RESEARCH AND ANALYSIS OF INDIAN AIRLINES

INDUSTRY

EXECUTIVE SUMMARY
Indian Airlines Industry research and analysis is a huge topic to study.
Indian airlines market is very competitive. Various players are struggling
to fetch the profit. Most of them are facing various problems. There are
issues with operations, government policies, taxation and huge
investment to be brought in to start the business.

From the analyst point of view though this market is facing lot of
issues and challenges it is growing at the rate of 18 percent per year.
Many factors are contributing to this growth such as increase in
disposable income of the population, industrial growth in the country or
change in government policies such as FDI. From this perspective Indian
market is lucrative.

Since few years most of the Indian population is moving from lower
middleclass to upper middleclass. They are gaining capability to spend
and upgrade their lifestyle. This is providing opportunity for low cost
players to tap the market share.

Industry has faced many challenges and still it is going on. Many new
players are entering into this market. Policy change such as 49 percent
investment through foreign direct investment (FDI) is changing the face
of the industry.

Major objective of this project is to study overview of the Industry

structure, Major players, new players in the industry and Few major
challenges faced by the industry. In addition to this another objective is
to look at these players from the consumer point of view on criteria such
as price, brand recall, time of arrival or departure, ease of booking and
service etc.

INTRODUCTION
The aviation sector is one of the major economic drivers for prosperity,
development and employment in any country, we know it. The rapidly
expanding aviation sector in India handles near about 2.5 billion
passengers across the world in a year and moves 45 million tonnes (MT)
of cargo through 920 airlines, using 4,200 airports and deploying 27,000
aircrafts in the world. Today, 87 foreign airlines fly to India and from India
five Indian carriers fly to foreign countriesand from 40 countries.

In any business satisfying the customer is the ultimate goal or objective

of any marketer. Excellent passenger satisfaction is one of the greatest
assets for air business in today’s competitive environment. Passenger
satisfaction service arises when a company can provide passengers with
benefits that exceed passengers‟ expectation and this is considered
value-added. If customers are satisfied with the product or service which
the company is providing then they will buy more, and do so more often.
Passenger gratification is an essential goal for each airline providing
passenger services. The on board experience is still something special for
the customer. The customers have a wide choice to select the suitable
airline product according to their requirements. Therefore, Airlines
Companies are continuously working on the in-flight product
development and innovation to differentiate themselves from their
competitors.There are many factors that can help an Airlines Company
to build its customer base, and passenger service and satisfaction can be
a determining factor in the success of an entire operation.

Indian aviation industry is among the top 10 aviation industries of the

world. It has shown high growth trajectory. According to the recent
report by KPMG, Currently Indian civil aviation industry has size of 16
Billion US dollars. It is contributing to the 0.5 % of the GDP. Now a days
daily 150 million passengers are transported by air. It is forecasted that
by 2020 this number will raise to traffic of 450 million passengers daily.
Total aircraft movements and passenger traffic has grown with CAGR of
3.3 and 5.5 percent respectively during FY 11 to FY 14. It is estimated by
Airport Authority of India that aircraft and passenger movements at the
entire airport are expected to rise at the rate of 4.2 and 5.3 percent
respectively.

There are few factors such as entry of Low costs carriers (LLC), modern
airports, vision of the new government regarding tourism and
transportation, foreign direct investments, cutting edge technology, and
vision of regional connectivity are driving the industry towards
transformation.

In 11th five year plan (2012-16), four new airports are built in “Public
Private Partnership (PPP)” mode. At present there are around 450
airports still there are no airports in tier 2 and tier 3 cities. Airport
Authority of India manages 125 airports of which 11 airports are
international airports, 8 custom airports, 81 domestic airports and 25
civil Enclaves at defense airfields. Tier 2 and 3 cities contribute only 30
percent of the total air traffic. Government of India is planning to
construct more 15 airports under the Greenfield Airport Policy by
identifying low cost viable model for construction of small airports.
These airports are expected to improve the connectivity among these T2
and T3 cities. Along with this AAI is also planning to invest 150 million in
development of non-metro airport in 12th five year plan.

According to report of CAPA Indian Domestic market has shown growth.

1.2 Challenges faced by the industry:

During 2015-16 industry has gone through tough time. The industry was
facing major challenges such as

a. Rising Operational costs

b. Higher air fares

These are the major challenges arises because of the following factors:
 i. Challenges with policies
ii. Procedures
iii. Taxation

Many factors are responsible for the high operational costs in India.

a. Higher cost of fuel in India

b. High taxation
i. Excise duty
ii. Customs duty
iii. Sales tax
c. High airport fare

These factors are leading to high operational costs. It is observed that in

India 35 to 45 percent operational cost is of fuel. Whereas 20 percent is
the global average. Major oil providing companies in India are Indian oil
Corporation Ltd and Bharat Petroleum Ltd. These companies charge
around 16 to 30 percent sales tax on fuel. This results into high price.
Along with this there are different taxes imposed by the government.

Recently new airports are built in PPP mode. These airports are highly
modern. This infrastructure change is also an area of high concern for
aviation industries. Investment cost for these airports is very high. To
recover this amount airport holding company charges very high this
directly results into high costs. For example recently Airports Economic
Regulatory Authority of India (AERA) approved to raise tax of Delhi and
Mumbai airport to 346 percent and 154 percent respectively in 2016.
Chennai and Kolkata also proposed to increase in airport tax to 118
percent and 242 percent respectively. This increased tax will eventually
lead to higher price paid by the aviation companies for landing and
parking their flights. This increases the cost of operation.
Along with this getting aviation license in India is main hurdle for small
companies to enter into the market. The procedure of getting license is
bit slow and hectic. This is major hurdle to growth of the industry. This
will responsible in coming years also if not addressed properly.

In 2016 government has taken some initiative such as they have allowed
direct import of the fuel, which will help to save sales tax to be paid to
the oil companies in India. Spice Jet is the first successful company to
import oil for its own in September 2015. Also government has promised
to reduce the custom duty charges.
 1. Analysis of main players

2.1 Main players in the industry

Indian aviation industry is dominated by the Low Cost Carriers (LCC).

These players can be classified into three major categories.

1. Public Players
i. Air India
ii. Alliance Air- Air India Regional- LLC
2. Private Players
i. Jet Airways
ii. Kingfisher India
iii. IndiGo
iv. Spice Jet
v. Go Air
2.3 Market share analysis of the players

Players in Indian Aviation Industry are fighting to gain maximum market

share. Domestic market is dominated by LLCs such as IndiGo and
SpiceJet. IndiGo is the only domestic company which has shown all time
profits in its balance sheet. At the time of crisis Indigo sustained itself
while gaining profits. It is India’s most preferred LLC.

According to analysis presented by Business Standards Indigo retained at

top position followed by Jet Airways. This analysis was at the end of
November, 2016.

Market Share-Aviation Industry

Indigo Jet Airways Jet Lite SpiceJet Air Costa Air India Go Air

9%
35%
18%

1% 16%
19%

2%

Passenger load factor, or load factor, measures the capacity

utilization of public transport services. Considering passenger load
factor analysis, Indigo and Air India has shown better results. From the
data of CAPA we can compare it for the month of April and May 2016.
All the companies are trying to increase load factor to 100 percent. This
will directly results into their profit gain.
During the month of May 2016, Spice Jet has shown more capacity
deployment than the mandatory capacity deployment requirements
given in the Route Dispersal Guidelines.
Spice Jet is gaining higher market share. It is spending high in advertising
and promotions. Now a day Spice Jet is providing lowest fare all over
India.

For example:

SpiceJet is coming with aggressive strategy in low cost market. Problem

with this strategy is the limited routes availability. Spice Jet flight is not
available on all the routes. SpiceJet is managing all the summer days in
advance. They are tapping up market way ahead of others. Price
conscious customers are going for these offers and they prefer it.
 3. Comparison of the major players of different factors

3.1 Price of the ticket.

Comparison of the players on price factor is difficult. Price varies
according to time of the booking as well as the route to be chosen,
time of the day etc. Every carrier has different price strategy. For
the sake of convenience I have chosen following parameters to
compare:

i. Route: Delhi to Mumbai

ii. Time duration: 7 pm to 12 am
iii. Time of booking:
a. Immediate booking
b. 3 months prior booking

a. Immediate booking: 14th Feb

Name of Price of Duration of Services Frequency

the ticket Journey during the
carrier day
6043 2 hours 10 1. Paid Meal 16
Indigo
min 2. Special
assistance
4500 2 hours Paid meal only 4
Spice Jet
4558 2 hours 20 Free Meal 4
Vistara
min Included
6520 2 hours 10 Free Meal 37
Jet
min
Airways
 4578 2 hours 20 Paid Meal only 9
Go Air
min
4956 2 hours 05 Free meal 44
Air India
min
Hence Spice Jet is lowest among all. Air India is providing maximum
frequency. And Indigo is better among the all for better service with
low price.

b. Prior booking of 3 months- 6th May 2016

Price of Duration of Services Frequency

Name of
ticket Journey during the
the
day
carrier
3049 2 hours 10 1) Paid Meal 17
Indigo
min 2) Special
assistance
3722 2 hours Paid meal only 4
Spice Jet
5481 2 hours 20 Free Meal 7
Vistara
min Included
5481 2 hours 10 Free Meal 29
Jet
min
Airways
4798 2 hours 20 Paid Meal only 8
Go Air
min
3263 2 hours 05 Free meal 38
Air India
min
 Hence in prior booking Indigo is providing lowest fare with better
services. Followed by Air India and Spice Jet. Air India is giving
maximum frequency which provides better ease of booking.

Source: www.makemytrip.comaccessed on 12th Feb. 2016

3.2 Comparison on other factors

A large survey all over India by “Trip Adviser” following is the

findings on scale of 100 percent:

Factors\Name Indigo Jet Air Go Jet SpiceJet

Airways India Air Connect
44.4 13.2 6.8 2 1.1 6.3
Value for
money
47.2 47.2 32.2 1.1 2.2 6.9
Services- food
and
entertainment
35.8 46.5 3.6 2.7 1.7 9.7
Cabin crew
appearance
36.1 44.9 5.6 2.7 1.6 9.1
Cabin crew
quality-
Service
65.5 18.3 6.8 2 1.1 6.3
On Time
performance
 39.7 31.3 16.9 2.4 1.7 8
Landing &
Take off
quality
41.2 34.7 9.2 2.7 2.5 7.5
Time taken to
deliver
baggage
18.2 38.6 34.1 1.9 1.6 5.6
Seat Comfort/
Leg room
38.8 39.1 12.6 1.7 1.7 6.6
Overall
experiance
Hence most preferred airline is indigo followed by Jet airways and Spice
Jet.
For new players in the Industry, most of the respondents prefer to go by
TATA SIA i.e. VISTARA followed by Air Asia.
 4. Analysis of the Survey carried during the project.

4.1 Details of the survey:

 Survey Respondents: 56
 Host website of the survey: www.surveymonkey.com
 Duration of the survey conducted: 4 days (8th Feb to 12th Feb,
2017)

4.2 Analysis of the survey:

Following things have been found from the survey carried out:

i. Most of the people (around 60%) prefer Indigo as their favorite

airline. Followed by Jet Airways. Spice-Jet is the third choice of
the consumers

ii. Most of them prefer Indigo because of the low price

iii. Around 95% people are looking for the low price carrier.
iv. People are conscious about service quality and promotions.
v. On time flight is most preferred for Indigo followed by the ease
of booking.

vi. Food is the most hated thing on the flight and ambience is least
hated thing. People want better food followed by better service.
vii. Most of the young consumers look for better cabin crew and
least look for the leg room.
 LITERATURE REVIEW

1) International Journal of Management and Strategy

(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

Title: CUSTOMER SATISFACTION MEASUREMENT IN AIRLINE SERVICES:

AN

EMPIRICAL STUDY OF NEED –GAP ANALYSIS

AUTHOR: Dr.Makarand Upadhyaya, Associate Professor (Marketing),

College of Business Management, Jazan University, Saudi Arabia.

In his study Dr. M Upadhaya has focused on customer complaint and its
quick resolution. In Airlines industry customer complains plays a vital role
in customer satisfaction. He focused on 2 types of complain, controlled
complaint are those which is under control such as fare related
problems, flight delays, misbehaviour by staff, etc. and uncontrolled are
those such as weather problems, technical fault, etc. So for solving these
problems trained staff is required who can effectively minimize or handle
these problems.

2)International Review of Business Research Papers

Volume 6. Number 6. December 2010 Pp.48 – 65

Title: A Comparative Study between Indian Public and Private (Low Cost)
Airlines With Respect To Their Passenger Service

Author: Dipa Mitra.

In her study she has given importance on healthy relationship between
customer and the Airline service provider. The Airlines Industry today
should aim not only at delivery of the service tothe passengers, but they
should also focus on satisfying the passengers with the services. They
need to know the customer preferences and should bring changes
according to that. Then the customer will be satisfied. Some of the
private players are very much concerned about their passengers as well
as some of them are implementing low price strategy to attract the
passengers. So in this competitive age, the success of Airlines is very
much dependent on the passenger service provided at all levels, after
and during the journey to make their passengers satisfied.

3) ZENITH

International Journal of Multidisciplinary Research

Vol.2 Issue 2, February 2012, ISS N 2231 5780

Title:A STUDY ON SERVICE QUALITY AND PASSENGER SATISFACTION

ON INDIAN AIRLINES.

Author: R.ARCHANA and DR.M.V.SUBHA

They have studied the factors which influences on passenger

satisfaction. They have identified that Cuisines provided, seat comfort,
safety these factors have an important role in customer satisfaction.
They have also found that customer satisfaction depends on personal
entertainment, which is an important factor in flying decisions of
passenger. According to their study online seat booking, call centre
facilities and reservation/cancellation is highest influencing factor in
flying decisions of the passengers.

4) Title:Application of Customer Relationship Management in Airline

Industry

Authors:Mohammad. J. Tarokh and Mahmoud Majidi.

According to Mohammad. J. Tarokh and Mahmoud Majidi customer

relationship management has a vital role in satisfaction of Airlines
services. The marketers should understand the customer needs and
wants to satisfy those needs. For that building a good relation is very
important with the customers. They have talked about Airline e-CRM
which provides an understanding of customer behaviour and enables
airlines to measure results of marketing changes. E-CRM supports fully
digital information exchange between airlines and customers, reduced
cost of a customer contact. It also helps to dynamically adapt to
customer behaviors.

5) Title:“The Impact of Expectation & Perception on Customer

Satisfaction in

Airline Industry (A Case Study of Mahan Air)”

Authors:Dariush Rafati and Peyman Shokrollahi.

In their studies they have talked about the gap between customer
expectations and perceptions about services. They have said that
according to the educational level the expectation of the customer
differs. They have also said that gap between customer's expectations
and perceptions in airline service attributes help top managers to
understandwhich services are important to customers and which
services are consistent to customers’ perceptions.

6) INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN

BUSINESS

VOL 4, NO 6. OCTOBER 2012.

Title:IMPACT OF EMPLOYEE MOTIVATION ON CUSTOMER

SATISFACTION: STUDY OF AIRLINE INDUSTRY IN PAKISTAN.

Authors:Muhammad Bilal Ahmad, Ejaz Wasay and Saif Ullah Malik.

Employee motivation is an important factor, which may be directly or

indirectly related to customer satisfaction. If the employees are well
motivated then they perform better job. And if the employees work
efficiently and provide services to the customer then the customer get
satisfied.They have said employee motivation is affected by both
personal characteristics as well as workplace environment.If the
employees behave nicely with the customer then the customer feel good
and they think the company is showing respect and providing value. And
the employee behaviour will be good when they will be motivated and
there is a healthy pay system and work environment.

7) Australian Journal of Basic and Applied Sciences, 5(11): 718-723, 2011

ISSN 1991-8178
Title:Customer Satisfaction Delivery In Airline Industry In Malaysia: A
Case of Low Cost Carrier.

Authors:Jayaraman Munusamy, Shankar Chelliah, Sivamurugan Pandian.

They have found that the factors such as the pre-flight services which
they are proving, customer relationship management and cabin
environment and in-flight services that customers are getting influence
customer satisfaction. If these are very good then customer gets
satisfied. The customers will be satisfied if the cabin facilities, baggage
systems are well maintained. Customer satisfaction also depends on how
they are maintaining relationship with the customers. How the staffs are
behaving with customer, entertainment facilities, timing plays a key role
in customer satisfaction in Airlines Industry.

8) Open Access Scientific Reports. Degirmenci et al., 1:5

http://dx.doi.org/10.4172/scientificreports.294

Title:Customer Satisfaction Measurement in Airline Services Using

Servqual.

Authors: Elif Degirmenci, Huseyin Basligil, Ahmet Bolat and Yavuz

Ozdemir.

In their study they have focused on service quality, CRM, Loyalty, Airline
Service Quality etc., which play an important factor for customer
satisfaction. To satisfy the customer the Airlines Company should
maintain good relationship with them. It will be possible when they will
provide the best quality service to the customer. The service provider
should take care of in-flight services, it has to be improved. Then the
loyalty of customers will be increased. Customer loyalty depends on the
educational level of the customer.

9) CFS AVIATION INDUSTRY CUSTOMER SATISFACTION SURVEY – 2010

In this report the study was conducted in Nigeria. It is found that they
prefer advance ticket booking services and they have bad experience. So
to satisfy the customer the Airlines Company should take care of this
issue. Customers also think about safety and security in flight. So the
marketers need to improve the security system. The service providers
need to make a smooth process of ticket reservation and ticket
cancellation. Customer satisfaction mainly depends on these above
issues.

10) Title: Improving Customer Satisfaction in an Airlines Industry.

By: BREAKTHROUGH MANAGEMENT GROUP INTERNATIONAL

According to the report the report Cabin appearance Staff should be

trained well. They should also give importance to build effective
communication in all locations.

11) Title: Measuring Customer Expectations of Service Quality: case

Airline Industry

By:Ekaterina Tolpa

Date: 06.06.2012
According to the report it is found that the importance is given on the
quality of the services in order to satisfy the customer. When the
expectations of the customer get fulfilled then they become satisfied.
Service quality includes customer safety, flight frequency, reliability etc.
They should also focus on customer segmentation. When the flight
frequencies get increased and safety measure is available then the
customers get satisfied.

12)Customer Satisfaction Heterogeneity and Shareholder Value

Rajdeep Grewal
Alka V. Citrin
Murali Chandrashekaran

Revision Requested, Under Second Review: Journal of Marketing

Research
October 2008

In this researcher paper researcher has describe the importance of

investment. They have done a research which says that shareholder
value and the growth of company depends upon the investment done by
the company i.e. in which sector or in which department they has
invested its money. In this research they have adopted the view that
customer satisfaction is a key marketplace asset, they have tested two
conjectures: (a) objective service quality and advertising impact not only
the level of customer satisfaction, but also the heterogeneity in this asset
get impacted, and (b) Satisfaction heterogeneity will decrease the utility
of the satisfaction asset in driving shareholder value, and also influence
the contemporaneous volatility in shareholder value. They have done
this research using secondary data from diverse sources describing the
dynamics within the U.S. Airlines Industry over a 9year period from 1997-
2005. They come to conclusion that increasing levels of satisfaction
heterogeneity serve to reduce the volatility in shareholder value.

13) International Air Transport Association (IATA)

Montreal — Geneva

Vision 2050

Singapore, 12 February 2011

Giovanni Bisignani - Director General & CEO – IATA

The whole research is done on the future problems, need, requirement,

changes that will be face by aviation industry. The problem describe in
this research is that the number of passengers increasing day by day and
the cost of travelling has decrease, if this the scenario now what will be
in 2050. So the modification that aviation industry should do for their
benefits are mention and research has been done on these things.
Solution trace out by the research is that all the company in this industry
should be united and there should be no competition, all should go hand
in hand. Even they should pursue government to join with them. There
should be change in the leadership. They said that last decade has shown
that by working together with a common purpose, change is possible and
also flexibility and openness to change will mark the way forward.
14) Linkages between customer service, customer satisfaction and
performance in the airline industry: Investigation of non-linearity and
moderating effects
Adams B. Steven*
Yan Dong
Martin Dresner

Robert H. Smith School of Business, University of Maryland, College

Park, MD 20742

This research paper investigates the linkages between customer service

and customer satisfaction, and firm performance in the U.S. airline
industry. They had examined the moderating effects of market
concentration and firm dominance on the service-satisfaction-
performance relationship. This research says that customer satisfaction
and airlines profitability are dependent and they are affected by the
market. Research says that considering customer satisfaction and
customers services airlines industries can increase their profit.

15) Customer Satisfaction in theAirline Industry: the Case of British

Airways

Giovanna Nicolini and Silvia Salini

Department of Economics, Business and Statistics, University of Milan,
Italy

In this research paper two different non-classic methods of research had

been use for research of customer satisfaction in British Airways, based
on the analysis the qualitative data, and are applied to evaluate
customer satisfaction. They said that quality and satisfaction is based on
two different approaches involving objective and subjective aspects. For
the purpose of research they had use Decision Tree theory and secondly
they have use Rasch model for study. By both the mean of study it can
be said that customer satisfaction is necessary in British Airline.

16) Measuring Customer Expectations of Service Quality:

Master’s Thesis

This research had been done in order to understand the concept of

service quality and find out the different approaches to measure service
quality. Another reason was to define a process model which enables to
measure service quality in air transportation based on literature review.
The utmost operation is to test the process model on selected customer
group and then the return result can be used to investigate what services
customers considers as the “core quality”, on their flight experience and
to check whether there is any deviation from the proposed quality and
actual applied service.

17) FUTURE OF AIR TRAVEL INDUSTRY: RELATION OF GROWTH AND

CONSUMER SATISFACTION

Manzoor Nazir Bhatti et. al., Int. J Eco. Res., 2010 (1(1), 19-37

The motive of this research is to find out the present and future aspects
of aviation industry in relates to growth and consumer satisfaction. The
sample had been collected from various sources. It was found that both
the US and European major airlines does not had constant profits in the
business. They either had losses or marginal profits in recent history.
However it has been noticed that low cost carriers have been able to
sustain in both the markets because of their effective marketing
strategies. However for both the airlines that is for executive class as well
as for low cost carriers future is unpredictable.

18)Passenger Satisfaction in Indian Aviation Industry: An Analytical

Approach

Dipa Mitra

January 6-9, 2013

The 21st century is considered as the service industry century. Service

industry is moving and growing at a rapid pace across developed and
developing centuries. Services generally termed as an intangible product
which can be measured by the level of satisfaction. Another definition of
service can be offered as an activity or benefit that one party offers to
another in a non tangible form. Now in today’s scenario every industry
needs to be properly handling the CRM that is Customer Relationship
Management. Thus it has been an important outlook for the service
industry to identify parameters that cause customer more satisfied and
should adopt those strategies.

19) Title:Service quality, satisfaction, and behavioural intentions

Astudy of low-costairlinecarriersinThailand
Authors:Gour C. Saha, Theingi

In this paper they have focused that flight schedules, flight attendant and
the service quality are the key factors of customer satisfaction. They have
said that customer satisfaction depends on the price of the airlines
services. They have focused on the services like comfort, food, and other
in – flight services. These leads to customer satisfaction. Customer
satisfaction also depends on how they are handling the complaints and
flights are running in time.

20) Branding satisfaction in the airline industry:

Kee Mun, Wong* and Ghazali, Musa

Faculty of Business and Accountancy, University of Malaya, 50603 Kuala

Lumpur, Malaysia.

Accepted 23 March, 2011

The airline industry has undergone through a fast moving ride for the
past few years. One of the main developments in the current aviation
industry is the growing popularity of low cost airline with high quality
service. The competition between Malaysia airlines and Air Pacific has
been cut throat as regards to price factor. Both the airlines have different
customer base and hence offers different service experience. It is also
note able that differentiate in providing higher service quality is the main
factor to increase or to attract customers towards them. It has been
noticed that customers are getting attracted towards the intangible
service where monetary value is less than the services being provided.
21) In-flight Meals, Passengers’ Level ofSatisfaction and Re-flying
Intention

Mohd Zahari, M. S, Salleh, N. K., Kamaruddin, M. S. Y and Kutut, M. Z.

World Academy of Science, Engineering and Technology 60 2011

Service quality is the essence of airline companies which makes their

image differentiate from others and keep their image in the minds of
passengers. Many airlines followed the route of higher service quality
through on ground and off ground service. Inboard meal is one of the
important aspect of the airline operation. Now days it became a
marketing strategy. This research depicts the reaction of customers
through in flight meals to see the satisfying level and re flying intention.
Food not only sacrifices the inboard customers but also have an effect
on flying intention.

22) International Airline Quality Measurement

Dean E. Headley

Wichita State University, KS and Brent D. Bowen

Journal of Air Transportation World Wide Vol. 2, No. 1. 1997

In earlier days airlines quality had been measured on survey which offers
the services expected and the prescribed services. Service quality is the
difference between the service expected and the actual service being
provided. Services should match according customer’s expectations. The
survey helps the airline companies to know exactly what they want and
accordingly operations have taken place.

23) Customer Satisfaction in the Airline Industry: the Case of British

Airways

Giovanna Nicolini and Silvia Salini

Department of Economics, Business and Statistics, University of Milan,
Italy

In this research paper two different non-classic methods of research had

been use for research of customer satisfaction in British Airways, based
on the analysis the qualitative data are applied to evaluate level of
customer satisfaction. They said that quality and satisfaction is based on
two different approaches involving objective and subjective aspects. For
the purpose of research they had use Decision Tree theory and secondly
they have use Rasch model for study. By both the mean of study it can
be said that customer satisfaction is necessary in British Airline.

24) Strategic Marketing Planning for the Tourism Industry

David L. Edgell, Sr.

Kurtis M. Ruf
Alpa Agarwal

In this article author describes new planning strategies for tourism

industries. Authors emphasizes on the quality, efficiency, and
effectiveness in the marketing process of this industry. The article
describes that how to analyze the market and make strategies. Author
have given some steps that include needs analysis of customers,
research and analysis, strategic positioning, marketing plan development
and training, implementation of the strategies, evaluation of the
strategies, and adjustment these will improve their planning process.
Through this the customer satisfaction can be achieved. Tourism industry
is also connected with aviation industry so some of these points can be
helpful in increasing customer satisfaction in aviation industry.

25) Customer Satisfaction with Air Services Delivery within Kiribati.

By : Aako Teikake
Degree of master of aviation
Massey University , Turitea Campus, Palmerston North
March 2012

In this research the importance is been given to customer satisfaction as

it playes an important role, as airline can survive and strengthen their
competitiveness. Service quality is an important factor for customer
satisfaction, this research will be helpful for airport management and
also aircraft management in increasing the customer satisfaction. The
questionnaire was made using SKYTRAX(one of the method of research),
stratified sampling process was use for the research. Through this survey
it was found that Kiribati air services have low customer satisfaction. The
problem was easily traced out as it was a research done through primary
data.

26) THE ROLE OF PACKAGING IN CUSTOMER SATISFACTION WITHIN THE

SUPPLY CHAIN : A STUDY IN AIRLINE INDUSTRY

CYNTHIA DE WET
UNIVERSITY OF PRETORIA, SOUTH AFRICA
2007

In the research author describes the importance of providing the best

services, so that customer satisfaction can be acquire. The study is been
done in detail regarding supply chain of South Africa Airways and the
problem has been trace out through this detail research. Both the
primary and secondary data were use in conducting this research. Two
survey has been done in this research paper one was done with staff of
the airline and other was done with customer of this airline.

27) The vicious cycle: growth and declining quality in the

US airline industry: some lessons for new start-ups

World Review of Entrepreneurship, Management and Sust.

Development, Vol. 1, No. 1, 2005
Dawna L. Rhoades
College of Business,
Embry-Riddle Aeronautical University,
600, S. Clyde Morris Blvd,
Daytona Beach, FL 32114, USA

The research says that there over 200 airlines have started up and failed
in U.S. the reason behind this was the competitive pressures and
economic conditions which result to the failure of many carriers. This
research paper examines the pressures which say that rapid expansion
can create including downward spiralling levels of quality, declining load
factors, and death in the airline industry. The research paper examines
the growth rates and service quality of some airlines of U.S and helps to
improve them.

28) The influence of service failure and service recovery on airline

passengers’ relationships with domestic airlines: an exploratory study.
P.G. Mostert, C.F. De Meyer & L.R.J. van Rensburg

Research paper describes that Service failures and the subsequent

service recovery efforts of an
Organization can have a profound effect on customers’ satisfaction with
an organization as well as on the quality of the relationship with the
organization, despite other efforts by the organization to build long-term
relationships with its customers. In this research the data were collected
from passenger’s flying with South African domestic passenger airlines
departing from
OR Tambo International Airport. The problem regarding the customer
satisfaction in domestic airlines was traced out.
FRAMEWORK

Independent Variable Dependent Variable

Price
Customer
Satisfaction

Service
Quality

PROBLEM DEFINITION

 Identify the factors those leads to customer satisfaction in

Airlines Industry.

OBJECTIVES

 To determine the relationship between Price and customer

satisfaction.
 To study the role of service quality in providing the excellent
customer satisfaction in Airline industry.
 HYPOTHESIS

H1. Service Quality has a positive influence over the customer’s decision
regarding choosing the airlines to travel.

H2. Price has a positive influence over the customer’s decision regarding
choosing the airlines to travel.

RESEARCH METHODOLOGY

 Research Design:In order to achieve the above study

objectives, we have used the Simple Random Sampling
technique, randomly intercepted and administered fully
structured questionnaires to target respondents.

 Sample: We have targeted the age group of above 20 and

who often use flight services.
Area of Survey: Gandhinagar
Gender: Male and Female both.

 Sample Size: 30

 Data Collection Method: We have collected data through

survey method.

Survey is done through questionnaire filling.

DATA ANALYSIS AND DISCUSSION

 Statement 1: Servicequality influences my decision while selecting your

preferred Airlines.

Strongly Neither Agree nor Strongly

Agree Agree Disagree Disagree Disagree
6 20 4 0 0

Disagree
0%

Neither Agree
nor Disagree
13% Strongly Agree
Strongly
20%
Disagree
0%

Agree
67%

Interpretation: It is found from the study that 20% of the respondents strongly
prefer the service quality and 67% of respondents also prefer service quality while
flying. So the Airlines Company should give importance to improve the quality of
the services to attract more and existing customers.
  Statement 2: Service quality differs from Airlines Service Provider to
Airlines Service Provider.

Strongly Neither Agree nor Strongly

Agree Agree Disagree Disagree Disagree
4 23 3 0 0

Q:2 Strongly
Q:2 Disagree
Disagree
Q:2 Neither Agree 0%
0% Q:2 Strongly
nor Disagree Agree
10% 13%

Q:2 Agree
77%

Interpretation: It is found from the research that 13% of the respondents strongly
think that service quality differs from Airlines Company to Company. And 77% of
the respondent’s perception is that different Airlines Company provides different
types of services. So the Airlines Company should focus on Customer services.
  Statement 3: Airlines service Providers should pay more attention on
the quality of the services.

Neither Agree nor Strongly

Strongly Agree Agree Disagree Disagree Disagree
12 13 5 0 0

Disagree Strongly Disagree

0% 0%

Neither Agree
nor Disagree
17% Strongly Agree
40%

Agree
43%

Interpretation: It is seen from the study that about 85% of respondents want that
the quality of the service that Airlines Companies are providing should be
improved. So quality is the issue that customers provide importance in terms of
satisfaction. To satisfy the customers companies should improve the quality of the
service.
  Statement 4:Satisfaction level depends on in-flight service quality.

Strongly Neither Agree nor Strongly

Agree Agree Disagree Disagree Disagree
7 15 6 2 0

Strongly Disagree
0%
Disagree
Neither Agree 7% Strongly Agree
nor Disagree 23%
20%

Agree
50%

Interpretation: The services which the Airlines service providers are giving in the
flight it has an important impact in terms of customer satisfaction. Nearly 75% of
respondents think that their satisfaction depends on In-flight service quality.
  Statement: 5: I prefer online ticket booking while purchasing ticket.

Strongly Neither Agree nor Strongly

Agree Agree Disagree Disagree Disagree
6 15 7 1 1

Disagree Strongly Disagree

4% 3%

Strongly Agree
Neither Agree
20%
nor Disagree
23%

Agree
50%

Interpretation: From our study we have found that 70% of the respondents prefer
online ticket booking while purchasing ticket.
  Statement 6: I choose the Airlines service according to the price of the
ticket.

Strongly Neither Agree nor Strongly

Agree Agree Disagree Disagree Disagree
5 15 7 3 0

Strongly Disagree
0%
Disagree
Strongly Agree
10%
17%
Neither Agree nor
Disagree
23%
Agree
50%

Interpretation:It is shown from the research that 67% of the respondents low fair
ticket while flying.
  Statement 7: Types of offers and discounts on tickets influence in my
purchasing decision.

Strongly Neither Agree nor Strongly

Agree Agree Disagree Disagree Disagree
17 10 1 2 0

Neither Agree nor Strongly Disagree

Disagree 0%
3%
Disagree
7%

Agree
33% Strongly Agree
57%

Interpretation: It shows that most of the people and 80% of the respondents prefer
to buy tickets at the time of offers and discounts.
  Statement 8:The speed of response to any queries enables to select a
particular Airline Service.

Neither Agree nor Strongly

Strongly Agree Agree Disagree Disagree Disagree
9 12 6 1 2

Disagree Strongly Disagree

3% 7%

Strongly Agree
Neither Agree nor 30%
Disagree
20%

Agree
40%

Interpretation: 70% of the respondents’ wants that their queries should be solved
as soon as possible. It has an impact on customer satisfaction.
  Statement 9: On time performance of scheduled flights influence our
flying decisions.

Strongly Neither Agree nor Strongly

Agree Agree Disagree Disagree Disagree
15 8 6 0 1

Disagree Strongly Disagree

0% 3%

Neither
Agree nor
Disagree
20% Strongly Agree
50%
Agree
27%

Interpretation: 77% of the respondents prefer the flights which maintain the proper
time table.
  Statement 10:Reduction in the price of ticket will increase my no. of
flying.

Neither Agree nor Strongly

Strongly Agree Agree Disagree Disagree Disagree
16 13 1 0 0

Neither Agree nor Disagree

Disagree 0% Strongly Disagree
3% 0%

Agree Strongly Agree

43% 54%

Interpretation: Most of the people i.e. maximum no of respondents’ wants that

the price of the ticket should b decreased and according to them it will increase the
no of flying.
CONCLUSION

Satisfying customer is the main motto of any marketer. Price and service quality
affects the customer satisfaction. Specifically consumers tend to consider the
relative relationship between price and their expectations about the performance
of the product. Price plays a major role in consumer satisfaction in aviation sector.
From this study we can see that price sensitive consumer focuses on price and
compares it with the utility and benefits of the services. If an Airline company is
providing a compatible price and increase in price are fare then customer takes it
positively which creates a sense of satisfaction among the consumers. In case of
Airline services most of the customer focuses on the price of the ticket to travel. It
is found that wherever and whenever they will get a ticket for a lesser price, the
customers have a tendency to buy the ticket. Sometimes they wait for offer prices
and if they also pay high prices for the service, they will expect a good service.
Conversely, younger passengers or passengers with lower incomes are more price-
sensitive, and usually purchase tickets based on the lowest price available, and also
may have different levels of expectations. This may lead to a different service
experience each flight, and make younger passengers or lower incomes passengers
less likely to be satisfied with the level of service provided.If the price matches with
their expectations they become satisfied.

Without any doubt, service quality is very important component in any business
related activity. This is especially so, to marketer a customer’s evaluation of service
quality and the resulting level of satisfaction are perceived to affect bottom line
measures of business success.Service quality can be defined as a consumer’s overall
impression of the relative efficiency of the organization and its services.
Understanding exactly what customers expect is the most crucial step in defining
and delivering high-quality service. Service quality is one of the best models for
evaluating customers‟ expectations and perceptions.If the passenger is not
satisfied, due to the negative experience, the client will reconsider the buying
decision for further flights and will probably switch to another airline. SoAirline
managers should better serve their customers, monitor and develop service quality
to achieve the highest level of their passengers‟ satisfaction.
From this research we have identified that price and service quality are two
important factors which have huge impact on customer satisfaction in Airlines
Industry. So the marketers should focus on these two factors and should take
proper steps in terms of customer preferences in this changing competitive
era.Delivering high-quality service to passengers is essential for airline survival, so
airlines need to understand what passengers expect from their services.

IMPLEMENTATION

We have used questionnaire method where different question were

asked to different respondents. Basically all the questions were based on
service and price factors. After going through all the replies, we came to
know that service quality and price does have a direct impact on
customer satisfaction in aviation industry. Customers tries to select
those flights where service quality is high with minimum ticket fare. So
companies need to look deeply into the price and service quality
department so as to increase the customer satisfaction which in turn
leads to more profit. Inflight services should also be taken into
consideration. We can assume that if the service quality is more in
compare to the price of it the rush of customers will be more and vice
versa. So our suggestion will be to select the best combination of service
quality and price where the ratio is equal or more than 2:1.