1 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: [email protected]Ph: 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 : [email protected]Ph. (R) 0091 124 2397809 Mobile : +919818207809 & Dr. S C BANSAL Associate Professor Indian Institute of Management Lucknow – 226 013 (India) e-mail: [email protected]Ph. 0091 522 2736637
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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: [email protected]: 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)
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
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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.
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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
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 –
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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.
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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:
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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
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.
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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
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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,
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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.