Customer Satisfaction In Ryanair Assignment
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Added on 2020-01-28
Customer Satisfaction In Ryanair Assignment
Added on 2020-01-28
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VFACTORS INFLUENCING LOW-COST AIRLINE CUSTOMER SATISFACTION IN RYANAIRCHAPTER 1: INTRODUCTION1.1BACKGROUND STUDYLow Cost Airline (or Low Fare Airline or Budget Airline) is a new business model in the airlineindustry. It was first introduced by Southwest Airline (SWA) in the United States in 1971. Thesuccess of SWA led to the spread of the model to Europe and then to Asia. LCAs compete byoffering lower fares than those of fullservice airlines. To make up for revenue lost in decreasedticket prices, the airline may charge for extras like food, priority boarding, seat allocating, andbaggage, etc. Most airlines have only a single passenger class and usually feature the Airbus320’s or Boeing 737’s in their fleet of aircraft. Efficiency is the major consideration in LCAs’operation and several strategies in cutting the cost down are employed.1In a highly competitive circumstance like the Low-Cost Airlines marketplace, how to providehigh quality service to satisfy passengers is the core competitive advantage for an airline’sprofitability and sustained development. Previous studies in the marketing field have pointed out that service quality is one main key todetermine corporate success (Lu and Ling, 2008). Under the conditions of this fiercecompetition and how to improve customer satisfaction, thereby increasing customer loyalty hasbecome of any airline unavoidable marketing theme1and the frequent flyer program is animportant part. Because according to relevant statistical research, to attract a new customer isroughly equivalent to the cost of maintaining an existing old customers five times, 20% oldcustomers often bring 80% of the profits. In general, increases profit and growth in many ways(Chow and Reed 1997; Heskett et al. 1994) to the extent that increasing the percentage of loyalcustomers by as little as 5%
Vcan increase profitability by as much as 30% to 85%, depending upon the industry involved(Reichheld and Sasser 1990).2Airline industry has always been famous for its continuous struggle: cutting costs, managingfluctuating demand, keeping up with tight quality requirements while trying to maintainsuperior services and satisfy needs of various customer groups. Customer satisfaction has beenon very low levels for decades, and e.g. according to American Customer Satisfaction Index,airline industry scores lowest out of 47 other industries (CNN.com, Airlines score lowest incustomer satisfaction, 2011). However, the demand for air transportation has been stable anddespite current economic crisis and such events as September 11, the growth reached 7.8% in2011 (Datamonitor, 2011). In this struggling environment, airlines are forced to shift their focus towards customer orientedservice quality (Chang & Yeh, 2002). It is extremely important for carriers not only tounderstand the perception of customers of their service offerings, but as well find out whatcustomers expect from the services (Chen & Chang, 2005) and what kind of services customersconsider most important. In the airline industry, services are composed of very complex mix ofintangibles as the airlines sell not physical objects but performances and experiences (Gursoy etal., 2005). Thus, service quality is a key to attract and keep loyal customers (Liou & Tzang, 2007;Chang & Yeh, 2002).1.2 HISTORICAL BACKGROUND OF RYANAIRRyanair was founded in 1984 as "Danren Enterprises" by Christopher Ryan, Liam Lonergan(owner of Irish travel agent Club Travel) and Irish businessman Tony Ryan (after whom thecompany is named), founder of Guinness Peat Aviation. The airline was shortly thereafterrenamed "Ryanair"and began operations in 1985 with a 15-seat Embraer Bandeiranteturboprop aircraft, flying between Waterford and Gatwick Airport with the aim of breaking theduopoly on London-Ireland flights at that time, held by British Airways and Aer Lingus.
VSince its establishment in 1984, Ryanair has grown from a small airline flying the short journeyfrom Waterford to London into one of Europe's largest carriers. Ryanair now has over 9,500members of staff working for the company, most of whom are employed and contracted bymultiple agencies to fly on Ryanair aircraft, or as is the case for pilots, the vast majority areeither agency employed or self-employed and their services are contracted to Ryanair. As of2013 including over 1,200 pilots. After the rapidly growing airline went public in 1997, themoney raised was used to expand the airline into a pan-European carrier.Michael O'Leary was charged with the task of making the airline profitable. O'Leary quicklydecided that the key to profitability was low fares, quick turn-around times for aircraft, "nofrills" and no business class, as well as operating a single model of aircraft.O'Leary returned from a visit to Southwest Airlines convinced that Ryanair could make hugeinroads into the European air market, at that time dominated by national carriers, which weresubsidised to various degrees by their parent countries. He competed with the major airlines byproviding a "no-frills", low-cost service. Flights were scheduled into regional airports, whichoffered lower landing and handling charges than larger established international airports.O'Leary as Chief Executive took part in a publicity stunt, where he helped out with baggagehandling on Ryanair flights at Dublin airport. By 1995, after the consistent pursuit of its low-costbusiness model, Ryanair celebrated its 10th birthday by carrying 2.25 million passengers.1.3STATEMENT OF RESEARCH PROBLEMCustomer satisfaction is an essential goal for each airline providing passenger services. The onboard experience is still something special for the customer. The customer has a wide choice toselect the suitable airline product according to their requirements. Therefore, airlines arecontinuously working on the in-flight product development and innovation to differentiatethemselves from competitors. During the last few years a variety of in-flight productinnovations have entered into the market. This includes the
Vaircraft seat on long haul flights as an important product element which is continuously beingimproved and renewed according to its life cycle and changing customer requirements. Thecurrent development of business class seat roll-outs shows the significance of this productelement which influences the buying decision of the passenger especially on long haul flights. Ifthe passenger is not satisfied, due to the negative experience, the client will reconsider thebuying decision for further flights and will probably switch to another airline. This kind ofsituation belongs to the daily business in the passenger airline industry.Thus,various studies have been carried out on customers satisfaction,expectation and loyalty inthe airline industry, but none emphasizes on the factors influencing the just stated attributes ina low-cost airline,such as Ryanair.1.4OBJECTIVES OF THE STUDYThe main objective of this study was to determine the factors influencing low-cost customersatisfaction in Ryanair.Specific objectives:1.to estsblish the factors influencing customer satisfaction in a low-cost airline;2.to examine establish the relationship between the factors above and customer satisfaction; and3.to examine the demographic profile of respondents.1.5SIGNIFICANCE OF THE STUDYIt is envisaged that Ryanair and other key players in the aviation industry will gain a betterunderstanding of customers and their expectations in terms of customer satisfaction in relationservice qualityy. This will lead to the appreciation of the role of various factors in increasingcustomer satisfaction and 4loyalty.The study findings will be relevant in equipping policymakers and regulators in the aviation industry with
Vinformation that will empower them to be in a position to integrate industry stakeholders inareas relating to customer satisfaction considerations in policy formulation.It is intended thatthe findings from this study will generate knowledge for the academic community.
VCHAPTER 2: LITERATURE REVIEW ( THEORETICAL AND CONCEPTUAL)This chapter presents the literature review on customer satisfaction; specifically the literaturereview focuses on theoretical foundation of customer satisfaction as well as various factorsaffecting customer satisfaction, which includes promotion, service quality, and brand and pricefairness. The review of literature focuses on the effect of the above variables on customersatisfaction62.1THEORETICAL FRAMEWORK OF CUSTOMER SATISFACTIONA theoretical basis that explains the relationship between customer loyalty and service quality,as well as customer satisfaction and value is drawn from the Social Exchange Theory (Homans,1958). The theory attempts to explain the nature of the relationships between service quality,perceived value, satisfaction and loyalty. The theoretical model adopted for this study isderived from the Social Exchange Theory, which posits that all human relationships are formedby the use of cost-benefit analysis and comparisons of alternatives. Homans suggested thatwhen an individual perceives the cost of a relationship outweighs the perceived benefits, thenthe person will choose to leave the relationship. The theory further states that persons that give much to others try to get much from them, andpersons that get much from others are under pressure to give much to them. The socialexchange relationships between two parties develop through a series of mutual exchanges thatyield a pattern of reciprocal obligations to each party. Social exchange theory indicates thatindividuals are willing to maintain relationships because of the expectation that to do so will berewarding. Individuals voluntarily sacrifice their self- benefits and contribute these benefits toother individuals with the expectation for more future gains. Thibaut and Kelly (1959) proposethat whether an individual retains a relationship with another one depends on the comparisonof current relationship, past experience and potential alternatives. The constant comparison ofsocial and economic outcomes between a series of interactions with
Vcurrent partners and available alternatives determines the degree of an individual'scommitment to the current relationship.7The theory is appropriate for this study because service encounters can be viewed as socialexchanges with the interaction between service provider and customer being a crucialcomponent of satisfaction and providing a strong reason for continuing a relationship(Barnes,2007). Social exchange theory attempts to account for the development, growth and evendissolution of social as well as business relationships. In a services context, considering the level of interpersonal contact needed to produce services,there is a range of psychological, relational and financial considerations that might act as adisincentive for a hypothetic change of service providers (Barnes, 2007). 72.2FACTORS INFLUENCING CUSTOMER SATISFACTIONIn the contemporary environment the only constant is change. Therefore, businesses have todevelop different strategies in order to survive in the long run. One of the best strategies isabout satisfying the customers that ensure a long-term growth of business. The various factorsaffecting customer satisfaction explored under this study are; promotion, service quality, brandand price fairness. 72.21PROMOTIONPromotion is a form of cooperate communication that uses various methods to reach atargeted audience with certain message in order to achieve specific organization object. It willdepend on services and products price offers, distribution system and promotion programmed(Onwuchuruba 2002). Services of the airline firms that satisfy consumers require crucialdecisions, such as; the features and introduction of new service products; service product lifecycle; modification or deletion of existing and unprofitable service products; and the elongationof the life span of service products. On promotional strategy, current and potential consumersneed be encouraged to obtain, utilize and benefit maximally from services provisions. Manyresearchers have
Vhinted at a feelings-based route through which promotions may impact consumer‟ssatisfaction. 2.2.2SERVICE QUALITYQuality is a driving force for improved competitiveness, customer satisfaction and profitability(Edvardsson, 1992). As for service quality, e.g. American Marketing Organization defines it intwo ways: first, it is an area of study that defines and describes how services are delivered sothat the service recipient is satisfied; second, high quality service is a delivery of service thatmeets and exceeds the expectations of the customers. Parasumaran et al. (1985) state thatservice quality is defined by the customer evaluation of service outcome and service process aswell as a comparison of customer expectations with service performance. Hence, service qualitycan be thought as the fit between current service level and customer expectations. Park et al.(2004) define service quality as a consumer’s overall impression of efficiency of an organizationand its services.Thus, customer satisfaction is a judgment made based on a specific service encounter. Chen &Chang (2005) suggest that service quality is a process, and in case of airline industry, theauthors divide the process into ground and in-flight services and state that customer'sexpectations are different for each of the processes. Measuring service quality has proven to bechallenging for both the researchers and companies due to its characteristics (Tiernan et al.,2008; Parasumaran et al., 1985; Johnson et al., 1995). Different from product quality, a set of specifications or by physical aspects such as defectscannot be applied to service quality due to service intangibility and simultaneous productionand consumption (Tiernan et al., 2008). In addition, service quality cannot be measured byevaluating outcomes of service process only (Johnson et al., 1995), but as well has to considerservice production process – e.g. employee training and customer-employee interaction.Hence, measuring all aspects of service production is essential to understand the quality of aservice.
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