CHAPTER:1. 1.0: Introduction

Transcription

1 1 CHAPTER:1 1.0: Introduction The low -cost airline industry in Thailand is one of the largest in the ASEAN region and one of the fastest growing globally. Loyalty is an important issue for the sustainability of business of the companies. Relationships with the customers should be maintained and nourished well in order to achieve their satisfaction and consequently loyalty. Furthermore, the airlines sector has its own specific circumstances to be considered in order to earn the customer satisfaction. In this study the service marketing mix and service quality are the most importance factors that affect the low-cost airline passenger satisfaction and loyalty in Thailand. The concept of marketing mix divided into product and service marketing mix of 7 P s (product, price, place, promotion, people, physical Evidence and process). To measure functional quality and perceived quality and perceived quality satisfaction in Bangkok Airway low-costs airline industry, there are some models. The slogan of Bangkok Airway is Asia Boutique Airline which indicates that the marketing strategy is steered toward passenger who love to visit boutique destinations. The Thailand carrier flies between Thailand s capital Bangkok and popular Southern destinations such as Phuket (HKT), Krabi (KBV), Koh Samui (USM) and it also operates in Chiang mai (CNX), Chiang Rai(CEI), Lampang (LPT),Laungprabang(LPQ) Sukhothai(THS),Pattaya(UTP), Trat(UDX) Regional flights include destinations in Myanmar Nay Pyi Taw (NYT), Yangon (YGN), Mandalay (MDL), Laos-Vientiane (VTE), Cambodia- Phnom penh(pnh), Malasia-Kuala Lumpur(KUL), Singapore, as well as international routes India-Mumbai(BOM) Bangladesh Dhaka(DAC) and Maldives-Male(MLE). It appears that Bangkok Airways has grand future plans with a staunch vision statement to be the leading airline in Asia a super short statement, which indicates grand plans. Then the Mission statements aimed as a reminder of what must be done to be the best airline in Asia. Operational safety. Maximizing shareholders return on investment. We must never forget that our passengers choose which airlines to fly with, Our continued success depends on our customers. Employees are an important asset. They define who we are and are the soul of our airlineto fly with. Through the use of industry best practices in human resource management and development, We strive to have not only highly motivates staff but also the best and most productive employees in the industry. Corporate accountability. Community.

2 Bangkok Airway has won skytrax s best Regional Airline award six consecutive years ( ) and in 2015, It took the second place a good reason to conduct a research and look into the consumer confidence and preference for choosing Bangkok on time performance summary. Figure:1 On Time Performance 16000% 14000% 12000% 10000% 8000% 6000% 4000% 2000% Volume Open High Low Close 0% On time Late Very late Excessive Canceled 0 Figure:2 Delay Statistics Series 3 Series 2 Series 1 Series 2 Series 3 Observation Average Delay Min Max Series 1 2

3 1.1:Background of The Study Low Cost Airline ( or Low fare Airline or Budget Airline) is a new business model in the airline industry. It was first introduced by Southwest Airline (SWA) in the United states in The success of SWA led to the spread of the model to Europe and then to Asia. LCAs compete by offering lower fares than those of full-service airlines. To make up for revenue lost in decreased ticket prices, the airline may charge for extras like food, priority boarding, seat allocating and baggage etc. Most airlines only a signal passenger class and usually feature the Airbus 320 or Boeing 737 in their fleet of aircraft. Efficiency is the major consideration in LCA operation and several strategies in cutting the cost down are employed. The domestic airline business in Thailand has been shaken by six low cost Airline (LCAs since December One- Two Go, hold by Orient Thai Airline was the first Airline operating as an LCA between Bangkok and Chiang Mai. After that, in February 2004, the second LCA took off. Thai Air Asia a joint venture between Air Asia (Malaysia) and Shin Corp (Thailand), started the operation. Solar Air Asia (Malaysia) is a low-cost airline with it was founded in Nok Air which is a subsidiary of Thai Airways international was launched to the Thai sky. Happy Air Travelers Co. Ltd. Trading as Happy Air is an airline based in Thailand, offering scheduled domestic passenger flight out of Suvannabhumi Airport and Phuket international Airport, as well as charter services. It was founded on April 3, Lastly, Thai Smile Air is an airline in Thailand, operated by Thai Airways international that began operations in July, When the ASEAN open sky policy comes into force and Airlines will be free to set up operations in any country within the 10-member group in More and more low-cost airline company will come to Thailand. The policy is likely to create greater competition and even more financial challenges for local airline. Now the low-costs airline major issues hampering progress include rising fuel costs. Increasing competition particularly from low cost carriers and showing economic growth in Thailand. During the process of economic and social development, the world today is undergoing led economy from a manufacturing society to a service-oriented change. With the formation of the service economic and social, the service sector is facing tremendous competitive pressure. Each of the services and service management study 3 of the item theory and practice are and more researchers concerned about. The airline is a typical service industry. With the continued development of the economy, the domestic air transport companies facing competitive pressure. A large number of foreign airlines into the domestic aviation market through direct or indirect way. Not only faced with the invasion of foreign airline, but also increasingly intense competition among domestic airlines. The aviation market has already shifted from the strength of the market to be buying power market. With the passenger groups increasing, the consumer requirements showing diversity and the current situation of oversupply, led the air transport traveler choices greatly increase. Domestic civil aviation enterprises in the low level of competition for the price war those understand the real needs of the customer. Improve service quality and marketing strategy for airline to improve customer satisfaction and loyalty is a important part. 3

4 1.2: Purpose of The Study The purpose of the study is to customer confidence as a predictor of consumer spending, to determine the main reasons for passengers to choose Bangkok Airway and to see if this is a temporary trend or a long lasting expectation. The primary focus of the study is propelled by the need to empirically measure customer s satisfaction on the quality of service delivery by Bangkok Airway. The role of confidence in macroeconomic is indicators in economic analysis have been widely debated in the academic literature. There are two main contrasting approaches: the information view which suggests that confidence indicators contain information about future economic development and the animal spirits view which claims that independents and the animal spirits view which claims that independent changes in beliefs have causal effects on business cycles. 1 both the information and animal spirits views can still be compatible with leading indicator properties, but only the latter would imply causality. Empirically, however, the conclusions remain ambiguous. At one extreme, confidence measure are shown to have both a predictive power and a role in understanding business cycle fluctuations. At the other extreme, some research concludes that the concept of confidence does not play any valuable in macroeconomics. Table:1 The evaluation criteria for airline service quality Operations Attributes Check in process Waiting time Check in efficiency Staff enthusiasm Problem solving Staff grooming and appearance Boarding procedures Boarding system efficiency Assistance during boarding Boarding priority Cabin staff performance Communication skills 4

5 Grooming service efficiency Cabin presence throughout flight Friendliness of staff Staff interaction with passengers Staff enthusiasm and attitudes Standards of performance On board product Seating comfort Cleanliness of cabin Value of money Total product consistency Destination service Staff assistance Bag delivery time Overall airline performance Flight schedule Airfares Booking system Product and service information Communication skills Customers service Table :2 Bangkok Airway Timeline Frequency Bangkok Airway on time performance The 20 most active routes for this carrier based on the number of observations made in this Departure Arrival Ratings Flights On time Delay Canceled Flights 5

6 Code City Code City Operated Codeshare % Avg Max 60 4% USM Koh Samui Bkk Bangkok % % BKK Bangkok USM Koh samui % % HKT BKK Bangkok % % BKK Bangkok HKT Phuket % % CNX Chiang Mai BKK Bangkok % % Bkk Bangko CNX Chiang Mai % % HKT Phuket USM KohSamui % % USM REP Koh samui Siem Reap HKT Phuket % % Bkk Bangkok % % BKK Bangkok REP Siem Reap % % BKK Bangkok PNH PhnonPenh % % PNH Phnom penh BKK Bangkok % % YGN Yangon BKK Bangkok % % BKK Bangkok RGN Yangon % % KBV Krabi BKK Bangkok % 2 0% BKK Bangkok KBV Krabi % % TDX Trat BKK Bangkok % % LPT Lampang BKK Bangkok % % 6

7 BKK Bangkok LPT Lampang % % BKK Bangkok TDX Trat % % 1.3:Conceptual Framework Several conceptual models have been developed by different researchers for measuring service quality. It is envisaged that conceptual models in service quality enable management to identify quality problems and thus help in planning for the launch of a quality improvement program, thereby improving the efficiency, profitability and overall performance. There are two main aspects that describe and affect both service quality: the actual service customers expected and services perceived. Fitzsimmons & Fitzsimmons (2012) explains that the creation of customer satisfaction for a service can be identified through a comparison between service with service expectation, see figure:4. Figure:3 Perceived service quality model Word of mouth Personal needs Past experience Dimensions of Service Quality Reliability Responsiveness Assurance Empathy Tangibles Expected Service Perceived Service Perceived Quality 1.Expectations exceeded 2. Expectations met 3. Expectations not met Recent interpretations in the consumer domain now couch satisfaction as a fulfillment response. Fulfillment implies that a consumption goal is know, as in basic motives of hunger, thirst and safety. However, observers of human behavior understand that these and other goals can be and 7

8 frequently are modified and updated in various ways. Thus, consumer researchers have moved away from the literal meaning of satisfaction and now pursue this concept as the consumer experiences and describe it. In Oliver (1997), satisfaction is the fulfillment response. It is a judgment that a product or service feature, or the product or service itself, provided( or is providing) a pleasurable level of consumption-related fulfillment, including levels of under or over fulfillment, satisfaction is an overall customer attitude towards a service provider (Levesque & McDougall,(1996) or according to Zineldin (200) an emotional reaction to the different between what customers anticipate and what they receive. When customers are satisfied, they are more likely to return. While dissatisfied customers are more likely to go else where(heskett et al., 1994: Zairi,2000). Since, customer satisfaction is strongly influenced by the interaction between customers and employees (Boshoff&Tait,1996), examining employee behavior is critical. Emp-loyee behavior, through, is strongly influenced by the operating organizational culture (Chow et al,2001: Ferris et al., 1998;Pratt&Beaulieu,1992;Shein,1996), a system of shared values and beliefs that product norms of behavior and either theoretical or indirect (Growing&Lindholm,2002; Gupta et al., 2005).Quality of service is the focus of the assessment that reflects the customer s perception of the five specific dimensions of service. Conversely, satisfaction is more inclusive, that is, satisfaction is determined by the perception of service quality, product quality, price, situation factors, and personal factors (Zeithaml & Bitne, 2001), see figure.4. Figure:4 Customer Satisfaction mod Reliability Responsiveness Assurance Empathy Tangibles Service Quality Product Quality Price Situational Factors Customer Satisfaction Personal Factors 8

9 Figure.5: Relationship between all Service quality subdimensions: 1.Timelines 2.Assurance 3.Convenience 4.Helpfulness 5.Comfort 6.Meal 7.Safety & Security Service quality Overall Customer Satisfaction Price Sociodemographic Behavioral Intentions characteristics 9

10 Figure :5, explains the relationship between customer satisfaction, service quality, price and socio-demographics and has been conceptualized based on Zeithml s (1998) means end model and parauraman et al s (1994a) satisfaction model, in which perceived service quality, and perceived price fairness are there abstract concept of a higher hence, the variables of product quality and service quality are combined into one variable, namely, service quality (Natalisa and Subroto, 2003). Conceptualization of the model also reflects Brady and Cronin s (2001) multidimensional model. Furthermore, customer socio-demographic characteristics are likely to influence their level of satisfaction towards the services they received (Peterpendent variables and customer satisfaction is the dependent variable. 1.4: Objective of the study This study is conducted with four objectives. There are: The main objective of this study is to examine the satisfaction of passengers on service quality of Bangkok Airway. To explore the level of passengers satisfaction with the service quality on Bangkok airline in terms of three dimensions of service quality instrument i.e., in-flight service, inflight digital services and back office operations. To elucidate the relationship between service qualities delivered to passengers and their satisfaction as to different class of journey. To examine the demographic profile of the respondents and their satisfaction on the services rendered by the airliners. 10