Service Marketing Analysis: A Qantas Airlines Case Study - MKTG3002

This case study examines the service marketing failures of Qantas Airlines, focusing on a customer satisfaction crisis stemming from an industrial dispute in 2011. The analysis identifies key issues related to core service delivery, supplementary services, and the delivery process, highlighting the airline's inability to meet customer expectations. The study explores the impact of flight cancellations, poor communication, and staff management on customer loyalty and trust. It then proposes and evaluates Qantas's immediate responses, including monetary and psychological support, to both domestic and international customers during the crisis, offering insights into crisis management strategies. The case study underscores the importance of service marketing in maintaining customer relationships and provides innovative solutions to rectify service failures.

Running head: SERVICE MARKETING
SERVICE MARKETING
Name of Student
Name of the University
Author note

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Table of Contents
Introduction..........................................................................................................................2
Discussion............................................................................................................................2
Company overview..........................................................................................................2
Identification of issues related to customer satisfaction..................................................3
Solution to the customer satisfaction problem.................................................................5
Immediate response to the crisis scenario for domestic customers.............................6
Immediate response to the crisis scenario for international customers.......................6
Additional benefits to passengers................................................................................6
Conclusion...........................................................................................................................7
References............................................................................................................................8

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Introduction
Service marketing refers to marketing process based on value and relationships. Service
marketing is usually done for marketing wither a product is a service (Kei 2019). Service
marketing is different from marketing of goods because of its features which includes-
intangibility, perishability, inseparability and heterogeneity (Barrows 2018). Service marketing
can be of different types based on the end user and therefore it can include- service marketing of
business to business, consumer service marketing, and industrial service marketing. In other
words, service marketing includes the promotion of activities undertaken by a company for its
customers or for other businesses (Chitty, D'Alessandro and Gray 2019). Therefore service
marketing includes a number of facilities including-rental cars, and wellness treatments and
various others. Service marketing is all about managing good relationship as compared to
traditional marketing approach (Chivandi, Samuel and Muchie 2019). Moreover it is important
for the service providers to carry out effective service marketing for the purpose of attracting and
retaining the customers. The Company selected for the case study is Qantas Airlines. The main
aim of the paper is to identify a service marketing failure of the company and provide a solution
to the same. The paper will therefore discuss about the identified service marketing failure and
provide an innovative solution for the same.
Discussion
Company overview
Qantas Airlines is the largest airline of Australia measured by its fleet size and it supports
international destinations and flights. It is considered to be one of the oldest airlines across the
globe. The QANTAS airlines is an acronym for Queensland and Northern Territory Aerial

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services and if often called as the flying Kangaroo. It occupies about 65% share of the domestic
Australian flight and about 14.9% of all international flights. And Qantas airlines own the Jetstart
airways which is one of the low cots airlines operating both nationally and internationally. Some
of the major hubs and sub hub of the airlines includes- Brisbane airport, Sydney airport,
Melbourne Airport and Adelaide airport and also the Perth airport (Jiang and Zhang 2016). The
airlines have got an operating revenue of about 17.96 billion dollars and has a total of about
30,179 employees. The vision of the company is to become the leading choice for those
customers who have specific needs, and want a hassle free and comfortable experience and that
will also provide safety as an utmost priority (Cho and Bae 2017). It is one of the strongest
Australian brands and are known for their operational reliability, safety, customer service and
engineering and maintenance. The main business of the Qantas group is customers transportation
with the help of complementary airline brands.
Identification of issues related to customer satisfaction
The problem faced by Qantas airways in the year 2011 is a classic case of customer
satisfaction and service failure along with inappropriate staff management. This is so because
service products have three main elements that affects the customers satisfaction and determines
their loyalty (Othman et al. 2019). These three elements includes the core, the supplementary and
the delivery process. The core includes- main activities undertaken by the company to satisfy its
customers and it is usually provided by all companies, the supplementary services adds value to
the customers experience and the delivery process included the way the services were delivered
to the customers including the core and supplementary services (Lee, Patterson and Ngo 2017).
The facilitating factors or services includes- the ability of an organization to keep its customers
informed, the ability of an organisation to take order efficiently, the ability of an organization to

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carry out proper billing activities and the ability of the company to offer easy payment options to
the company (Rather 2019). And the set of enhancing services includes- consultation services,
hospitality services, safekeeping services and exceptional services to the customers in order to
keep them satisfied. The company Qantas airlines was unable to meet these criteria’s for keeping
its customers satisfied. Some of the other determinants of service quality includes- access,
communication, competency, courtesy, credibility, reliability, responsiveness, security, tangibles
and the ability to understand the customers. Qantas airlines was unable to solve its industrial
dispute with the three unions due to which it customers had to suffer as the airlines had to cancel
all flights and ask its customer to rebook the same at a later date due to its grounding (Wilson et
al. 2016). Moreover, the company failed to inform its customers beforehand due to which there
was a chaos in the airport as the customers had to wait when all of sudden they were informed
that their flights got cancelled. And although the company is offering full refund of the process
that were paid by the customers for booking their tickets, the customers were harassed at the
airport due to sudden cancellation of the flights. And although some of the Qantas airlines
subsidiaries were operating, the loyal customers were the ones who had to suffer because they
did not travel in any other airlines except for Qantas. Moreover the customers were also
informed about the operations of the codeshare flights but there was still a lot of chaos
everywhere. Moreover the company’s booking facilities have also been affected due to this
industrial dispute as the airlines have no idea of the time period up to which the grounding will
take place, the booking was taking place on a day-to-day basis for urgent flights (Raynes and
Tsui 2019). Only those customers who were being faced with some urgency or emergency and
had to travel within the next 24 hours were eligible for making calls to the customer contact
centres for discussing the alternatives. Moreover the customers were asked by the company to

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not change their booking until the date of closure of departure. Therefore the customers had to
face lot of inconvenience due to this incident of Qantas airlines and it had also resulted on loss
of trust of trust for the company. Only those customers were allowed to use alternatives who
were stuck in some emergency and this option was not available for all because everyone else
was asked to delay their flights.
Moreover from this incident, it can also be understood that the company is unable to
manage its unions that represents the staff because it had entered into a dispute with the three
main unions of the Australian Licensed Aircraft Engineers association (ALAEA), the transport
workers Union (TWU) and the Australian International Pilots association (AIPA) which resulted
in a major setback in the relationship of the company with its customers. Moreover the Qantas
airlines had to remain grounded for some time which caused a lot of inconvenience among the
passenger especially the ones who were travelling due to some emergency because they had to
look for alternatives and booking was taking place on a day to day basis only which caused them
further delay. And as it has already been studied that the tolerance of customers is affected by a
number of factor such as – the importance if the occasion for which they were travelling, the
psychological and social needs of the customers, their mood after hearing about the cancellation
of the flights and importance of the services for the customers who were travelling.
Solution to the customer satisfaction problem
Organizations need to ready to meet crisis situations in order to maintain their position in
the market during the crisis or eve post crisis. Therefore when Qantas airlines was decided to be
grounded it took some immediate action to helps its passengers overcome the crisis both through
monetary and psychological support to them by providing them for accommodation, meals,

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immediate reimbursement in cash and also refunds. Therefore the company’s ability to manage
crisis in a unique way can be referred to as a unique solution option.
Immediate response to the crisis scenario for domestic customers
In order to maintain the customers loyalty, the Qantas airlines responded immediately to
the crisis scenario by helping its domestic customers who were away from home and in between
flights by providing for their accommodation, transfers and meals. For those domestic passengers
who were far from home but were going to begin their journey, although the company could not
help them for their accommodation, meals and transfers by arranging it for them, the company
was reimbursing the passengers an amount of AUD 350 per person for their accommodation,
meals and transfers (Yang et al. 2019). Moreover reimbursement of about 250 AUD per night
was given for accommodation to the passengers and 100 AUD for the incidentals such as phone
calls and meals per day per person (Wong and Ho 2019). Therefore the airlines took the
responsibility of its passengers to ensure that they could reach home safely and could be in
continuous contact with their family members until they reach home.
Immediate response to the crisis scenario for international customers
In order to keep the trust of its international passengers, the Airlines decided to take
immediate actions for them as well in this situation of sudden crisis (Wongleedee 2017). The
airlines arranged for the accommodation, meals and transfers of the international passengers
again out of their pockets. Moreover, the airlines also made arrangement for re-route traveling of
the international customers and therefore showed a responsibility not only towards its domestic
customers bot alps its international customers.

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Additional benefits to passengers
The airline provided for some additional benefits to the customers who were traveling
through Qantas by providing for rebooking opportunities to the customers in alternative Qantas
flights also the codeshare flights (Hapsari, Clemes and Dean 2017). The airlines provided for re-
route travelling options for its passengers – via the most direct routes available on Qantas
subsidiaries and for returning to the origin post through most direct routing. The passengers were
allowed to change their destinations by allowing them to make use of the full value of the
existing tickets towards the purchase of a new ticket. The passengers were also given an option
to retain the value of their tickets in credit for future travel within a period of 12 months with
Qantas airlines from the original date of departure. And the passengers were eligible for getting
refunds in wither cases- where they have started their journey or when they have not started their
journey.
Conclusion
Therefore from the above case study, the importance of service marketing has been
understood and the way a failure in the service marketing affects the customer relationships have
also been understood from the paper. Further from the paper, a marketing service failure has
been understood which includes- customer satisfaction issue and also issues related to poor
management of people by the selected company. From the paper it is understood that some of the
major factors affecting the level of customer satisfaction includes- the ability of the organization
to keep the clients informed with latest information, having an appropriate order taking ad billing
process and easy payment options for the customers. The supportive factors that affects the
customers satisfaction includes the hospitality services provided to the customers, the ability of
the organization to keep the customers safe and also regular consultations with the customers.

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Moreover from the paper, the innovative solution undertaken by the company for overcoming its
issue of customer satisfaction has been understood.

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References
Barrows, S.D., 2018. In Asia, does airline service quality matter to investors. Asian Social
Science, 14(4), pp.8-17.
Chitty, W., D'Alessandro, S. and Gray, D., 2019. Services marketing. Oxford University Press
Australia and New Zealand.
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Service Marketing. In Consumer Behavior and Marketing. IntechOpen.
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satisfaction, brand image and brand loyalty in airlines. Journal of the Korea Convergence
Society, 8(12), pp.317-327.
Hapsari, R., Clemes, M.D. and Dean, D., 2017. The impact of service quality, customer
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satisfaction: the role of resources. European Journal of Marketing.

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Othman, B., Harun, A., Rashid, W., Nazeer, S., Kassim, A. and Kadhim, K., 2019. The
influences of service marketing mix on customer loyalty towards Umrah travel agents: Evidence
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