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RESEARCH PAPER

CUSTOMER PERCEPTIONS, EXPECTATIONS AND GAPS IN SERVICE

QUALITY: AN EMPIRICAL STUDY OF CIVIL AVIATION INDUSTRY IN

INDIA

BY

DR. MOHAMMED NAVED KHAN Senior Lecturer

Department of Business Administration Faculty of Management Studies & Research

Aligarh Muslim University Aligarh-202002 (UP) INDIA

e-mail: mohdnavedkhan@gmail.comPh: 0091571 2701184(R) Mobile : +919411800860

VIPPAN RAJ DUTT Doctoral Research Scholar (Corresponding author)

Faculty of Management Studies and Research Aligarh Muslim University, AMU. Manager (System / Maintenance)

NACIL (I)

Correspondence Address: Dutt Niwas,

809 Sector 17 A Gurgaon 122001

Haryana – 122001 INDIA e-mail : vrdutt@indianairlines.co.in

Ph. (R) 0091 124 2397809 Mobile : +919818207809

&

Dr. S C BANSAL Associate Professor

Indian Institute of Management Lucknow – 226 013 (India) e-mail: bansal@iiml.ac.in

Ph. 0091 522 2736637

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CUSTOMER PERCEPTIONS, EXPECTATIONS AND GAPS IN SERVICE

QUALITY: AN EMPIRICAL STUDY OF CIVIL AVIATION INDUSTRY IN

INDIA

ABSTRACT

Civil aviation is a catalyst for economic development and trade in an increasingly

globalized world where people and goods are moving farther, faster and cheaper than

ever. The Indian civil aviation sector too is presently witnessing a boom with a host of

private airlines taking to the skies. Leading players in the Indian aviation industry

include Air India, Indian Airlines, Jet Airways, Sahara Airlines, Kingfisher, Spicejet,

Paramount, Indigo and Go Air. While the growth rate of the civil aviation sector has

slowed down in the mature international markets, it is increasing at a brisk pace in India.

This growth is fuelled by the liberalization of the industry, increase in investments,

emergence of low cost carriers (LCCs), positive impetus by regulatory authorities and

improvement in the standards of living in the region.

With the entry of LCCs, the domestic airline industry in India is presently experiencing its

second phase of liberalization. The winds of competition have changed the rules of the

game. As airfares drop, an increasing number of middle-income travelers are preferring

to travel by air. In fact, domestic air travel has grown at the rate of around 38 per cent in

the period Jan – July 2007.

The pressure to provide better customer services has never been greater. Consequently,

the primary purpose of this study was to compare the quality of service on domestic

flights of various Indian airlines. The service components considered for the study were

expectations and perceptions. The research questions and the derived hypotheses were

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examined comparing expectations and perceptions and the gap between them. An

analysis of demographics like age, gender and level of income for the airlines surveyed

was also carried out.

The validity of the “classical” five-dimensions of SERVQUAL could not be resolved for

service quality in case of domestic airlines. The reliability estimates for SERVQUAL as a

unidimensional instrument were found to be higher. The main findings of the study

indicated that there were significant differences between expectations and perceptions of

service quality on domestic flights. Dimensions of Tangibility (Legacy Support Service,

Additional LCC Support Service and Flight) and Reliability were significant drivers of

customer service. Passengers expect airlines to ensure safe journey, support in mitigating

problems due to critical incidents and of course meet time commitments. The study has an

applied bias as the findings of the study can help the airlines, government and regulating

agencies in evaluating the level of existing services being offered by the players as also in

deciding on the portfolio of services to be made mandatory in the interest of passengers.

JEL classification : M31, L93, N75

Key words: Customer Satisfaction, Airline, Customer Service, SERVQUAL, India, Civil

Aviation

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CUSTOMER PERCEPTIONS, EXPECTATIONS AND GAPS IN SERVICE

QUALITY: AN EMPIRICAL STUDY OF CIVIL AVIATION INDUSTRY IN

INDIA

INTRODUCTION

Civil aviation industry has been swept by a wave of liberalisation throughout the world

(Chan 2000, InterVISTAS-ga 2006). The aviation industry has moved towards

liberalisation in the ownership of national carriers, capacity sharing, price controls and

market access, leading to greater competition among airlines. Open sky policy is being

followed in increasing number of countries. Airline alliances are being forged for

enhanced networking of destinations and code sharing among airlines is becoming

common. With facilities for easy entry, exit and freedom over fare structure, domestic

private operators are competing with national carriers. Airports, apart from providing

range of facilities to airlines, are evolving into multifaceted hubs containing hotels,

conference centres, duty free shops, and shopping malls.

Air travel, driven by liberalization and globalization, remains the fastest-growing market.

Over 2.1 billion passengers departed on scheduled journeys in 2006 (IATA 2007). Strong

economies saw international passenger demand grow by 5.9%. Driving these

developments are further market liberalization and the availability of more fuel efficient

and longer-range aircraft that are better able to serve thinner routes.

Focus on service quality is the need of the hour if the airlines aspire to improve market

share and further enhance financial performance in domestic and international markets. A

necessary corollary is that domestic airlines need to have valid and reliable measures to

better understand the variables likely to have a bearing on the service quality offered by

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their organization, e.g. expectations and perceptions of airline passengers vis-à-vis service

quality.

The article provides introduction to theoretical foundations for measurement of service

quality in the context of airline industry. This is followed by a brief profile of civil

aviation industry in India. Research objectives, hypotheses and methodology are

discussed followed by results from the data analysis. The study has an applied bias as it

also discusses practical implications for airline marketing managers in India.

SERVICE QUALITY MEASUREMENT: THEORITICAL FOUNDATIONS

Much of the research in services marketing centers on understanding services and service

quality from customer’s point of view (Brown et al. 2006). The use of service quality as a

competitive edge has been extensively addressed in marketing literature (Shostack 1977;

Lovelock 1983; Gronroos 1978, 2006; Parasuraman, Zeithaml & Berry 1985, 1988, 1991,

1994A, 1994B; Bitner, Booms & Tetreault 1990; Rust, Zahorik & Keiningham 1995;

Rust & Chung 2006; Kasper, Helsdingen, & Gabbott 2006). However, service quality is

an elusive and abstract construct that is difficult to measure (Cronin et al. 2000).

The disconfirmation model of service quality provides a customer referenced method for

assessing service quality. In this model quality is implied if the customers’ expectations

of the service experience beforehand are exceeded by the service when it is delivered.

Disconfirmation has had a huge impact upon service quality and has been subject to a

series of refinements. Grönroos (1978) identified that services are not one big amorphous

event but comprise of different components – technical quality and functional quality –

which interact to determine overall quality. SERVQUAL (Parasuraman et al. 1985; 1988)

based service quality approach in academic literature, takes into account disconfirmation

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and different service attributes and links them together with management activity through

a gap framework.

Six-Sigma model of service quality was developed by Motorola in 1980’s, and is an

organizational change model driven by customer demand. Customer equity framework

(Rust et al. 2000; 2004; 2006) provides an information-based, customer-driven,

competitor-cognizant, and financially accountable strategic approach to maximizing the

firm’s long-term profitability. Customer equity projections are built from a new model of

Customer Life-Time Value (CLV)—which permits the modeling of competitive effects

and brand switching patterns.

Service-dominant-logic (SDL) model (Vargo and Lusch 2004; Lusch et al 2006) – work

in progress status - represents an inversion from goods dominant logic, that places

activities driven by specialized knowledge and skills, rather than units of output, at the

center of exchange processes. While according to Kano’s model (Yueh-Ling et al 2007),

quality elements can be classified into three categories, namely Must-be, One-

dimensional and Attractive needs, depending on their ability to create customer

satisfaction or dissatisfaction.

The Gaps Model Of Service Quality

(Parasuraman et al. 1985) developed a model which depicts how various gaps in the

service process may affect the customer’s assessment of the quality of the service. The

foundation of the model (see Figure 1) is a set of four gaps which are the major

contributors to the service quality gap which customers may perceive:

Gap 1 (Consumer Expectation – Management Perception Gap): In formulating its

service delivery policy, management does not correctly perceive or interpret consumer

expectation.

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Gap 2 (Management Perception – Service Quality Specification Gap): Management

does not correctly translate the service policy into rules and guidelines for employees.

Gap 3 (Service Quality specification – service delivery Gap): Employees do not

correctly translate rules and guidelines into action.

Gap 4 (Service Delivery – External Communications Gap): External communications

– promises made to customers – do not match the actual service delivery.

These four gaps emerge from an executive perspective on a service organization’s design,

marketing and delivery of services. These gaps are located throughout the organization

between frontline staff, customers and managers. They, in turn, contribute to another gap,

i.e. gap 5, which is the discrepancy between customers’ expected services and the

perceived service actually delivered. This gap is a function of the other four gaps: i.e. Gap

5 = f (gaps 1, 2, 3, 4).

It is this gap that Parasuraman et al. (1985) sought to measure using the SERVQUAL

instrument. The instrument has been further developed and promoted through a series of

publications (Parasuraman et al. 1988; 1991, 1994a, 1994b; Zeithaml et al. 2003). Much

of the research in this area since then has been concerned with validating or challenging

the construct (Cronin et al 1992; Babakus et al 1992a, 1992b; Teas 1993; Smith 1995;

Buttle 1996; Genestre & Herbig 1996; Asubonteng McCleary & Swan 1996; Nel, Pitt &

Berthon 1997; Llosa, Chandon & Orsingher 1998; Hussey 1999; Brady, Cronin & Brand

2002; Myerscough 2002; Nyeck et al. 2002) and suitability of SERVQUAL vs

SERVPERF scale (Cronin et al 1994; Elliot 1994; Jain & Gupta 2004). Chang & Lim

(2002) carried out comparative study of relevance of SERVQUAL and SERVPERF

scales to airline industry. In their opinion, SERVQUAL model is more appropriate for

airline service industry than SERVPERF.

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Figure 1: Conceptual Model of Service Quality

Word of Mouth

Personal Needs

Expected Service

Perceived Service

Service Delivery

External Communication to Consumers

Translation of Perceptions into Service

Gap 2

Management Perceptions of Consumer Expectations

Gap 5

Gap 4

Consumer

Marketer

Gap 1

Past Experience

Gap 3

Source: Zeithaml, V.A., Berry, L.L., Parasuraman, A. (1988), Communication and

Control Processes in the Delivery of Service Quality, Journal of Marketing, 52, p. 36

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The development of SERVQUAL by Parasuraman et al. (1988) as a generalisable

measure of service quality was a seminal contribution that has been adapted and widely

used across industries around the world (Dabholkar et al. 1996). The instrument

empirically relies on the difference in scores between expectations and perceived

performance. It consists of 22 items divided along the 5 dimensions, with a seven-point

scale accompanying each statement to test the strength of relations. These 22 items are

used to represent five dimensions viz. reliability, responsiveness, tangibles, assurance

and empathy (RATER). Mathematically, the same may be expressed as:

∑=

−=k

j

ijiji EPSQ1

)(

where,

SQi = Perceived service quality of individual ‘i’

k=Number of service attributes / items

P=Service quality perception of individual ‘i’ for service attribute ‘j’

E=Service quality expectation of individual ‘i’ for service attribute ‘j’

A variant of SERVQUAL scale, SERVPERF scale contains perceived performance

component only. A higher perceived performance implies higher service quality. In an

equation form, it can be expressed as follows:

∑=

=k

j

iji PSQ1

where,

SQi = Perceived service quality of individual ‘i’

k=Number of service attributes / items

P=Service quality perception of individual ‘i’ for service attribute ‘j’

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The identification of five dimensions of service quality has dominated the literature in the

field of service quality. There are now over 5500 research articles on this model (Kasper

et al. 2006). According to EBSCO database (30 Sept’07), SERVQUAL as a keyword is

appearing in 102 publications. Major published studies include Banking (Arasli,

Katircioglu & Mehtap-Smadi 2005; Bexley 2005; Baumann et al. 2007; Aga & Safakli

2007), Education (Arambewela & Hall 2006), Health (Lam 1997; Kilbourne et al. 2004;

Pakdil & Harwood 2005), Hotel (Antony, & Ghosh 2004; Juwaheer 2004), Information

System & E-Commerce (vanDyke, Kappelman & Prybutok 1997; Cook 2000; Jiang,

Klein & Carr 2002), Internal Marketing (Frost & Kumar 2000, 2001; Straughan 2002),

Public Services (Orwig, Pearson & Cochran 1997; Donnelly & Shiu 1999; Wisniewski

2001; Brysland & Curry 2001), Retail (Finn &Lamb 1991; Dabholkar, Thorpe, & Rentz

1996; Zhao, Changhong & Hui 2002) and Tourism & Hospitality (Saleh & Ryan 1991;

Kouthouris & Alexandris 2005; Home, Peter & Pikkemaat 2005), Transportation (Crosby

& LeMay 1998; Mehta & Durvasula 1998; Durvasula & Lysonski 1999) .

SERVICE QUALITY IN THE CONTEXT OF AIRLINE INDUSTRY

Continued liberalisation and ‘open skies’, the impact of global alliances, new low-cost,

no-frills carriers, on-line ticket selling, and privatisation of state-owned airlines are some

of the crucial developments that have been impacting on airline business at a time of

continually falling average fares and yields. Increasing competition from low cost, low

fare carriers is one of the fundamental challenges being faced by the traditional full

service carriers (Chen, Gupta & Rom 1994; Cerasani 2002; Gillen & Morrison 2002;

Sayanak 2003; Franke1 & Hamilton 2004; Cary 2004; O’Connell 2005; and Pant 2006)

and it has also led to reduction in average quality of service provided to the customer

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(Trapani & Olson 1981; Bhatt 1997; Chan 2000; Butler 2001; Servitopoulos 2002;

Mazzeo 2003; Morrison 2004; Manuela 2007).

The airline industry is inherently unstable (Doganis 2006) and highly competitive, where

all airlines have comparable fares and matching frequent flyer programs. In such a

scenario, service quality is a significant driver of passenger satisfaction, loyalty and

choice of airline (Sultan et al 2000; Chang et al 2002, Gilbert et al 2003; Rust et al 2006).

Figure 2 outlines airline service delivery mechanism.

Airlines need to have valid and reliable measures for a better understanding of the

variables likely to impact the perception of service quality being offered by them. They

need to measure not only customer perceptions but also expectations of airline

passengers. If significant variations are found in the perceptions of airline passengers’

vis-à-vis service quality on the different flights, changes in the marketing mix need to be

implemented to improve the perception of quality. But, in general, passenger hardships

have increased after Sept 11 attacks (Leone & Liu 2003; Gkritza, Niemeier & Mannering

2006).

Several papers have been written during the past few years examining the service quality

of airline industry. These papers focus primarily on measuring the performance of airlines

using SERVQUAL instrument (Gourdin & Kloppenborg 1991; Ostrowski, O'Brien &

Gordon 1993; Young, Cunningham, & Moonkyu 1994; Bejou & Palmer 1998;

Gustafsson, Ekdahl & Edvardsson 1999; Sultan & Simpson 2000; Chang et al 2002;

Tsaur, Chang & Yena 2002; Gilbert & Wong 2003; Alter 2003; Kozak, Karatepe & Avci

2003; Boland, Morrison & O’Neill 2003; Natalisa & Subroto 2003; Scheraga 2004; Truitt

& Haynes 1994; Heracleous, Wirtz, & Johnston 2004; Bel 2005; Ling et al 2005; Gursoy,

Chen. & Kim 2005; Knibb 2005; Rhoades & Waguespack 2005; Anitsal & Paige 2006;

Hunter 2006; Pham 2006; Pham & Simpson 2006; Park, Robertson & Wu 2005, 2006;

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Sima, Kohb & Shetty 2006; Venkatesh & Nargundkar 2006; Chitnis 2007; Pakdil &

Aydin 2007; Chitnis 2007; Lioua & Tzeng 2007).

In US, Airline quality ratings (AQR) that also take in to account 12 customer complaint

categories are being published annually since 1991 (Headley and Bowen 1997, Bowen &

Headley 2007). Gardner (2004) carried out a dimensional analysis of airline quality based

on on-time arrivals, denied boardings, mishandled baggage and customer complaints,

which is in conflict with the results of AQR 2004.

The travel industry has been a pioneer in the innovative use of Information Technology

(IT) (Feldman 2001; Gareiss 2001; Gareiss 2003; Kelemen 2003; Botha 2004; Ghobrial

& Trusilov 2005). The airline industry is embracing cutting edge technology to gain

competitive edge (Jiang & Doukas 2003; Baker 2007). O’Toole (2004) predicts that air

travel could become world’s first web-enabled industry as online sales, e-tickets and

range of new technologies gain ground with increasing speed. The dramatic growth of

web and self-service technologies permit customers and airlines to bypass the complexity

and cost of old legacy systems (McIvor, O’Reilly & Ponsonby 2003; Shon, Chen &

Chang 2003).

Researchers have employed Structural Equation Modelling (SEM) to investigate the

effects of individual dimensions of airline service quality (Cezard 1999; Kalamas,

Laroche & Cezard 2002); Park et al 2005, 2006; Ling, Lin & Lu 2005; Cassab &

MacLachlan 2006). Chang & Yeh (2001) suggested a multiattribute decision making

model to measure and compare overall competitiveness of airlines on five dimensions and

their associated objective performance measures. Danaher (1997) employed a method

based on conjoint analysis to determine the relative importance of service attributes

measured in airline customer satisfaction surveys.

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Figure 2 : Customer Service Delivery in Airline Industry PASSENGER (Pax) LINE OF INTERACTION FRONT LINE LINE OF INTERNAL INTERACTION SUPPORT

Pax makes Flight Reservation –Bkg Office / Internet

Ticketing Check-in at Airport (Pax, Baggage)

PreboardingSecurity Check

Boarding and Seating

Inflight Service

Transport-ation of Pax to Aircraft Cabin Crew – Greet, assistance to seat & store bags

Cabin Crew – Safety Demo, Meals, Adhoc Request

Security – Passenger & Hand Baggage Check

Check-In Counter – Issue Boarding Pass & Tag Baggage Security – Check-in Baggage Security Check

Ticket Office – Payment & Collection of Ticket

Reservation Desk – Check Availability, Quote Fare & Reserve Seat

IT – Reservation Database, Frequent Flyer Database Catering – Meal Request

Finance – Accounts IT – Ticketing Database

IT – Check-In Database Commercial – Check-in Baggage Reconcilia-tion & Loading

Engineering – A/c Check & Flight Clearance Refuelling Catering – Loading of Meals Cabin

Preparation of Trim Sheet, Aircraft fueling & preparation for Take-off

Baggage –Unload Baggage and load it on airport carousel

Internet based Reservation & Ticketing

Commercial - Flight Monitor ing

Arrival Helpdesk –Special need passengers, Transfer case, Pax Feedback

Arrival, Baggage Retrieval

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CIVIL AVIATION IN INDIA

The Indian air transport sector is among the most vibrant and fastest growing in the

world. As per IATA forecasts, with GDP growth of 7.2% for 2005 to 2009, air traffic

growth can be expected to be in the 15% range (Bisignani 2005). With less than 1% of its

population currently traveling by air, India's growth potential is enormous. Within a

period of 15 years, the number of Indian carriers has grown from 2 players to more than

10 today. More than 24.85 million passengers traveled between January and July 2007 as

against 18.03 million in the same period last year (Awasthi 2007). Figure 3 details the

growth of domestic passenger traffic in last 10 years.

Figure 3: Growth of Domestic Passenger Traffic in last 10 Years

Domestic Passenger Traffic for last 10 Years

0

5

10

15

20

25

30

1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Year

Pas

sen

ger

Tra

ffic

in M

illio

ns

NATIONAL CARRIERS PRIVATE CARRIERS TOTAL

Source: Directorate General of Civil Aviations (DGCA) 2007

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In India, Air Deccan, which started operations in August 2003, was the first airline to

adopt the low-cost business model. But low fares translate into sustainable gains when

backed by safety and on-time performance (Gopinath 2007). Five new carriers—Air

Deccan, SpiceJet, GoAir, IndiGo and Paramount Airways—have already started

operations and many more such as Indus Air, AirOne, East-West and Magic Air are on

the horizon. Presently, Indian Airlines, Jet Airways, Sahara and Kingfisher are the Full

Service Carriers (FSC), whereas Air Deccan, Spicejet, Paramount, IndiGo and Go Air fall

in the category of Low Cost Carriers (LCC). Table 1 gives the profile of domestic airlines

operating in India.

The National Council for Applied Economic Research (NCAER) Report (2000) identified

the factors restraining the Civil Aviation sector from fully contributing to the growth and

progress of the country. Naresh Chandra Committee Report, (2003) delineated the

problems being faced by airline industry in India and proposed a roadmap for its rapid

growth and improvement in services to the passengers. According to Bhandari (2002)

regulatory – policy framework has prevented this sector from being transformed into a

mass transport system. He suggested minimal intervention of the government to unlock

its potential. The International Air Transport Association (IATA) has identified five

challenges for the successful development of air transport in India (1) enhancing safety,

(2) urgent infrastructure improvement, (3) reasonable taxation, (4) commercial freedom

and (5) Simplifying the Business through effective use of technology (Concil 2005).

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Table 1: Profile of Various Players in the Civil Aviation Sector in India FSC-

PUBLIC FSC – PRIVATE LCC

Indian Airlines

Jet Sahara King fisher

Air Deccan Spice Jet

Para mount

Go Air IndiGo

IC 9W S2 IT DN OS I7 G8 6E Start Date Aug, 1953 May, 1993 Dec, 1993 May 2005 Aug 2003 May 2005 Oct 2005 Nov 2005 Aug 2006 Web Site www.indian

airlines.in www.jetair ways.com

www. Airsahara.net

www.fly kingfisher.com

www. airdeccan.net

www. spicejet.com

www.paramount airways.com

www. goair.in

www.indigoairlines.com

Technology Partner

In-house Sabre Gabriel Sabre Radixx Navitaire Amadeus BIS Inter Globe Technologies

Current Fleet # (Classic / Small)

71 / 6 57 / 8 17 / 7 21 / 10 21 / 22 13 / 0 0 / 5 4 / 0 11 / 0

Destinations @ (Domestic/ International)

62/18 44/8 34 31 65 15 8 11 15

Daily Flights 250 340 147 180 350 86 53 56 78 Domestic Market # Share (2006)

21.5 31.2 8.8 8.7 18.3 6.9 0.7 2.8 1.3

Passengers Carried in Millions (2006)

6.903 10.028 2.816 2.793 5.875 2.216 0.225 0.905 0.412

Operating Revenue in Millions (2005-06)

63,193.5 56,960.6 20,617.2 4,250.1 13,518.1 3,418.6 144.2 384.0 Not Available

Operating Expenses in Millions (2005-06)

62,873.2 51,573.0 21,212.1 6,587.8 16,741.4 3,903.9 321.9 968.0 Not Available

Operating Result in Millions (2005-06)

320.3 5,387.6 -594.9 -2,337.7 -3,223.3 -485.3 -177.7 -584.0 Not Available

Passenger Load Factor (2005-06)

63.8 73.7 70.8 59.3 74.7 82.9 44.1 45.1 Not Available

Fleet on Order 43 40 84 90 20 10 20 95 Owner / Business Group

Government of India

Naresh Goyal

Sahara India Pariwar

Kingfisher UB Group

Air Deccan / Capt. Gopinath

Royal Holding / Kansagra Family

Paramount Group

Wadia Group

InterGlobe Enterprises

Source : Prepared by researchers with inputs from official websites of DGCA and domestic airlines (as on 19th Aug 2007)

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Baisya (2004), while identifying the key attributes that influence customer choice in

airline selection, also presented a comparative analysis of the performance of domestic

airlines on the attributes. Khan, Dutt & Bansal (2007), in a preliminary study,

investigated the service quality provided by different domestic airlines. Bansal, Khan &

Dutt (2006a) employed the concept of customer lifetime value in measuring marketing

ROI for domestic airlines in India. Khan, Dutt & Bansal (2006c) also discussed at length

the deployment of IT by the airline industry in India for providing upgraded services to

the passengers thereby leading to enhanced customer satisfaction and improvement in

overall efficiencies. In yet another research, Khan & Dutt (2006b) traced developments in

the aviation sector in India with special reference to LCCs and their role in the emerging

borderless world.

RESEARCH OBJECTIVES AND HYPOTHESES

Review of literature conducted as a prelude to the present study revealed that majority of

the available studies on customer services are confined to US and Europe. Studies,

particularly, in the context of Indian airline industry, are few and far between.

Although, airlines have introduced various measures to improve their service profile in

the eyes of the customer, yet there is a need to continually assess the dimensions of

service that customers look forward to in an airline.

LCCs are relatively a new phenomenon in India, and service quality expectations from

these carriers have till date not been covered by any researcher in detail. The present

study attempts to bridge this gap. Thus, the primary objective of the study was to examine

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the customer’s perceptions and expectations of service quality in domestic airline

industry with special reference to LCCs. Specifically the study attempts to measure the:-

1) Dimension of services valued by the passengers,

2) Satisfaction levels of customers on various dimensions of services,

3) Compare the quality of services on domestic flights of selected airlines in India,

4) Compare service expectations; perceptions and the gaps between them using the

SERVQUAL scale, and

5) Investigate the extent of applicability of the SERVQUAL instrument to airline

industry in India.

Based on the above objectives, the following relationships were hypothesized:

H01: There is no difference in the gap between customers’ perceived and expected service

quality vis-à-vis ‘Tangibility - Legacy Support Services’ among different categories

of airlines.

H02: There is no difference in the gap between customers’ perceived and expected service

quality vis-à-vis ‘Tangibility – Additional LCC Support Services’ among different

categories of airlines.

H03: There is no difference in the gap between customers’ perceived and expected service

quality vis-à-vis ‘Tangibility – Flight’ among different categories of airlines.

H04: There is no difference in the gap between customers’ perceived and expected service

quality vis-à-vis Reliability among different categories of airlines.

H05: There is no difference in the gap between customers’ perceived and expected service

quality vis-à-vis Empathy among different categories of airlines.

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H06: There is no difference in the gap between customers’ perceived and expected service

quality vis-à-vis Responsiveness among different categories of airlines.

H07: There is no difference in the gap between customers’ perceived and expected service

quality vis-à-vis Assurance among different categories of airlines.

H08: There is no difference between customers’ expected service quality among different

categories of airlines.

H09: There is no difference between customers’ perceived service quality among different

categories of airlines.

H10: There is no difference in the gap between customers’ perceived and expected service

quality among different categories of airlines.

It is expected that the findings of the study will help the airlines, government and

regulating agencies in evaluating the level of existing services being offered by the

players as also in deciding on the portfolio of services to be made mandatory in the

interest of passengers. Thus, analysis of various dimensions of service could help evolve

a model of service parameters that airlines could adopt.

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RESEARCH METHODOLOGY

The tool used primarily in the present research was SERVQUAL (Parasuraman et al.,

1988, 1991). SERVQUAL is a survey instrument that purports to measure the quality of

service rendered by an organisation along five dimensions: reliability, assurance,

tangibles, empathy and responsiveness (RATER). The instrument is viewed as a basic

“skeleton” that requires modification to fit airline industry (Sultan et al., 2000; Gilbert et

al., 2003; Park et al., 2006).

The gap analysis as per SERVQUAL instrument has been carried out first time across the

domestic airline industry in India. SERVPERF analysis has also been simultaneously

carried out to provide further insight. Combination of SERVQUAL and SERVPERF

instrument makes this study unique in Indian context.

The study was carried out across three categories of airlines:

• Full Service Carriers – Public Sector, which includes Indian Airlines and Alliance Air

• Full Service Carriers – Private Sector, which includes Jet Airways, Air Sahara and

Kingfisher Airlines

• Low Cost Carriers, which includes Air Deccan, Spicejet, Paramount, IndiGo and Go

Air

Questionnaire Design and Measurements

The questionnaire is primarily based on 22 items of SERVQUAL model. In depth

interviews were held with airline staff, airline passengers and academics connected with

the aviation industry to develop the questionnaire. In addition, the service quality

measures were checked against other independent sources of literature related to service

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quality. These resulted in the identification of 7 service quality dimensions and 31

measurement items suitable for the airline industry. Tangibility dimension was modified

to reflect unique characteristics of airline service industry. The instrument used in the

present study for measuring airline service quality encompasses 31 items grouped under

seven dimensions is given in Table 2. All the items were measured on a 7 point Likert-

type scale. The survey instrument contained questions pertaining to expectation and

perception rating for each driver. In addition, the research instrument also had questions

related to demographics.

Service quality feedback was obtained from passengers and domestic airline staff. Gaps 1

– 4 were measured using quality service audit questionnaire (Messinger 2003) that was

filled by staff of the airlines.

Pilot Study

The main study was preceded by a pilot study in order to check for appropriateness of the

items used in the study. A convenience sample of passengers who had recently traveled

by air was used. The pilot study was carried out in two stages.

Stage I: In all 65 questionnaires were distributed to passengers to check for clarity of the

measurement items. Passengers were asked to complete the questionnaire and also give

overall comments about the questionnaire. A total of 45 passengers responded. Based on

the feedback, the questionnaire was revised.

Stage II: The revised survey questionnaire was tested a second time using 75 passengers

who had used domestic airline service during the last 12 months. In total, 66 individuals

responded. The revised survey questionnaire was then used on the final sample.

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Table 2: Instrument for Measuring Airline Service Quality

Service Quality Parameters Abbreviation Tangibility – Legacy Support Services 1 Visually Appealing Physical Facilities VAPF 2 Vast Sales and Support Network VSSN 3 Vast Network of Destinations VND

Tangibility – Additional LCC Support Services 4 Economical Airfare and Discount Schemes EADS 5 Web-site and Call Center usage WCCU

Tangibility – Flight 6 Modern Aircraft with up-to-date Facilities MAUF 7 Neat Well Dressed and Visually Appealing Staff VAS 8 Seat in Flight of Choice SFC 9 Hassle free Check-in and Boarding HCB 10 Efficient Baggage Handling Mechanism EBHM 11 Excellent Quality In-Flight Services EQIS 12 Multiple Meal Options of High Quality MMO

Reliability 13 Special Need Customers SNC 14 Problems due to Critical Incidents PCI 15 Meet Time Commitment MTC 16 Keep Error Free Records EFR 17 Perform Service right the first time PSRF

Responsiveness 18 Prompt Service to Customers PSC 19 Always Willing to Help Customers AWHC 20 Staff Behavior should Instill Confidence SBIC 21 Keep Customer informed about time of Service CITS 22 Staff never too busy to respond to customer's request SNB

Assurance 23 Safe Planes and Facilities During Journey SPF 24 Consistently Courteous Staff CCS 25 Knowledge to Answer Customers' Queries KACQ 26 Individual Attention to Customer IAC

Empathy 27 Staff gives Personal Attention to Customer PAC 28 Customer's Best Interest at Heart CBIH 29 Understand Specific Needs of Customers USNC 30 Convenient Flight Schedules CFS 31 Overall Satisfaction with the Airline OSA

23

Data and Sampling

Illustrative data was mainly obtained from real airline passengers at domestic terminals at

Indira Gandhi International Airport, Delhi (IGIA); Sardar Vallabhbhai Patel International

Airport at Ahmedabad; Chatrapati Shivaji International Airport at Mumbai and Bangalore

Airport. It should be noted that the airports covered are the busiest in their respective

sectors and thus expected to provide an unbiased representative sample.

In all, 1081 passengers were randomly approached during the months of March 2006 –

Feb 2007. Of these, 477 agreed to participate in the study. During editing phase of the

questionnaires, it was observed that 57 responses were incomplete in various respects and

thus had to be discarded. This resulted in a total of 420 responses. It included 171 FSC –

Public, 169 FSC – Private and 80 LCC passengers. Of these, New Delhi accounted for

around 40%, Mumbai 30%, Bangalore 20% and Ahmedabad 10%. Most of the

respondents were Indian. Table 3 gives the demographic profile of the respondents.

24

Table 3: Demographic Profile - Passenger

Primary Airline Total Dimension FSC – Public

FSC – Private

LCC

Male 148 143 70 361 Gender Female 23 26 10 59

Less than 21 1 2 5 8 21 to 40 101 125 61 287 41 to 60 66 40 14 120

Age Group

Above 60 3 2 0 5

Graduation or Below 32 35 27 94 Post Graduation 67 70 25 162

Highest Qualification

Professional 72 64 28 164

Self Employed 16 15 13 44 Employed (Private Sector) 60 105 53 218 Employed (Govt/ Public Sector

76 33 7 116

Occupation

Others 19 16 7 42

Less than 0.5 Million 104 75 51 230 0.5 – 1.0 Million 48 64 22 134 1.0 – 2.0 Million 14 17 5 36

Annual Income Bracket

Above 2.0 Million 5 13 2 20

Less than 1 Year 6 6 7 19 1 - 5 Years 62 84 49 195 5 – 10 Years 32 32 11 75

Since how long Flying

More than 10 Years 71 47 13 131

1 – 5 102 92 51 245 6 – 10 38 34 22 94 10 – 20 17 26 5 48

Domestic Flights in last 1 Year

Above 20 14 17 2 33

No 115 109 62 286 Frequent Flyer Member

Yes 56 60 18 134

No 73 73 54 200 Travel to International Sector

Yes 98 96 26 220

Total 171 169 80 420

25

A non-probability sampling design was used to collect the data from staff who were

approached individually during their rest periods for the feedback. Of the 218

questionnaires distributed, 72 were returned. A total of 15 questionnaires were rejected as

they were incomplete in various respects. This resulted in 57 usable responses. Table 4

gives the demographic profile of the respondents.

Table 4 Demographic Characteristics – Airline Staff

Primary Airline Dimension FSC - Public

FSC - PRIVATE LCC

Total

Male 16 15 11 42 Gender Female 4 7 4 15

Less than 30 2 15 13 30 30 to 40 8 4 1 13 41 to 50 4 3 1 8

Age Group

Above 50 6 0 0 6

Graduation or Below 6 11 12 29 Post Graduation 3 6 3 12

Highest Qualification

Professional 11 5 0 16

Less Than 1 Year 0 7 4 11 1 to 5 Years 2 9 11 22 5 to 10 Years 1 6 0 7

Duration in Present Airline More than 10 Years 17 0 0 17

Passenger Services 7 9 14 30 In Flight Services 5 10 0 15

Functional Area Support Services 8 3 1 12

Junior Management 4 15 10 29 Middle Management 13 7 5 25

Level in the Organization

Top Management 3 0 0 3

Less than 5 8 10 7 25 5 to 10 5 8 3 16 11 to 50 4 1 2 7

Staff Reporting to You More than 50 3 3 3 9

Total 20 22 15 57

26

The responses were analyzed using SPSS, LISREL and MS-Excel 2000 spreadsheet

program. Appropriate statistical tools like EFA, CFA, cross tabulation and one-way

ANOVA have been applied on the data collected for the study.

FINDINGS AND DISCUSSION – CUSTOMER SERVICE

The validity and reliability analyses of SERVQUAL were conducted as part of the study

to determine the extent of the applicability of the dimensions of SERVQUAL to this

study.

Validity Analysis

Face validity, a subjective criterion reflecting the extent to which scale items are

meaningful and appear to represent the construct being measured, has been explicitly

assessed a priori in most studies (Babakus et al 1992; Carman, 1990; Parasuraman et al.,

1988). In the instant case too, extensive discussions were held with airline executives,

passengers and academicians who reviewed the questionnaire and confirmed that

modified SERVQUAL - with minor wording changes in few items - had face validity.

After evaluation of the questions they judged that all questions were appropriate to be

used in measuring passengers’ attitudes about service quality of domestic airlines in

India.

Factor analysis was conducted on perceived performance scores (P) and gap between

perceived and expected service quality scores (G), using principal component analysis

with varimax rotation (Table 5). Items for perception and gap loaded on five factors each.

27

The validity of the “classical” five-dimensions SERVQUAL is still an unresolved issue

when applied to studying airline service quality. The items related to expectations and

perceptions might be too general for such a study. Also, the fact that passengers are

required to respond to both expectations and perceptions of service quality at the same

time could affect the instrument’s validity and reliability.

28

Table 5: Factor Analysis on Perception (P) and Gap (G) Service Quality Parameters 1 2 3 4

Visually Appealing Physical Facilities P, G

Vast Sales and Support Network P, G

Vast Network of Destinations P, G

Economical Airfare and Discount Schemes P, G

Web-site and Call Center usage P, G

Modern Aircraft with up-to-date Facilities P, G

Neat Well Dressed and Visually Appealing Staff P, G

Seat in Flight of Choice P, G

Hassle free Check-in and Boarding P, G

Efficient Baggage Handling Mechanism P, G

Excellent Quality In-Flight Services P, G

Multiple Meal Options of High Quality P, G

Special Need Customers P, G

Problems due to Critical Incidents P, G

Perform Service right the first time P, G

Meet Time Commitment P, G

Keep Error Free Records P, G

Keep Customer informed about time of Service P, G

Prompt Service to Customers P, G

Always Willing to Help Customers P, G

Staff never too busy to respond to customer's request P, G

Staff Behavior should Instill Confidence P, G

Safe Planes and Facilities During Journey P, G

Consistently Courteous Staff P, G

Knowledge to Answer Customers' Queries P, G

Individual Attention to Customer P, G

Staff gives Personal Attention to Customer P, G

Customer's Best Interest at Heart P, G

Understand Specific Needs of Customers P, G

Convenient Flight Schedules G P

Extraction Method : Principal Component Analysis. Rotation Method : Varimax with Kaiser Normalization. Rotation converged in 6

iterations for both Perception and Gap.

29

Reliability Measures

To assess reliability, Cronbach’s alpha was used. Cronbach’s alpha is the average of all

possible split-half coefficients resulting from different ways of splitting the scale items

and a value of 0.6 or less generally indicates unsatisfactory consistency reliability

(Malhotra 2005). Reliability analysis was conducted for perception and gap on each

category of airline and reliability values were calculated for each dimension of

SERVQUAL. The reliability value for SERVQUAL as a uni-dimensional instrument was

high in all cases. The Cronbach’s alpha values for each measure are presented in Table 6.

Table 6 Reliability of SERVQUAL Dimensions Cronbach's ALPHA PERCEPTION GAP Overall ( 30 Items ) 0.964 0.955 Tangible – Legacy Support Services ( 3 Items ) 0.695 0.660 Tangible – New Support Services ( 2 Items ) 0.685 0.660 Tangible – Flight ( 7 Items ) 0.873 0.845 Reliability ( 4 Items ) 0.878 0.863 Responsiveness ( 5 Items ) 0.921 0.896 Assurance ( 4 Items ) 0.891 0.864 Empathy ( 4 Items ) 0.832 0.799

Confirmatory factor analysis was conducted using LISREL 8.5 to validate the

relationship between observed and the latent variables. The results of CFA suggested that

the seven dimension conceptualization fitted the data for Indian domestic passengers

(Table 7).

30

Table 7: Confirmatory Factor Analysis Summary Goodness of Fit Statistics PERCEPTION GAP

Degrees of Freedom 384 384 Minimum Fit Function Chi-Square 1246.665 (P = 0.0) 1127.628 (P = 0.0)

Root Mean Square Error of Approximation (RMSEA) 0.0760 0.0694 Normed Fit Index (NFI) 0.972 0.968 Non-Normed Fit Index (NNFI) 0.978 0.976

Comparative Fit Index (CFI) 0.981 0.979

Root Mean Square Residual (RMR) 0.110 0.131 Standardized RMR 0.0552 0.0527

Goodness of Fit Index (GFI) 0.827 0.844 Adjusted Goodness of Fit Index (AGFI) 0.791 0.811

PERFORMANCE OF AIRLINES ON VARIOUS SERVICE PARAMETERS

The performance of the airlines on various service parameters was analyzed and the same

is presented below:

a) Tangibility – Legacy Support Services

FSC – Public has the biggest network of destinations. It also has vast sales & support

network. FSC – Private have visually appealing physical facilities. Gap was highest in

case of LCC for network of destinations.

Airline staff exhibited higher perception of customer’s expectation across all the airlines.

Passengers expected LCCs to fly to more destinations.

b) Tangibility – Additional LCC Support Services

LCCs were rated high on economical airfares and use of website/call center.

Passengers expected more discount and economical airfares in case of full service

carriers.

c) Tangibility – Flight

Passengers had high perception regarding the quality of in-flight service of private

airlines. Gap regarding aircraft quality and facilities available was high in case of FSC –

31

Public as the aircrafts are quite old, especially those used by Alliance Air. Passengers

were not satisfied with the quality of food provided during the flight. Interestingly, the

gap was also high for LCC vis-à-vis in flight meal options, even though the LCC

guidelines are quite clear regarding non-supply of meals to the passengers. Passengers

were clearly not satisfied with baggage handling procedure of LCCs. FSC - Private and

LCC staff was perceived to be neat and good looking.

FSC – Private customers expected more from the airlines. They wanted better quality

service during check-in and baggage handling. They desired seat of choice and better

quality meals during the flight. FSC – Public passengers expected more with respect to

in-flight services.

d) Reliability

Gap was high in case of reliability of service for LCCs. Respondents were not satisfied

with their service in case of special needs, problems due to critical incidents1 and their

inability in meeting time commitments. The service of FSC – Public was also perceived

to be poor during the critical incidents. The general perception was that FSC – Private

keep error free records and performed service right the first time.

During critical incidents, FSC – Private customers expect airline to provide better service.

FSC – Public passengers have higher expectation from the airline to meet time

commitment. Private airline’s (both FSC and LCC) passengers expect airlines to keep

error free records.

1 Negative customer encounters, which do not proceed normally but create friction, irritation and

dissatisfaction. According to Edvardsson (1992) the major critical incidents in the view of business passengers are delays, cancelled flights, delayed or damaged luggage and overbooking.

32

e) Empathy

Gap between passenger’s expectation and perception was high for LCC on all the

parameters, namely, staff giving personal attention to customer, airline having customer's

best interest at heart; staff attending to specific needs of customers, and convenient flight

schedules. It is worth mentioning that LCCs started operations in India during the last few

years and their fleet size is not big. To extract maximum revenue, they tend to fly aircraft

for longer durations leading to inconvenient flight schedules and inconvenience to

passenger in case of any snag in aircraft. Overall, all airlines scored low on empathy.

FSC – Private passengers expect airline staff to have customer’s best interest at heart.

Passengers expect FSC to provide more convenient flight schedules.

f) Responsiveness

LCCs were unable to provide prompt service to customers perhaps due to low staff to

passenger ratio owing to rapid expansion in their operations. At Delhi airport, the number

of counters available to them are few (and small) leading to congestion and delay in

service to customers. Most of the LCC passengers are first time flyers and consequently

they have high anxiety regarding when service will be performed. LCCs have not been

able to keep pace with their expectations. The perception was that FSC – Private provides

prompt service to customers and that their staff was always willing to help customers, and

they keep the customer informed about the time of service. Overall, FSC – Private scored

high on responsiveness.

Passengers expect FSC – Private staff to meet their requirements and provide prompt

service.

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g) Assurance

Findings suggest that LCC staff were poorly trained to answer customers’ queries. In fact,

most of the passenger handling staff is freshly recruited and at times they find it

impossible to handle all the passenger queries. They also do no have adequate staff to

provide individual attention to customers. The first time flier, who probably is paying

beyond his means, expects higher level of personal attention, which, unfortunately for

him, is not a part of package. FSC – Private scored high on assurance.

FSC – Public and LCC staff was expected to provide more individual attention to the

customer. Customer’s also expected FSC – Private staff to have more knowledge to

answer their queries.

Overall, airline’s have higher perception of customer’s expectation. However, customer

expect FSC – Private to provide even higher level of service in case of tangibility –

additional LCC support services, tangibility – flight, reliability and responsiveness. A

summary of the above findings is presented in Table 8 given below:

34

Table 8: Airlines’ Performance on Service Parameters

FSC – Public FSC – Private LCC Overall Service Quality Dimension E P G E P G E P G E P G

Pax 6.064 5.213 -0.851 5.97 5.209 -0.761 6.008 4.546 -1.462 6.016 5.084 -0.932 Staff 6.483 5.717 -0.766 6.288 5.5 -0.788 6.422 5.756 -0.666 6.392 5.643 -0.749

Tangibility – Legacy Support Services Gap -0.419 -0.504 -0.085 -0.318 -0.291 0.027 -0.414 -1.210 -0.796 -0.376 -0.559 -0.183

Pax 6.368 4.714 -1.654 6.432 5.039 -1.393 6.563 5.494 -1.069 6.431 4.993 -1.438 Staff 6.525 6.15 -0.375 6.386 5.296 -1.09 6.633 6.633 0 6.5 5.947 -0.553

Tangibility – Additional LCC Support Services Gap -0.157 -1.436 -1.279 0.046 -0.257 -0.303 -0.070 -1.139 -1.069 -0.069 -0.954 -0.885

Pax 6.17 4.62 -1.55 6.22 5.11 -1.11 6.03 4.37 -1.65 6.16 4.77 -1.39 Staff 6.39 5.04 -1.35 6.08 5.55 -0.54 6.45 5.33 -1.11 6.29 5.31 -0.98

Tangibility – Flight

Gap -0.22 -0.42 -0.2 0.14 -0.44 -0.57 -0.42 -0.96 -0.54 -0.13 -0.54 -0.41 Pax 6.31 4.66 -1.65 6.43 5.07 -1.35 6.29 4.57 -1.71 6.35 4.81 -1.54 Staff 6.47 5.33 -1.14 6.36 5.51 -0.85 6.43 5.65 -0.77 6.42 5.49 -0.93

Reliability

Gap -0.16 -0.67 -0.51 0.07 -0.44 -0.5 -0.14 -1.08 -0.94 -0.07 -0.68 -0.61 Pax 6.15 4.65 -1.5 6.24 5.01 -1.23 6.16 4.55 -1.61 6.19 4.78 -1.41 Staff 6.36 5.21 -1.15 6.26 5.51 -0.75 6.45 5.75 -0.7 6.35 5.47 -0.88

Empathy

Gap -0.21 -0.56 -0.35 -0.02 -0.5 -0.48 -0.29 -1.2 -0.91 -0.16 -0.69 -0.53 Pax 6.27 4.63 -1.64 6.34 5.15 -1.2 6.23 4.59 -1.64 6.29 4.83 -1.46 Staff 6.53 5.06 -1.47 6.28 5.64 -0.65 6.39 5.53 -0.85 6.4 5.41 -0.99

Responsiveness

Gap -0.26 -0.43 -0.17 0.06 -0.49 -0.55 -0.16 -0.94 -0.79 -0.11 -0.58 -0.47 Pax 6.18 4.81 -1.37 6.28 5.26 -1.02 6.16 4.67 -1.49 6.21 4.96 -1.25 Staff 6.39 5.03 -1.36 6.38 5.67 -0.7 6.33 5.53 -0.8 6.37 5.41 -0.96

Assurance

Gap -0.21 -0.22 -0.01 -0.1 -0.41 -0.32 -0.17 -0.86 -0.69 -0.16 -0.45 -0.29 Pax 6.21 4.72 -1.49 6.27 5.12 -1.15 6.17 4.6 -1.57 6.23 4.86 -1.37 Staff 6.44 5.26 -1.19 6.27 5.55 -0.72 6.43 5.63 -0.8 6.37 5.47 -0.9

Overall

Gap -0.23 -0.54 -0.3 0.00 -0.43 -0.43 -0.26 -1.03 -0.77 -0.14 -0.61 -0.47 Legend: Expectation: E; Perception: P; Gap: G; Pax: Passenger

35

Reasons for Gaps

Gap 1 (Consumer Expectation – Management Perception Gap). 5 items

LCCs do not undertake market research or utilize its findings. The regular interaction

with customers is also low in their case. FSC – Public, because of its size and legacy

procedures, is not able to disseminate information to all levels. The staff agreed that

levels of management inhibits communication with the customers.

Gap 2 (Management Perception – Service Quality Specification Gap). 17 items

FSC – Public scores lowest on most of the parameters as there are no clear goals for

customer service, no mechanism to measure performance against these goals and there is

no reward to improve service quality. For LCC’s, sales goals are more important than

customer service.

Gap 3 (Service Quality specification – service delivery Gap). 16 items

Here also FSC – Public score low on most of the parameters. The staff is neither

empowered to deliver service, nor do they have the decision making freedom. There is

also no reward for better customer. Staff feels that they spend more time resolving

problems that they have little control over.

Gap 4 (Service Delivery – External Communications Gap). 5 items

FSC – Public customer service staff do not have input in planning and execution of

advertising, nor are they aware of external communication to customers. Their staff feels

that external communication does not accurately reflect what customers receive in the

service encounter.

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RESULTS OF HYPOTHESES TESTING

One-way ANOVA test for independent samples were conducted at significance level of

0.05 to test the null hypotheses. To gain deeper insight, the same was checked for

different sub groups too i.e. Tangible Support Services, Tangible Flight, Reliability,

Empathy, Responsiveness and Assurance. It was observed that there is no difference

between customers’ expected service quality among different categories of airlines.

However, passengers were found to have significantly higher perception of service

quality for FSC – Private as compared to FSC – Public and LCC’s. Findings also indicate

difference in the gap between customers’ perceived and expected service quality among

different categories of airlines for all dimensions. Table 9 presents the results of ANOVA

test.

37

Table 9: Results of One Way ANOVA

Descriptives Homogeneity of

Variances ANOVA

Hypotheses

N Mean Std. Dev.

Std. Error

Levene Statistic

Sig. F Sig.

Interpre tation

H01 Gap between customers’ perceived and expected service quality (Tangibility – Legacy Support Service) – Airline Category

420 -0.932 1.171 0.057 0.741 0.477 10.897 0.000 Rejected

H02 Gap between customers’ perceived and expected service quality (Tangibility – Additional LCC Support Service) – Airline Category

420 -1.438 1.294 0.631 3.420 0.034 5.897 0.003 Rejected

H03

Gap between customers’ perceived and expected service quality (Tangibility - Flight) – Airline Category

420 -1.393 1.199 0.059 3.380 0.035 8.329 0.000 Rejected

H04

Gap between customers’ perceived and expected service quality (Reliability) – Airline Category

420 -1.545 1.262 0.062 3.182 0.043 3.330 0.037 Rejected

H05

Gap between customers’ perceived and expected service quality (Empathy) – Airline Category

420 -1.410 1.201 0.059 2.942 0.054 3.567 0.029 Rejected

H06

Gap between customers’ perceived and expected service quality (Responsiveness) – Airline Category

420 -1.460 1.315 0.064 5.915 0.003 5.860 0.003 Rejected

H07

Gap between customers’ perceived and expected service quality (Assurance) – Airline Category

420 -1.252 1.298 0.063 4.231 0.015 4.920 0.008 Rejected

H08

Customers’ expected service quality - Airline Category

420 6.230 0.677 0.033 0.464 0.629 0.690 0.502 Not

Rejected

H09

Customers’ perceived service quality – Airline Category

420 4.860 1.000 0.049 2.426 0.090 10.548 0.000 Rejected

H10 Gap between customers’ perceived and expected service quality – Airline Category

420 -1.370 1.038 0.051 4.194 0.016 6.561 0.002 Rejected

Hypotheses H04 and H05 significant at p=0.05 while others were significant at p=0.01.

38

MANAGERIAL IMPLICATIONS

This paper provides some practical implications for airline marketing managers. The

analysis shows that the dimensions of Tangibility (Legacy Support Service, Additional

LCC Support Service and Flight) were significant drivers of customer service. Airline

marketers should realize that improvements in these three factors would enhance

passengers’ repurchase intention and their recommendation to other passengers via a

favorable airline image. In addition, airline marketers should develop strategies to

improve service quality such as meeting passengers’ desired service levels, improving the

quality of in-flight meal, solving service problems effectively and immediately, making

convenient schedules for passengers, preventing service problems from occurring and so

on. These strategies will enhance airline image and result in retaining existing passengers

and enticing passengers from other airlines.

Reliability is one of the most important requirements of airline operations (Sultan et al

2000). Even a minor slip in reliability leads to the formation of a negative airline image.

Therefore, domestic airlines should strive to keep a good safety record and on time

performance in order to attract potential passengers.

The study provides justification to the belief that differences exist in consumer

perceptions and expectations based on airline categories. Although it is understood that

practitioners had used the SERVQUAL model in various countries, it represents the first

use of the model across airline categories in India. The study provides empirical evidence

for the expectations and perceptions differences that may be expected in service quality

and may significantly impact airlines. Airline passengers have different expectations for

airline service quality based on airline category, as well as perceiving the service quality

39

Table 10 : Top Three Service Parameters* for Different Customer Profile Total Expectations Perceptions Gap

FSC - Public 171 SPF, SNC, PCI VND, VSSN, SPF PCI, MAUF, MTC

FSC - Private 169 PCI, SPF, SNC VAS, SPF, CCS EADS, PCI, MTC

Airline Category

LCC 80 WCCU, EADS, SPF WCCU, EADS, VAS MMO, PCI, EBHM

Male 361 SPF, SNC, PCI SPF, VSSN, VAS PCI, MTC, SNC Gender

Female 59 EADS, PCI, HCB VAS, VND, CCS MTC, PCI, EADS

Less than 21 8 SPF, WCCU, CFS WCCU, VAS, SNC PCI, MMO, MTC

21 to 40 287 SNC, EADS, SPF VSSN, SPF, VND PCI, MTC, SNC

41 to 60 120 SPF, PCI, EBHM SPF, VAS, CCS PCI, AWHC, EBHM

Age Group

Above 60 5 EADS, VAS, EBHM WCCU, VND, MAUF PSRF, CITS, SNB

Graduation or Below 94 SNC, SPF, PCI WCCU, VAS, HCB PCI, MTC, SNC

Post Graduation 162 EADS, SPF, PCI VSSN, SPF, VAS PCI, MTC, AWHC

Highest Qualifica- tion

Professional 164 SPF, PCI, EBHM SPF, VND, VAS MTC, PCI, EBHM

Self Employed 44 MAUF, SNC, PCI WCCU, VAS, SPF MTC, MMO, EBHM

Employed (Private Sector)

218 SPF, EADS, PCI SPF, VAS, VSSN PCI, MTC, EADS

Employed (Govt/ Public Sector

116 SNC, SPF, EBHM VND, VSSN, SPF PCI, SNC, EBHM

Occupa- tion

Others 42 EADS, EBHM, PCI VND, CCS, SPF PCI, MTC, EADS

Less than 0.5 Million 230 EADS, SNC, PCI VAS, SPF, CCS PCI, SNC, MTC

0.5 – 1.0 Million 134 PCI, EBHM, SPF SPF, VND, VSSN MTC, PCI, CBIH

1.0 – 2.0 Million 36 SPF, MAUF, EBHM VSSN, EFR, SPF PCI, EBHM, MTC

Annual Income Bracket

Above 2.0 Million 20 SPF, SNC, PCI CFS, VND, VAS MTC, SNC, AWHC

Less than 1 Year 19 CFS, KACQ, SPF VAS, EFR, SBIC MMO, MTC, KACQ

1 - 5 Years 195 PCI, EADS, SNC VAS, SPF, WCCU PCI, MTC, MMO

5 – 10 Years 75 SPF, SNC, EADS SPF, VSSN, VAS PCI, AWHC, MTC

Since how long Flying

More than 10 Years 131 EBHM, SPF, HCB SPF, VND, VSSN PCI, MTC, EADS

1 – 5 245 EADS, SPF, PCI VAS, SPF, CCS MTC, PCI, SNC

6 – 10 94 SNC, PCI, HCB VND, VSSN, SPF PCI, HCB, MTC

10 – 20 48 SNC, MAUF, SPF SPF, VAPF, VAS PCI, MTC, EBHM

Domestic Flights in last 1 Year

Above 20 33 SNC, MAUF, SPF SPF, VSSN, VND PCI, MTC, MAUF

Economy SPF, SNC, PCI SPF, VAS, VSSN PCI, MTC, SNC Class of Travel Business MTC, CCS, MAUF VSSN, CFS, SPF SBIC, MTC, EFR

No 286 SPF, PCI, EADS VAS, SPF, VSSN PCI, MTC, SNC Frequent Flyer Member

Yes 134 SNC, EBHM, HCB SPF, EFR, VAS EBHM, PCI, MTC

No 200 EADS, PCI, SPF VAS, WCCU, SPF PCI, MTC, MMO Travel to International Sector

Yes 220 EBHM, SPF, SNC VND, VSSN, SPF PCI, MTC, EBHM

Overall Parameters 420 SPF, PCI, EADS SPF, VAS, VSSN PCI, MTC, EBHM

Overall Dimensions 7 T-ALSS, REL, RESP

T-LSS, T-ALSS, ASS

REL, RESP, T-ALSS

* Refer table 2 for parameter description

40

of airlines to vary in terms of SERVQUAL model features and overall service quality.

Table 10 gives top three service parameters for different customer profile.

The findings exemplify that merely excellent perceived service quality is insufficient to

develop long-term service loyalty without investigating the mediating effect of customer

satisfaction. Passengers expect airline to ensure safe journey, support to mitigate

problems due to critical incidents and meet time commitments. Thus, service managers

should ensure that the performance on all components of delivered service is perceived as

excellent by customers and also sustain high levels of satisfaction.

In order to meet this objective, service staff must be well trained for keeping good

relationship with customers and for addressing customers’ enquires. As suggested from

the measure of perceived service quality, besides the quality of interactions between

service staff and customers, physical outcomes are also important and need to be well

managed.

LIMITATIONS AND FUTURE RESEARCH DIRECTIONS

The major limitations of this study are as follows:

a) This study was limited to airlines services in a specific domestic market, i.e. India.

b) The study was conducted on a limited number of flights.

c) Collecting respondents’ data on expectations and perceptions of service quality at the

same time could have compromised the reliability of the data.

The nature of this research precluded airlines renowned for service quality internationally

and which do not compete on the designated routes, e.g. Singapore Airlines, Cathay

Pacific, and Emirates. As future growth for airlines competing internationally is forecast

to rise in Asia in general and India in particular, studies of service quality issues

encompassing such airlines and the influence of regional cultures need to be explored.

41

CONCLUSIONS

In India, the domestic airline industry has entered into 2nd phase of liberalization with the

entry of LCCs. There is a growing competition amongst airlines to provide better quality

services to passenger at economical air-fares. Technology is also being extensively used

to improve customer satisfaction.

Analysis of data revealed that items for perception and gap loaded on four factors each.

The validity of the “classical” five-dimensions of SERVQUAL could not be resolved for

service quality in case of domestic airlines. The reliability value for SERVQUAL as a

unidimensional instrument was high.

In the context of customer service vis-à-vis Full Service Carrier – Public Sector, Full

Service Carrier – Private Sector and Low Cost Carriers, expectations were significantly

high for tangibility – additional LCC support service, reliability and responsiveness.

Service quality perceptions were low for tangibility – flight and empathy, especially in

case of Low Cost Carriers. Gap between perceptions and expectations were observed to

be highest for Low Cost Carriers. Overall, reliability of service was an area of concern for

passengers across all categories of airlines.

There was no difference between customers’ expected service quality among different

categories of airlines. However, there was difference between customers’ perceived

service quality. As a result, gap was also observed between customers’ perceived and

expected service quality among different categories of airlines.

Dimensions of Tangibility (Legacy Support Service, Additional LCC Support Service

and Flight) and Reliability were significant drivers of customer service. Passengers

42

expected airlines to ensure safe journey, offer support to mitigate problems due to critical

incidents and particularly meet time commitments.

JEL classification: M31, L93, N75

Key words: Customer Satisfaction, Airline, Customer Service, SERVQUAL, India, Civil

Aviation,

43

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Authors’ Profile

Dr. Mohammed Naved Khan, B. Sc. Engineering (Electrical), MBA, PhD, is at present

working as Senior Lecturer, Department of Business Administration, Faculty of

Management Studies & Research, Aligarh Muslim University, Aligarh. His areas of

interest include Consumer Behavior & Marketing Research. He is the recipient of All

India “PD Agarwal-TCI Award for Doctoral Research in Management” for the year

1997. Several of his research papers have been published in leading national and

international publications. He has to his credit two books viz. “Facets of Indian

Advertising and Consumer Behavior: An Empirical Approach”, Kanishka Publishers,

New Delhi (2002) ISBN: 81-7391-447-8 and “The Encyclopedic Dictionary of

Marketing”, Response Books, Sage Publications, New Delhi/Thousand Oaks/London,

ISBN: 0761935010.His areas of interest include marketing and marketing research.

Vippan Raj Dutt, B Tech. (Electronics and Telecommunication), MBA (Marketing), is

pursuing his research on ‘Dimensions of Customer Service Quality’ at the Faculty of

Management Studies and Research, Aligarh Muslim University. At present, he is also

working as Manager, (System/Maintenance) in the IT Department at NACIL (erstwhile

Indian Airlines). He has previously worked with Engineers India Ltd. and Siemens India

Ltd. His areas of interest include Information Technology and Customer Service in

Service Sector.

Dr S C Bansal, earned his Ph D in Finance at the Department of Commerce, Delhi

School of Economics, University of Delhi, Delhi in 1987. Currently, he is Associate

Professor of Finance and Accounting at the Indian Institute of Management, Lucknow.

He has held senior positions at the Institute of Company Secretaries of India, National

Institute of Financial Management, and University of Delhi. He has teaching experience

of about three decades. Dr Bansal’s teaching interests include corporate finance,

management accounting and corporate restructuring.