FACTORS EFFECTING CONSUMER PREFERENCES IN AIRLINE INDUSTRY

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1 FACTORS EFFECTING CONSUMER PREFERENCES IN AIRLINE INDUSTRY Yasir Ali Soomro PhD Scholar & Lecturer, Iqra University Business Administration Department, Main Campus, Karachi, Pakistan Tel: Irfan Hameed PhD Scholar & Lecturer, Iqra University Business Administration Department, Main Campus, Karachi, Pakistan Tel: Rehan Shakoor Lecturer, Iqra University Business Administration Department, Main Campus, Karachi, Pakistan Atif Shahab Butt Assistant Director, Quality Enhancement Cell, Iqra University Business Administration Department, Main Campus, Karachi, Pakistan Sana Abbas Kaim khani Research Scholar ABSTRACT This research paper is an attempt to study and identify the factors such Boarding and clearance time, Ease of E-ticketing and luggage capacity and their effect on Customer Preference in the airline service industry of Pakistan. To carry out this research questionnaire survey was conducted on the sample identified through unrestricted non probability sampling technique to generalize the results on the population of the air industry. Regression Analysis and descriptive statistics were applied on the response collected through the questionnaire instrument. Empirical results showed that Boarding /clearance time and Ease of E-ticketing have significant impact on customer preference and positively lead to purchase intention of service offered by the airline companies in the market. KEYWORDS: AIRLINE INDUSTRY, SERVICE QUALITY, PIA, CUSTOMER PREFERENCE, PURCHASE INTENTION. JEL Classification: M-3 & M

2 INTRODUCTION: It is very important for an airline to provide service quality to their customers.this report mainly focuses on the factors that influence air passenger preferences of selection of a particular airline for traveling. Several aspects related to service quality of airlines have been discussed in this report. On recent days mostly research is going on the topics related to airline industry. Different methods & dimensions is being used in such type of researches in order to know the impact of service provided by airline to their passengers on the choice of airline selection while making a decision for traveling. Past work on the study of airline service is used in such researches to evaluate the effect of airline service on passenger future behavioral intentions towards airline selection. Such researches are very helpful for those managers who work in airline industry to make better & more attractive service quality. Several airline service dimensions have been focused in this report. This report seeks to investigate the extent to which airline service quality & image influences the passenger behavioral intentions towards selection of airline.the following review presents an overview of relevant literature that leads to the development of conceptual framework. LITERATURE REVIEW: In today s era determining service quality has become the most recurrent subject in the management literature. Due to which a need arose to develop reliable and valid instruments so that organizations can systematically evaluate their performance from the customers view point and the association between the perceived service quality and the other major organizational outcomes and this has encouraged the development of the models for determining the service quality (Badri, Abdullah & Al-Madani, 2005). 64

3 Many researchers Schneider and White (2004) identified the importance of relationship between the service quality of airline, behavioral intention and the customer satisfaction. The researchers have explored the relationship and suggested that the customers behavioral responses usually play an interceding role in service quality of airline, behavioral intention and the customer satisfaction. In simpler words the behavioral intention is anticipated as behavioral consequences of the service quality and it also affects the customers actual behavior which in turn affects the organizations financial outcomes. Sebastianelli and Tamimi (2002) explained in their research that the different service quality levels have different impacts. Like the superior services is likely to encourage the favorable behaviors of customers and reduce the probability of unfavorable behavior of customers. The important point is that the organizations should determine the different levels of service quality that the organizations should target in order to have the desired impact on the customer behaviors. By going through several studies this has been concluded that the dependency between the behavior consequences and the service quality exists and the increase in one variable is likely to encourage the increase in the other variable (Schneider & White, 2004). Several studies also pointed out that the service quality is more conceptual than the behavior consequences of customers. The reason is the behavior consequences of customers reflects the feelings of customers about various experiences and encounters with the service organizations and at the same time the service quality might be affected by the customers perception of the benefit that is relative to cost (Fen, & Meillian, 2005). 65

4 Service quality is the extent to which consumer expectations are met by service provided (Bitner, & Hubbert, 1994). Providing high quality in the services is the most important thing which can give a unique position to a company among competitors (Parasuraman & Zeithaml, & Berry,1994). Goodman (1989) stated that companies have to focus mainly on service quality issues because low service quality can make customer unhappy & disloyal & eventually it would lead to decline of a company. Service quality is an important factor for airlines that widely influence passengers choosing decisions (Park, Robertson, & Wu, 2005). Several researches also concluded that the customers o passengers rate the tangible dimension of SERVQUAL model as the most important service quality dimension in service industries and the reliability as the second most important dimension of SERVQUAL model (Chowdhary, & Prakash, 2007). On the other hand some researchers argued that the tangible dimension is the least important service quality dimension. Some of the research findings also indicate that the service quality differs in different regions of the world (Eshghi, Roy, & Ganguli, 2008). Overall many of the research findings regarding the impact of service quality on behavioral consequences of the customers concluded that the managers of the service provider organizations should put their efforts and try to manage the customers expectations up instead of down if they are willing to enhance the perceptions of the services among the customers. Although, for some this appears pretty much risky because it is believed in organization that by increasing the customers expectations of the services, could potentially set the organizations in a critical condition to face the failure if due to any reason they would not deliver the same service quality when the customers consumes the service the organization promised. Customer loyalty is the degree to which a customer recommends & expresses a preference for future use of, a particular company (Dean, 2007). When customer is satisfied with an airline 66

5 services & he appreciate & admire the service quality level that means he will come again which would increase the sales volume of that company (Zeitaml, 1996). Past research studies are evidence that repurchase intention is the result of highly satisfaction from past experience. RESEARCH METHOD: Sampling Size, Technique and Research instrument 180 sample respondents were selected through unrestricted non probability sampling and included in the research. Questionnaire was used as instrument of the research. Respondents were asked to rate the perception on the service quality factors in Karachi International Karachi Airport. The questionnaires were also distributed to certain air travel agents to know their view in the about the factors while they sell the tickets to the customer. Instrument included close ended question 25 in number with Likert scale of 1 to 5. RESEARCH MODEL: SERVICE QUALITY Ease of Online booking Increase luggage capacity Boarding and Clearing time CUSTOMER PREFERENCE PURCHASE INTENSION HYPOTHESIS OF THE STUDY: H1: There is a significant impact of Service Quality on consumer preference of airline industry and it leads to purchase intension. 67

6 H2: There is a significant impact of Ease of Online booking (Service Quality) on consumer preference of airline industry and it leads to purchase intension. H3: There is a significant impact of Increase luggage capacity (Service Quality) on consumer preference of airline industry and it leads to purchase intension. H4: There is a significant impact of Boarding and Clearing time (Service Quality) on consumer preference of airline industry and it leads to purchase intension. RESULTS Model Summary Multiple R R Square Adjusted R Square Apparent Prediction Error ANOVA Sum of Squares Df Mean Square F Sig. Regression Residual Total Interpretation The table that Sig. (p value) = At p < 0.05 our predictors were significantly better. The regression line predicted by the independent variables did explain a significant amount of variance in the dependent variable. It would normally be reported in a similar fashion to other ANOVAs: F (10, 91) = ; p < 0.05.The next output is the coefficients table shows which variableswere individually significant predictors of our dependent variables. 68

7 Coefficients Standardized Coefficients Beta Bootstrap (1000) Estimate of Std. Error Df F Sig. Ease of e-ticketing Capacity of Luggage Boarding and Clearance time Interpretation Model summary revealed that model is strong model as it predicts 95 % movement in the dependent variable is explained by the independent variables. The standardized Beta coefficients column shows the contribution that an individual variable makes to the model.ease of e- ticketing and Boarding clearance time were significant as p<0.05. Only Capacity of luggage was insignificant as the p value was greater than

8 HYPOTHESIS ASSESSMENT SUMMARY HYPOTHESES SIG.VALUE EMPIRICAL RESULT H1: There is a significant impact of Service Quality on consumer preference of airline industry and it leads to purchase intension..000 Accepted H2: There is a significant impact of Ease of Online booking (Service Quality) on consumer preference of airline industry and.001 Accepted it leads to purchase intension. H3: There is a significant impact of Increase luggage capacity (Service Quality) on consumer preference of airline industry and.341 Rejected it leads to purchase intension. H4: There is a significant impact of Boarding and Clearing time (Service Quality) on consumer preference of airline industry and.004 Accepted it leads to purchase intension. CONCLUSION This research study concludes that while choosing a particular airline service people consider lot of factors, among them significant and important factors are, Ease of online booking and e-ticketing, Boarding and clearance time. Empirical results and research further signifies the above mentioned concept. But one research finding stated that people don t give significant value to luggage capacity. In choosing between Airline Service, two factors that are 70

9 being studied in this research have proved significant in influencing consumer preference and one did not had significant impact. This eventually leads to positive evaluation and increases preference for repeat behavior. Airline should mainly focus on having e-ticketing facility as people now days want to buy tickets from their home or workplace rather than going to a travel agency physically. Secondly companies should make sure that processing time of boarding and clearance should be shortened so that time of the people is not wasted in this fast pace world where every second is important. It can be recommended that airlines should focus on the quality of their service which is their only way to retain customer and increase customer base. References: [1] Bitner, M.J. and Hubbert, A.R. (1994), Encounter satisfaction versus overall satisfaction versus quality. In R.T. Rust and R.L. Oliver (Eds.), Service quality: New directions in theory and practice, Thousand Oaks: Sage Publications, pp [2] Badri, M. A., Abdulla, M. & Al-Madani, A. (2005).Service quality assessment and application of SERVQUAL, 22 (8), p [3] Chowdhary, N. &Prakash, M. (2007).Prioritising service quality dimensions. Management Service Quality, 17 (5), p [4] Dean, A. M., (2007), 'The impact of the customer orientation of call center employees on customers' affective commitment and loyalty', Journal of Service Research, [5] Eshghi, A., Roy, S. K., &Ganguli, S. (2008). Service quality and customer satisfaction: An empirical investigation in Indian mobile Telecommunications services, Marketing Management Journal, 18 (2), p [6] Fen, Y. S., & Meillian, K. (2005). Service quality and customer satisfaction: Antecedents of customer s re-patronage, Sunway Academic Journal, 4, p

10 [7] Jin-Woo Park, Rodger Robertson, Cheng-Lung Wu (2005), Investigating the effects of Airline Service Quality on Airline Image and Passengers Future Behavioral Intentions: Findings from Australian international air passengers The journal of tourism studies Vol. 16, No. 1 [8] Parasuraman A, Zeithaml, VA, Berry LL (1994). Reassessment of expectations as a comparison standard in measuring service quality: implications for future research. J Mark., 58(1): [9] Sebastianelli, R. &Tamimi, N. (2002), How product quality dimensions relate to defining quality, International Journal of Quaility and Reliability Management, 19 (4), p [10] Schneider, B. & White S. S. (2004). Service quality: Research perspectives. USA. Sage Publication Ltd. [11] Zeithaml, V. A., Berry, L. L. &Parasuraman, A. (1996), The behavioral consequences of service quality, Journal of Marketing, 60, p