUAL service quality statements (N = 100) Dimension Attribute Mean Std. Deviation Reliability Ensures safety of flying Tangible Employees appear neat Tangible Up to date aircrafts and in-flight facilities Reliability Cathay Pacific Airways is dependable Tangible Empathy The aircraft has clean and comfortable interiors and seats Cathay Pacific Airways has convenient flight schedules and enough frequencies

52 Tangible Physical facilities are visually appealing Assurance You feel secure and safe during the payment transactions with Cathay Pacific Airways Assurance Employees of Cathay Pacific Airways are polite and courteous Responsiveness Employees of Cathay Pacific Airways are always willing to help customers Reliability When Cathay Pacific Airways promises to do something by a certain time, they will do so Reliability Maintains a punctual flying schedule Reliability Empathy Assurance Empathy Empathy Responsiveness Assurance Empathy Responsiveness Responsiveness When a customer has a problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways has your best interest at heart You can trust employees of Cathay Pacific Airways Employees of Cathay Pacific Airways understand your specific needs Employees of Cathay Pacific Airways give you personal attention Employees of Cathay Pacific Airways give prompt service to customers Employees of Cathay Pacific Airways have the knowledge to answer customers enquiry Cathay Pacific Airways gives you individual attention Employees of Cathay Pacific Airways tell its customers exactly when services will be performed Employees of Cathay Pacific Airways are never too busy to respond to customer requests

53 Table 4.5 question 10 Employees of Cathay Pacific Airways tell its customers exactly when services will be performed and question 13 Employees of Cathay Pacific Airways are never too busy to respond to customer requests were the lowest rank of SERVQUAL statements at score of 3.51 and 3.32 respectively. The issue of responsiveness had become the service quality failure of Cathay Pacific Airways. A detailed analysis of the responsiveness dimensions were resulted in two situations. Firstly, the importance of core service appeared to be clear such as baggage check-in processes and the quality of reservation services. The second situation was the service providers, such as the employees of Cathay Pacific Airways in their responsiveness dimensions. It showed that the standard of service quality was depending on how well the employees presented to the customers. The employees were the frontline staff who delivered the real quality service level of the airline to the passengers. Nowadays, customer are seeking for a quick and prompt responded and wanted to know the actual performance duration, so Cathay Pacific should cope with this trend in order to increase their service quality standard in the Responsiveness dimension. 44

54 4.6 Passengers perception differences by genders To investigate the difference of passenger perceptions by gender, an independent sample t-test was conducted for male and female passengers (Table 4.6). To examine the attributes of influencing service quality perception of Cathay Pacific Airways passengers, there were no other service quality attributes significantly different from male and female passengers. This might reflect that male and female passengers had the similar perception on the service quality of Cathay Pacific Airways. Table 4.6 Passengers perception differences by genders (Independent sample t-test) Attribute Mean Sig. Male Female t-value level (N=46) (N=54) Up to date aircrafts and in-flight facilities Physical facilities are visually appealing Employees appear neat The aircraft has clean and comfortable interiors and seats When Cathay Pacific Airways promises to do something by a certain time, they will do so When a customer has a problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable Maintains a punctual flying schedule Ensures safety of flying Employees of Cathay Pacific Airways tell its customers exactly when services will be performed

55 Employees of Cathay Pacific Airways give prompt service to customers Employees of Cathay Pacific Airways are always willing to help customers Employees of Cathay Pacific Airways are never too busy to respond to customer requests You can trust employees of Cathay Pacific Airways You feel secure and safe during the payment transactions with Cathay Pacific Airways Employees of Cathay Pacific Airways are polite and courteous Employees of Cathay Pacific Airways have the knowledge to answer customers' enquiry Cathay Pacific Airways gives you individual attention Employees of Cathay Pacific Airways give you personal attention Cathay Pacific Airways has convenient flight schedules and enough frequencies Cathay Pacific Airways has your best interest at heart Employees of Cathay Pacific Airways understand your specific needs *Indicates significance level < Passengers perception differences by age The result of one-way ANOVA of the 22 SERVQUAL instruments means by age groups were summarized in table 4.7 and 2 attributes indicated the significant differences, Employees of Cathay Pacific Airways are always willing to help customers and Cathay Pacific Airways has your best interest at 46

56 heart. The means score of the youngest age group of years old and the oldest age groups over 60 years old were significantly higher than those of the other age groups. This indicated that those two groups of passengers commented that the employees of Cathay Pacific Airways were really helpful. On the other hand, these two groups of passengers were the groups that required highest demand for assistance by the employees of airlines. Because younger passengers were lack of the travel experience, they might try to ask for help initiatively. This would increase the interaction between employees of Cathy Pacific Airways and the younger passengers. It could also increase the chance to build up a good impression on the service quality perception. Besides, the oldest passengers group also requested assistance of the airline staff frequently. Comparing the attributes means on Cathay Pacific Airways has your best interest at heart, it appeared that the younger groups between years old were more likely to agree the Cathay Pacific has their best interest at heart. This might have resulted from the fact that Cathay Pacific Airways always launch the new products which the youngsters were interested in, such as the in-flight entertainment system and the online check-in services. 47

57 Table 4.7 Attribute Up to date aircrafts and in-flight facilities Passengers perception differences by age (ANOVA) (N=34) (N=24) Mean (N=23) (N=16) over 60 (N=3) F-value Sig. level Physical facilities are visually appealing Employees appear neat The aircraft has clean and comfortable interiors and seats When Cathay Pacific Airways promises to do something by a certain time, they will do so When a customer has a problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable Maintains a punctual flying schedule Ensures safety of flying Employees of Cathay Pacific Airways tell its customers exactly when services will be performed Employees of Cathay Pacific Airways give prompt service to customers Employees of Cathay Pacific * Airways are always willing to help customers Employees of Cathay Pacific Airways are never too busy to respond to customer requests You can trust employees of

58 Cathay Pacific Airways You feel secure and safe during the payment transactions with Cathay Pacific Airways Employees of Cathay Pacific Airways are polite and courteous Employees of Cathay Pacific Airways have the knowledge to answer customers' enquiry Cathay Pacific Airways gives you individual attention Employees of Cathay Pacific Airways give you personal attention Cathay Pacific Airways has convenient flight schedules and enough frequencies Cathay Pacific Airways has * your best interest at heart Employees of Cathay Pacific Airways understand your specific needs *Indicates significance level < Passengers perception differences by nationalities To investigate the difference of passenger perceptions by nationalities, ANOVA was conducted and the result was shown in Table 4.8. One attribute indicating the significant differences was Employees of Cathay Pacific Airways give you personal attention. 49

59 The means score of the British was significantly higher than the other nationalities of passengers. It might reflect that the route between Hong Kong and the United Kingdom was the major route with highly completive environment. The major competitor of Cathay Pacific Airways on this routing liked Virgin Atlantic which was famous for providing personal services to their passengers. Cathay Pacific Airways needed to provide excellent service quality as well as personal attention to their passengers to get the competitive advantages. It was the reason why the British passenger gave higher scores on this attributes when comparing to the others nationalities. Table 4.8 Passengers perception differences by nationalities (ANOVA) Mean Attribute F-value (N=36) (N=11) (N=17) (N=14) (N=6) (N=16) Sig. level Up to date aircrafts and in-flight facilities Physical facilities are visually appealing Employees appear neat The aircraft has clean and comfortable interiors and seats When Cathay Pacific Airways promises to do something by a certain time, they will do so When a customer has a problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable Maintains a punctual flying schedule

60 Ensures safety of flying Employees of Cathay Pacific Airways tell its customers exactly when services will be performed Employees of Cathay Pacific Airways give prompt service to customers Employees of Cathay Pacific Airways are always willing to help customers Employees of Cathay Pacific Airways are never too busy to respond to customer requests You can trust employees of Cathay Pacific Airways You feel secure and safe during the payment transactions with Cathay Pacific Airways Employees of Cathay Pacific Airways are polite and courteous Employees of Cathay Pacific Airways have the knowledge to answer customers' enquiry Cathay Pacific Airways gives you individual attention Employees of Cathay Pacific Airways * give you personal attention Cathay Pacific Airways has convenient flight schedules and enough frequencies Cathay Pacific Airways has your best interest at heart Employees of Cathay Pacific Airways understand your specific needs *Indicates significance level <0.05 Keys: 1 = Chinese; 2 = Canadian; 3 = American; 4 = British; 5 = Southeast Asian; 6 = Other (Australian and New Zealander) 51

61 4.9 Passengers perception differences by education level Since the attributes influencing service quality perception of Cathay Pacific Airways passengers were examined by one-way ANOVA, there were no other service quality attributes to be significantly different by educational level. This might reflect that various educational levels of passengers had similar perception on the service quality of Cathay Pacific Airways and different education level would not influence the passengers perception on the service quality. Table 4.9 Passengers perception differences by education level (ANOVA) Attribute Up to date aircrafts and in-flight facilities Physical facilities are visually appealing Mean (N=4) (N=10) (N=27) (N=46) (N=13) F-value Sig. level Employees appear neat The aircraft has clean and comfortable interiors and seats When Cathay Pacific Airways promises to do something by a certain time, they will do so When a customer has a problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable Maintains a punctual flying schedule

62 Ensures safety of flying Employees of Cathay Pacific Airways tell its customers exactly when services will be performed Employees of Cathay Pacific Airways give prompt service to customers Employees of Cathay Pacific Airways are always willing to help customers Employees of Cathay Pacific Airways are never too busy to respond to customer requests You can trust employees of Cathay Pacific Airways You feel secure and safe during the payment transactions with Cathay Pacific Airways Employees of Cathay Pacific Airways are polite and courteous Employees of Cathay Pacific Airways have the knowledge to answer customers' enquiry Cathay Pacific Airways gives you individual attention Employees of Cathay Pacific Airways give you personal attention Cathay Pacific Airways has convenient flight schedules and enough frequencies Cathay Pacific Airways has your best interest at heart Employees of Cathay Pacific Airways understand your specific needs *Indicates significance level <0.05 Keys: 1 = Primary; 2 = Secondary 3 = Tertiary, non-degree course 4 = Tertiary, degree course 5 = Postgraduate or above 53

63 4.10 Passengers perception differences by seat class To investigate the differences of passenger perceptions by seat class, one-way ANOVA was conducted for both business and economy class passengers (Table 4.10). When attributes influencing Cathay Pacific Airways passengers service quality perception were examined, all the attributes of business class scored higher than the mean score of economy class and scored 3 or above on the 5-point Likert scale. It indicated that business class passengers had a higher service quality perception than economy passengers. Furthermore, there were 14 attributes out of 22 were found to be significantly different between business class and economy class which included an attribute was highly significantly (Table 4.10). The means of business class passengers for these 14 attributes were significantly higher than economy class passengers. Employees appear neat and the aircraft has clean and comfortable interiors and seats were two tangible attributes. The result was expected because business class passengers were provided with much better in-flight services than economy class passengers. The business cabin was exceptional comfort as well as high privacy with cozy surroundings. Business class seat contained 54

64 massage function and easy access to the aisle, the mood lighting to enhance passenger flying experience and when it was time to sleep, passengers simply pressed a button to turn the seat into a perfectly flat bed. Furthermore, the air hostesses who were responsible to provide service in business class were experienced. So that the service quality perception of business class passengers of these two attributes were higher than economy class passengers. The passengers who traveled in business class rated when Cathay Pacific Airways promises to do something by a certain time, they will do so significantly higher than passengers who travelled in economy. This might reflect that Cathay Pacific Airways played more concern on the business class passengers and they would like to put more effort to finish the task or provide the service what they were promised to do before the deadline. Cathay Pacific Airways did not want to lose the business class passengers who paid at a higher rate than who travelled in economy. Respondents who traveled in business class rated Employees of Cathay Pacific Airways give prompt service to customers, Employees of Cathay Pacific Airways are always willing to help customers and Employees of 55

65 Cathay Pacific Airways are never too busy to respond to customer requests to be significantly higher than those who traveled in economy class. And these three attributes were responsiveness dimensions. This was expected as Cathay Pacific Airways offered many different kind of services which were related to the needs of business class passengers, such as business class passengers had designated special check-in area at the airport, business class lounge and pier service centre. All those service could enhance the service quality perception of business class passengers. The passengers who traveled in business class indicated all attributes of assurance dimensions significantly higher than passengers who travelled in economy class including You can trust employees of Cathay Pacific Airways, You feel secure and safe during the payment transactions with Cathay Pacific Airways, Employees of Cathay Pacific Airways are polite and courteous and Employees of Cathay Pacific Airways have the knowledge to answer customers' enquiry. The result showed that the business class passengers had a higher service quality perception than economy class passengers. It was because the business class passengers raised their enquiries more frequent as they were frequent traveler. And most of the business class passengers had transaction with Cathay Pacific directly, such as online booking and online 56

66 check in. It was different from economy class passengers setting their payment transaction with travel agents. Table 4.10 Passengers perception differences by seat class (ANOVA) Mean Attribute First Business Economy (N=0) (N=19) (N=81) F-value Sig. level Up to date aircrafts and in-flight facilities NIL Physical facilities are visually appealing NIL Employees appear neat NIL * The aircraft has clean and comfortable interiors and seats NIL * When Cathay Pacific Airways promises to do something NIL * by a certain time, they will do so When a customer has a problem, Cathay Pacific NIL Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable NIL Maintains a punctual flying schedule NIL Ensures safety of flying NIL Employees of Cathay Pacific Airways tell its customers NIL exactly when services will be performed Employees of Cathay Pacific Airways give prompt service to customers NIL * Employees of Cathay Pacific Airways are always willing NIL * to help customers Employees of Cathay Pacific Airways are never too NIL ** busy to respond to customer requests You can trust employees of Cathay Pacific Airways NIL * You feel secure and safe during the payment NIL * transactions with Cathay Pacific Airways Employees of Cathay Pacific Airways are polite and NIL * courteous Employees of Cathay Pacific Airways have the NIL * knowledge to answer customers' enquiry Cathay Pacific Airways gives you individual attention NIL * Employees of Cathay Pacific Airways give you personal NIL * 57

67 attention Cathay Pacific Airways has convenient flight schedules NIL and enough frequencies Cathay Pacific Airways has your best interest at heart NIL * Employees of Cathay Pacific Airways understand your NIL * specific needs *Indicates significance level <0.05 **Indicates significance level <0.001 Furthermore, in the Empathy dimension, respondents who traveled in business class rated Cathay Pacific Airways gives you individual attention, Employees of Cathay Pacific Airways give you personal attention, Cathay Pacific Airways has your best interest at heart and Employees of Cathay Pacific Airways understand your specific needs to be significantly higher than those who traveled in economy class. It was because Cathay Pacific Airways offered more different kinds of services to business class passengers which were mentioned before. Also, the staff ratio of air hostess to the passengers in business class was higher than the staff ratio in economy class, so that the air hostesses were never too busy to answer the passenger s enquiry Passengers perception differences by occupation The results of one-way ANOVA of the 22 service quality perception attribute means by occupation were summarized in Table Significant differences between the attribute means by the different occupations were revealed for 2 58

68 service quality perception attributes. That was Employees of Cathay Pacific Airways give you personal attention and Cathay Pacific Airways has your best interest at heart. When comparing the passengers groups who were students, managers or administrators, it was find that students scored the overall service quality significant lower than managers and administrators passengers. It was because the student travelers usually travelling by Cathay Pacific Airways were during the public holiday such as summer holiday or Christmas. It was known as the peak season of airline industry. During this period, the airline needed to pay attention on handling such large amount of passengers and it made a heavy pressure on the operation sector. So that it was hard to demand Cathay Pacific Airways to pay attention on every individual needs. On the other hand, the student travelers who were always having less travel experience or they were too young to travel to foreign countries individually, they might feel depress if the airline could not provide any assistance. That was why the student travelers gave relatively low score in these two attributes. 59

69 Table 4.11 Passengers perception differences by occupation (ANOVA) Mean F- Attribute value (N=10) (N=13) (N=14) (N=15) (N=14) (N=0) (N=0) (N=2) (N=19) (N=19) Sig. level Up to date aircrafts and NIL NIL in-flight facilities Physical facilities are visually NIL NIL appealing Employees appear neat NIL NIL The aircraft has clean and NIL NIL comfortable interiors and seats When Cathay Pacific NIL NIL Airways promises to do something by a certain time, they will do so When a customer has a NIL NIL problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways is NIL NIL dependable Maintains a punctual flying NIL NIL schedule Ensures safety of flying NIL NIL Employees of Cathay Pacific NIL NIL Airways tell its customers exactly when services will be performed Employees of Cathay Pacific NIL NIL Airways give prompt service to customers Employees of Cathay Pacific NIL NIL Airways are always willing to help customers Employees of Cathay Pacific NIL NIL Airways are never too busy to respond to customer 60

70 requests You can trust employees of NIL NIL Cathay Pacific Airways You feel secure and safe NIL NIL during the payment transactions with Cathay Pacific Airways Employees of Cathay Pacific NIL NIL Airways are polite and courteous Employees of Cathay Pacific NIL NIL Airways have the knowledge to answer customers' enquiry Cathay Pacific Airways gives NIL NIL you individual attention Employees of Cathay Pacific NIL NIL * Airways give you personal attention Cathay Pacific Airways has NIL NIL convenient flight schedules and enough frequencies Cathay Pacific Airways has NIL NIL * your best interest at heart Employees of Cathay Pacific NIL NIL Airways understand your specific needs *Indicates significance level <0.05 Keys: 1 =Managers and administrators; 9 = Students; 2 = Professional; 10 = Housewives 3 = Associate professionals; 4 = Clerks; 5 = Service workers and shop sales workers; 6 = Craft and related workers; 7 = Plant and machine operators and assemblers; 8 = Non-skilled workers; 61

71 4.12 Passengers perception differences by frequency of travel To investigate the differences in passenger perceptions according to their frequency of travel, one-way ANOVA was conducted (Table 4.12) and two attributes were found to be significantly different. These were Cathay Pacific Airways is dependable and Employees of Cathay Pacific Airways are polite and courteous. Passengers who travelling from seven to twelve times in the past twelve months scored Cathay Pacific Airways is dependable significantly higher than passengers who did travelling less. The latter also exhibited significantly lower mean scores for Employees of Cathay Pacific Airways are polite and courteous. The result was reasonable because if the passengers did not agree an airline is dependable, then they would not travel by Cathay Pacific Airways so many times in a specific period. Dependable was one of the most important service quality elements of airline. On the other hand, airline was service provider, it was important to earn the business by providing excellent customers services, the employees needed to be polite and courteous. As a result the airline could gain the repeated customers or frequent travelers which were very important to the airline. That was why the frequent traveler always indicated higher service quality 62

72 perception than those who did travelling less. Table 4.12 Passengers perception differences by frequency of travel (ANOVA) Mean Attribute More than (n=85) (n=15) 12 (n=0) F-value Sig. level Up to date aircrafts and in-flight facilities Nil Physical facilities are visually appealing Nil Employees appear neat Nil The aircraft has clean and comfortable interiors and Nil seats When Cathay Pacific Airways promises to do Nil something by a certain time, they will do so When a customer has a problem, Cathay Pacific Nil Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable Nil * Maintains a punctual flying schedule Nil Ensures safety of flying Nil Employees of Cathay Pacific Airways tell its Nil customers exactly when services will be performed Employees of Cathay Pacific Airways give prompt Nil service to customers Employees of Cathay Pacific Airways are always Nil willing to help customers Employees of Cathay Pacific Airways are never too Nil busy to respond to customer requests You can trust employees of Cathay Pacific Airways Nil You feel secure and safe during the payment Nil transactions with Cathay Pacific Airways Employees of Cathay Pacific Airways are polite and Nil * courteous Employees of Cathay Pacific Airways have the Nil knowledge to answer customers' enquiry Cathay Pacific Airways gives you individual attention Nil Employees of Cathay Pacific Airways give you personal attention Nil

73 Cathay Pacific Airways has convenient flight Nil schedules and enough frequencies Cathay Pacific Airways has your best interest at heart Nil Employees of Cathay Pacific Airways understand Nil your specific needs *Indicates significance level < Passengers perception differences by purpose of travel Table 4.13 reported the result of one-way ANOVA attribute means by purpose of travel. With respect to six attributes tested signal statistically significant differences. Firstly, company business purpose passengers perceived the aircraft has clean and comfortable interiors and seats significantly lower compared to other purpose. The passengers who were company business purpose, their ticket fare was paid by their company and these kinds of employees would like to travel by higher class of cabin to get comfort, like business class. But not all of the company purpose passengers were traveled by business class. When they compared to the business class, they would think that the seat of economy class was not as comfortable as the seat of business class. Then their perception would get lower than the others purpose of travel. The other five attributes which included Employees of Cathay Pacific Airways are never too busy to respond to customer requests, You can trust employees 64

74 of Cathay Pacific Airways, You feel secure and safe during the payment transactions with Cathay Pacific Airways, Employees of Cathay Pacific Airways have the knowledge to answer customers' enquiry and Cathay Pacific Airways has convenient flight schedules and enough frequencies. Education purpose passengers rated these five attributes lower than passengers who traveled of other purpose. As the researcher mentioned before, the holiday period was known as the peak season of air transportation. The employees were too busy to respond to customer. They were too difficult to find the assistance from the employees of Cathay Pacific Airways. As a result they were lack of interaction between them, which was the reason why they did not trust and thought the employees had the knowledge to answer their questions. Also, during the peak season, there was high pressure on the seat demand. Passengers who were traveled by education purpose were difficult to request the flight booking. That was the reason why they had worse service quality perception on the flight schedules and frequencies. 65

75 Table 4.13: Passengers perception differences by purpose of travel (ANOVA) Mean Attribute (N=8) (N=2) (N=5) (N=9) (N=39) (N=37) F-value Sig. level Up to date aircrafts and in-flight facilities Physical facilities are visually appealing Employees appear neat The aircraft has clean and comfortable * interiors and seats When Cathay Pacific Airways promises to do something by a certain time, they will do so When a customer has a problem, Cathay Pacific Airways shows a sincere interest in solving it Cathay Pacific Airways is dependable Maintains a punctual flying schedule Ensures safety of flying Employees of Cathay Pacific Airways tell its customers exactly when services will be performed Employees of Cathay Pacific Airways give prompt service to customers Employees of Cathay Pacific Airways are always willing to help customers Employees of Cathay Pacific Airways are * never too busy to respond to customer requests You can trust employees of Cathay Pacific * Airways You feel secure and safe during the * payment transactions with Cathay Pacific Airways Employees of Cathay Pacific Airways are polite and courteous Employees of Cathay Pacific Airways have the knowledge to answer customers' * 66

76 enquiry Cathay Pacific Airways gives you individual attention Employees of Cathay Pacific Airways give you personal attention Cathay Pacific Airways has convenient flight schedules and enough frequencies Cathay Pacific Airways has your best interest at heart Employees of Cathay Pacific Airways understand your specific needs *Indicates significance level < * Keys: 1 = Company business 2 = Education 3 = Attend trade show / convention 4 = Visiting friends and relative 5 = Package Holiday 6 = Independent holiday 67

77 Chapter 5 Conclusions and Recommendations 5.1 Conclusion The highly competitive market condition in the airline industry pressurized airline to deliver high quality services. To achieve this vital goal, Cathay Pacific Airways should understand the significant difference among airline service quality perception, demographic characteristics and travel patterns. It was very important for developing marketing strategies, service quality management, service segmentation strategies and product development to obtain new customers and retain the exceeding customers of different groups as well as to provide different kinds of services to the passengers with different specific needs. Gilbert and Wong (2002) stated that improvement in service provided improved profit due to increasing the customer base through new and repeat purchase from more loyal customers. Gale (1992) indicated that companies that offered superior service were able to charge 8 per cent more for their product. This paper had investigated passengers perceptions by 22 SERVQUAL 68

78 attributes on five service quality dimensions: Tangibles, Reliability, Responsiveness, Assurance and Empathy (Zeithaml, Parasuraman and Berry, 1990). An important finding with the relative importance of each service quality dimensions was determined by Cathay Pacific Airways passengers response. This section asked respondents to prioritize the five service quality dimensions in order of importance. In the result, it was indicated that Empathy was the most important dimension in measuring airline service quality, followed by Tangibles, Reliability, Responsiveness and Assurance. The finding denied the previous studies (Sultan and Simpson, 2000) that Reliability was the most important dimension among air passengers. Furthermore, the dimension of Tangible got the highest average mean scores. By contrast with the table of importance of service quality dimensions (Table 4.3). Tangible was the second highest important of service quality dimensions, it showed that the respondents agreed with Cathay could provide high standard of service quality of what they looked for. Moreover, all of the 22 attributes of SERVQUAL scored 3 or above on the 5-point Likert scale, indicating the respondents perception of all attributes was 69

79 above average. On the other hand, the Cathay s passenger perception of its service was excellent and Cathay Pacific Airways could provide their service consistently so as to meet the passenger s needs. Besides, all the respondents stated that they would like to travel or may travel by Cathay Pacific Airways in the future. It indicated that the passengers service quality perception of Cathay Pacific Airway passengers was positive. The results of one-way ANOVA identified significant differences of passenger perceptions by demographic characteristics (age, nationality, and occupation) and travel patterns (class of cabin, frequency of travel, purpose of travel). This finding supported the previous studies (Park, 2007) that service quality perception differed across class of cabin and frequency of travel. The finding also supported the studies of (Sultan and Simpson, 2000) that the service quality perception varied by nationality. For the result of one-way ANOVA, it also identified the differences among passengers of different travel purposes which supported the previous research (Gilbert and Wong, 2002). This study also indicated that the service quality perception differed by occupation and the age groups. It was suggested that a more general observation of service policies could be perceived in different ways by individuals of different backgrounds. 70

80 5.2 Recommendations for the further studies In conclusion, this research had attempted to provide some useful information, i.e. the differences in service perceptions among passengers of different market segments. Future research might initiate to expand on this study. This research involved only two cabin class passengers: business class and economy class. So researcher might be interested in testing the differences in service perception of another cabin class: First class passengers. Therefore, the researcher recommended the further research should interview Cathay Pacific Airways passengers in all cabin class. The questionnaire of this research was compiled in two languages Chinese and English. Due to the language constraints, some of the respondents might not understand these two languages and became hesitate to answer the questions. So the researcher recommended the future research to design the questionnaire in more than two languages such as Japanese and French to reduce the misunderstanding and get rid of the language barriers. As a suggestion for further research, the same survey procedure could be applied to the same airline (Cathay Pacific Airways) in order to investigate whether the airline had improved its service quality since this researcher 71

81 conducted. Moreover, the sampling profile of the further research could be rearranged for equal percentage of nationality, gender and age groups in order to generalize the results. 5.3 Recommendation for Cathay Pacific Airways Delivering superior service quality was a fundamental factor for the success and survival in today s highly competitive business environment. That was the reason why Cathay Pacific Airways would like to establish a reputation for providing excellent service quality. Thus Cathay Pacific Airways needed to ensure their service quality up to the current standard and set the continuous improvement strategies as their product development and marketing strategies in the company objectives. The result of this research stated that the dimension of Responsiveness obtained the lowest average mean scores. If Cathay Pacific Airways aimed to provide excellent service quality to their passengers, it was essential to improve these service areas. Because the employee s attribute was critical to be correlated to shaping the perception of the organization s image. The researcher recommended that Cathay Pacific Airways should employ more workers and provide more training for the frontline staffs in different service 72

82 areas such as customer service hotline and passenger check-in service. It could help to increase the efficiency and provide quick response to passenger s enquiries. Moreover, resources might need to be deployed across various services attributes on various flight routes to increase the service quality perception of different countries, especially Asian region and the Chinese market. Furthermore, Cathay Pacific Airways needed to provide more convenient schedules; increase the frequencies of flight and seek more global airline partners. The researcher also recommended Cathay Pacific Airways to offer more flights and reserve a certain proportion of seats for the student travelers so as to meet their needs of travel. Such practice not only retained large amount of customers, it also could enhance the overall impression of the company. To increase the service quality perception of economy class passengers, Cathay Pacific Airways needed to provide more comfortable seat cabin and more entertainment services in economy class. Also it also needed to increase the proportion of the ground staffs and flight attendants to economy class passengers. So that it could increase the service quality of the passengers 73

83 perception. Although there were obviously lots of limitations to make the generalization of the results in which the sampling size was relatively small, but the researcher hoped that it could provide suggestions for Cathay Pacific Airways for improvement and the future researcher might want to expand on this study. Word Count:

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93 Appendix I Source: Hong Kong Tourism Board (2007), A Statistical Review of Hong Kong 84

94 Appendix II 22 SERVQUAL service quality perception statements Source: Zeithaml, Parasuraman and Berry,