Study of Influence of Airline Quality Ratings (AQRs) on repeat purchase behaviour of next-generation domestic air travellers in Maharashtra State

 

Basudev Datta*, Pritam Kaushik

MBA Student (2018-20), Symbiosis Institute of Management Studies, Pune

*Corresponding Author E-mail: basudev.datta2020@sims.edu

 

ABSTRACT:

In today’s time, airline sector has become highly intangible, perishable and heterogeneous in nature. In certain cases, it has been observed that airline services are highly personalized due to continuous variation in customer engagement factor by frontline employees. Majority of the senior management in airline sector believes that they are continuously able to bridge the gap between the customer perception about service quality and actually delivered services through frontline employees which is highly misconceived from customer point of view. Given the fact that the sector is highly volatile and competitive in nature, airline management must be in position to gauge the trend line which influences the Airline Quality Ratings (AQRs) and its impact on consumer decision making process. The pattern recognition will assist the management in making necessary corrective actions on high impact service quality factors which will make the airline remain afloat in such a volatile environment. Henceforth, keeping in view, recent set of events which led to closure of Sahara Airline, Kingfisher Airline, Jet Airways etc. despite being of one of leading LCC in Indian Airline Industry for quite long time. Authors have attempted to mathematical model the factors which influences the Airline Industry in Maharashtra state only. So, as to enable the senior management to take timely corrective actions as and when necessary.

 

KEYWORDS: LCC: Low Cost Carrier, WOM: Word-of-Mouth, ATF: Aviation Turbine Fuel, PoD: Point of Differentiation, AQRs: Airline Quality Ratings.

 

 


1. INTRODUCTION:

Indian civil aviation sector has emerged has one of the fastest growing sector in India over period of last three years. India has witnessed sudden surge of large number of MNC and National LCC operators in last 3 decades as India is emerging as world’s third largest domestic aviation market. IBEF, 2019 surveys clearly indicates that by 2024, India will overtake United Kingdom (U.K.) to become world’s third largest air passenger service provider. Foresaid survey indicates that Indian aviation sector has witnessed 16.52% of growth in traffic on Y-o-Y basis in FY-2018.

 

However, CAGR over period of FY-2006 to 2018 is 12.72% due to global recession, pessimism in aviation sectors due to multiple failures of LCCs and rising cost of ATF. DGCA, 2019 expects that Indian Aviation Industry will grow by 1.76 Percentage points on Y-o-Y in FY-2020.

 

It is well conceived notion that customer retention is function of service quality rendered by service provider and met expectation criterion of the customer. This research paper makes an attempt to determine the AQR factors which heavily influences the customer preferences of selection of a particular airline for traveling. Keeping in view the dynamic nature of the industry and recent turmoil in Indian aviation LCC players, this is topic of prime importance for sustainability of airline industry. Systematic literature reviews indicates that earlier researchers has deployed different methodologies in order model the AQRs on Consumer Decision Making process in terms of purchase of airline tickets for traveling. Most of the earlier research work in the domain revolves around; determining the influence of AQRs on passenger future behavioral intentions towards airline selection. However, dynamics of the global aviation industry has changed in last decade due to surge of LCCs in the sector, who is giving tough competition to the established players. Hence, research on this topic will be extremely helpful for those managers who work in airline industry to make better and more attractive service quality.

 

We have accounted all-important AQRs based on recent trends in Indian and International aviation industry to accommodate changes in demographics and AIOs of next-generation domestic air travellers. In this research paper an attempt is made to mathematically model the influence of AQRs on consumer decision making process using SPSS software which will help the senior management in making timely corrective actions to improve the high impact AQRs.

 

2. LITERATURE REVIEW:

Hyper competition and fast changing dynamics of the market has made the service quality survey as one of most recurrent subject in the management literature. The prevailing circumstance warrants development of reliable tools which will accurately model the scenario for organization’s performance from customer’s point of view and met expectation criterion for either parties and provide suitable information to management to take timely actions to bridge the service quality gaps (Badri, Abdullah and Al-Madani, 2005).

 

According to Schneider and White (2004), there is a positive correlation between AQRs, behavioral intention and the customer satisfaction. Their research further indicates that AQRs has direct impact on balance sheet of the airline as AQRs heavily influences customer retention and +WOM. Sebastianelli and Tamimi (2002), segregated AQRs into high and low impact variables as statistical analysis indicated that each AQRs variables has different degree of influence on consumer purchase decision. Their model is highly reliable as this will help the management to focus on specific issue in service quality. It is worthwhile to mention that in some cases researchers were able show strong inter-corrections between variables which mean that each AQRs influences each other by certain extent. Hence, it is important for management to focus equally on all AQR to reduce probability of adverse behavioural consequences (Schneider and White, 2004).

 

Many research studies indicate that in most of the cases the customer behaviour consequences usually reflects the feelings of customers about various experiences and encounters with the service providers and at the same time the service quality might be affected by the customers’ perception of the benefit that is relative to cost (Fen, and Meillian, 2005).

 

Service quality is defined as ability of the service provider to meet the expectation of the customer by bridging the gap between customer perception of service and service rendered by provider vis-à-vis cost benefit association pictured by customer (Bitner, and Hubbert, 1994). In order to acquire market leadership position in a particular service segment, one need to consistently maintain the service quality standard, so as to able to sustain in the era of hyper-competition uniquely (Parasuraman and Zeithaml, and Berry,1994). It is well conceived notion that financial health of service provider is dependent on customer loyalty which in turn is directly depends upon customer experience of the service quality. Customer air ticket purchasing decision is widely dependent on various AQRs variables (Park, Robertson, and Wu, 2005).

 

Research studies conducted by Chowdhary, and Prakash, 2007, most of the customer rate tangible dimensions of the SERQUAL model as high impact service quality dimension. There is a contrary observation by Eshghi, Roy, and Ganguli, 2008, were-in research surveys proves that intangible dimensions are rated as most important service quality dimensions and same is subjected to significant variation based on country of origin.

 

2.1 CONSUMER POST/ PRE-PURCHASE BEHAVIOUR IN THE AIRLINE INDUSTRY:

2.1.1 POST/PRE-PURCHASE EVALUATION BY POTENTIAL AIRLINE PASSENGER:

Those services were potential consumer has access to large amount of information in public domain, which is made  practically possible in the era of internet can be easily evaluated by the customer before purchasing the services in comparison to those services were-in repeat purchase is subjected to experience of previous purchase (Cobb Walgren and Mohr, 1998). Research conducted by Haubl and Thrifts, 2000 indicates that with advent of online sales platform, pre-purchase service quality evaluation process has become easier for the potential customer and has favourable influence on purchase decision vis-à-vis quality of services experienced. Cunningham, Gerlach, Harper and Young, 2005 surveys indicates that with increasing coverage of internet exposure across the globe, most of air travellers make informed decisions based on website data before experiencing the airline service quality by comparing with various alternatives available in the market. In upcoming sections, we will focus on various research studies conducted by eminent researcher in the domain which will be depicted in tabular form in Table No. 1 for ease of convenience.

 

2.1.2 AIRLINE SERVICE ATTRIBUTES CRITERIA:

Research studies conducted by Gardial et. al., 1994, clearly indicates that service selection or purchase decision criteria is complex combination of service/product characteristics focusing primarily on features or performance aspects of the services. In this section authors has made an attempt to briefly summarize the relevant literature on the topic concerned. We will primarily focus on identification of various factors in form of AQRs that influences that consumer pre/post-purchasing decision in aviation sector and summary of same is reflected in Table No.1. below.

 


 

Table No. 1: Identification of AQRs suggested by eminent researchers across globe

AQRs

Referenced journals

Ease of convenience of flight schedule

Chang and Yeh, 2002; Chen and Chang, 2005

No-changeover of flights

Leick, 2007; Lim, 2013; Pakdil and Aydin, 2007

Price of ticket

Aksoy et. al., 2003; Teikake, 2012; Lim, 2013

Convenience of ticket reservations

Leick, 2007; Lim, 2013; Ostrowski et. al., 1993; Pakdil and Aydin, 2007

Ticket flexibility

Leick, 2007; Lim, 2013

Baggage Allowance

Archana and Subha, 2012; Lim, 2013

Frequent Flyer Program

Gilbert and Wong, 2003; Leick, 2007

Availability of alliance partner

Gilbert and Wong, 2003; Pakdil and Aydin, 2007

Appealing advertising

Aksoy et. al., 2003; Bowen and Headley, 2000

Country of origin

Aksoy et. al., 2003,Grace and O’Cass, 2005

Brand Image

Jamal and Goode, 2001; Grace and O’Cass, 2005

Safety

Wong and Chung, 2007

Check-in counter operations

Aksoy et. al., 2003; Bowen and Headley, 2000; Chang and Yeh, 2002; Chen and Chang, 2005

Punctuality of on-board services

Tsaur, Chang and Yen, 2002; Wong and Musa, 2011

Resolving issues related to flight delays

Chang and Yeh, 2002; Pakdil and Aydın, 2007

Courtesy of frontline employees

Chen and Chang, 2005; Chou et. al., 2011; Sultan and Simpson, 2000

Frontline employee service rendering efficiency

Aksoy et. al., 2003; Chang and Yeh, 2002; Chen and Chang, 2005; Chou et. al., 2011; Lim, 2013; Ostrowski et. al., 1993; Teikake, 2012

Frontline employee problem solving skills

Chen and Chang, 2005; Chou et. al., 2011; Lim, 2013; Pakdil and Aydın, 2007

Physical appearance of frontline employee

Chang and Yeh, 2002; Chen and Chang, 2005

Multi-lingual crew

Aksoy et al., 2003; Lim, 2013; Pakdil and Aydın, 2007; Tsaur et al., 2002

Physical appearance of the aircraft interior

Aksoy et. al., 2003; Chang and Yeh, 2002; Chen and Chang, 2005;

Gilbert and Wong, 2003; Lim, 2013; Ostrowski et. al., 1993

Comfort level of seats

Lim, 2013; Nejati and Shafaei, 2009

Leg-room space

Leick, 2007; Elliott and Roach, 1993

On-board food and beverage services

Aksoy et. al., 2003; Archana and Subha, 2012

On-board Entertainment Services

Pakdil and Aydın, 2007; Tsaur et al., 2002

Baggage handling

Gursoy, Chen and Kim, 2005; Lim, 2013; Ostrowski et. al., 1993;

Teikake, 2012; Wong and Chung, 2007

Lounge services

Chen and Chang, 2005; Gilbert and Wong, 2003; Lim, 2013; Park,

Robertson and Wu, 2006; Wong and Musa, 2011

 


Teikake, 2012 conducted studies on determination of degree of influence the level of customer satisfaction has on airline selection based on airline on-ground and on-board services in Kiribati based on six evaluation criterions. Out of 6 criterions, most of the airlines possessed 5 of them which are named as “Check-in process”, “Boarding Procedure”, “On-board performance”, “Cabin Staff Performance” and “destination services”. Each of the above mentioned variables are utilized by customer to adjudicate the airline service quality differently depending upon the level of importance the AQR variable as per customer perception.

 

Alamdari, 1999 conducted surveys to investigate correlation between on-board airline service quality and customer satisfaction level in order to determine the fruitfulness of investment made by airline management on on-board services to attract customer. On-board services taken into consideration include “on-board entertainment (OBE)”, “passenger perception about OBEs”, “Willingness to pay extra for OBEs” and “ability to create PoD through OBEs in market”. Post-2000 era, OBEs were in fact considered as PoD in airline industry was IT sector was booming across the globe. But, outcome of studies reflected that most of the air travellers were expecting entry of OBE in late-2000. Hence, introduction of OBEs had diminishing returns in early 1990s. It further reflects that OBEs are rather secondary factors for any airline selection criterion. The primary criterion identified through research were as follows, CORE: “Safety”, “Schedule” and “Reliability”, EXPECTED: “Seat Comfort”, “Baggage”, “”Lounge”, “Cleanliness” and “Food and Drinks” and AUGMENTED: “OBEs”, “Limousine Services”, “Shower Facility”, “Lounge Entertainment”, “Pre-flight meals” and ”Massage.

 

Vink et. al. 2012, conducted studies on determination of correlation between in-flight comfort levels (IFCLs) experienced by traveller on repeat purchase behaviour. On-board comfort levels were measured in terms of “leg-room space”, “hygiene”, “crew attention” and “seat and personal space”. The research revealed that indeed tendency to repeat purchase is dependent on in-flight comfort levels. Earlier research conducted by Richards and Jacobson, 1977 also indicates that leg-room space, firmness, width and shape of the seat are main factors contributing towards overall IFCLs. However, given the fact that such study was being conducted almost 30 yrs. ago and with advents of latest technology and aircraft interior design over such long period of time, we can say that such findings may become questionable in nature in today’s era.

 

Ostrowski et. al., 1993 conducted studies to determine the influence of air traveller’s perceived service quality and customer royalty in US Air Space. Extensive surveys were conducted at the point of on-boarding or de-boarding based on parameters such as “flight schedule”, “price”, “frequent flyer program”, “airline preference while booking”. Deplaning passengers were asked to rate the airline service quality based on 16 service quality factors. Both, data sets from on-boarding and deplaning clearly indicates that customer royalty is indeed function of service quality variables.

 

Chen and Chang, 2005 conducted service quality gap analysis for particular Taiwanese domestic airline for all routes possible. Study revealed that 32 service quality factors influences the service quality gap which includes 17 variables from on-ground service and rest 15 from on-board services. Author of the research paper claimed that these variables can accurately model the correlation between AQRs and airline ticket purchase behaviour. However, we are of the view that since the sample referred to specific airline in Taiwanese Air Space. Model cannot accurately reflect the scenario which warrants senior management calls.

 

Bowen and Headley, 2000 conducted extensive research into AQR after making certain modifications in highly cited 9 AQRs studies in United States and were internationally accepted a decade prior (Gilbert and Wong, 2003). The studies indicate that variables such as “On-time performance”, “Safety”, “Misplaced Baggage”, “Denied Boarding” and “Handling of customer complaints” are considered most important variables in post-2000 era.

 

Wong and Chung, 2007 measured the airline passenger satisfaction based on AQRs in Taiwanese Air Space. But, unlike Chen and Chang, 2005 they have included all possible airline flying in or out through Taiwan to improve the accuracy of the study. The same study was further used by to determine the tendency of repeat purchase and it was found to be accurately predicting the shift in consumer base with fluctuation in AQRs.

 

Aksoy et. al., 2003 research studies reveals that sometimes AQRs are dependent on air crew’s ability to speak in multiple languages as same has strong influence on customer satisfaction levels.

 

Studies conducted by Mason, 2000 and Fourie and Lubbe, 2006 suggests that following are the most important variable influencing the AQRs in order of precedence are “In-flight comfort”, “Seating”, “Flight Schedule” and “Frequency”. From Business travellers view point, flight schedule is considered as most important AQR (Chin, 2002). Evangelho et. al., 2005 research survey show that reliability, flight frequency, multi-options in ticket booking,  price, frequent flyer programs, in-flight services and lounge services plays major role in creation of +AQRs.

 

2.1.3 SERVQUAL IN AIRLINE INDUSTRY:

Parasuraman et. al., 1988 proposed an instrument to measure customer’s perspective of service quality which is known as SERVQUAL. The main objective of the SERVQUAL model is to explain the gap between consumer expectation and actual service rendered by service provider. The gap between customer perception and rendered service is called as service quality. Initial model had 10 service dimension, the refined model had 5 has depicted in Table no. 2 (Parasuraman, Berry and Zeithaml, 1991). This model has been quite successful in recent times in both national and international markets (Parasuraman et al.,1988; Sultan and Simpson, 2000). This model relevant in this research paper as it helps us in designing selection criteria based on which we measure pre-purchase and post-purchase expectation.

 

Table No. 2: 5 Dimensions of SERVQUAL Model (After Parasuraman et al.,1988)

SERVICE DIMENSIONS

DESCRIPTION

Tangibles

Physical Facilities, Equipment and appearance of the frontline employees

Reliability

Ability to accurately and dependably perform the promised services

Responsiveness

Promptness and willingness to assist the customer

Assurance

It is combination of trust and confidence inducted by frontline employee on customer based on knowledge and courtesy

Empathy

Providing personalized attention to customer

 

Parasuraman et. al., 1988 used combination of 44 questionnaires in 5 point Likert-scale, out of which 22 questions were designed to capture post-purchase behaviour of the customer in terms of customer royalty, repeat purchase etc. In earlier-1990s, SERVQUAL model was used by companies operating in the field of “Banking”, “Credit Card Services”, “Product maintenance and repair industry” and “Telecom Sector”. Factor analysis was conducted on data sets to determine the dimensions of SERVQUAL Model and R2 values were taken into consideration to determine consistency of five dimensions across all four industries.

 

Teas, 1993 has suggested that SERQUAL model is used by service provider to measure the pre-purchase behaviour of the potential or existing customer in 6 different ways as mentioned below;

a)    Forecasted Importance: Customer’s pre-purchase thought process about expected level of service quality based on personalized assumption.

b)    Deserved performance: Customer’s pre-purchase thought process about expected level of service quality based on Cost-Benefit Analysis.

c)    Equitable performance: Customer’s pre-purchase thought process about expected level of service quality based on opportunity cost.

d)    Minimum Tolerance: It is treated as baseline level of service quality based on customer’s perception in terms minimum acceptable quality level vis-à-vis financial investment.

e)    Ideal performance: It is treated as optimal level of service quality that can be rendered by the service provider in most of the cases.

f)     Service attribute importance: It is subjected to individual customer’s bias in terms of precedence of several of service quality variables in deceasing order of importance.

 

A research survey conducted by Sultan and Simpson, 2000 reflects that there is strong correlation between customer expectation about airline service quality and country of origin of the passenger for code-share flights. Hence, outcome of his study cannot be relied upon completely due to change over of the airline brands based on alliance network. Gilbert and Wong, 2003 improvised over the preceding author by focusing on non- code-share flights and conducted studies on influence of nationality of the passenger on the pre-purchase expectation based on SERQUAL model. Park et. al., 2006 based on SERVQUAL model formulated 3 factors to depict AQRs as mentioned here-in (a) Reliability and Customer Service (b) Convenience and accessibility and (c) In-flight service based on qualitative studies by interviewing the air crew and travellers. Their studies clearly depicts that indeed repeat purchase behaviour is dependent on AQRs. Pakdil and Aydun, 2007 found that customer’s perception of service quality rendered is also dependent on educational level based on research surveys conducted in Turkish Airlines, Chou et. al. 2011, conducted surveys in multiple Taiwanese Airlines using fuzzy weighted SERVQUAL framework and found that “Safety”, “Customer Complaint Handling” and “Courtesy of crew” to be most important variables of AQRs.

 

 

2.1.4 BRANDING AND LOYALTY IN AIRLINE SERVICE EVALUATION

Brand is defined as “Name”, “Term”, “Sign”, “Symbol” or “Design” or Combination of them” which helps in identification of products or services of a particular organization and creates PoD from me-too firms (Kotler, 1994). Keller, 1993 defined the term “Brand equity” as the commercial value in form of incremental future cash flows that can be obtained from consumer perception of the brand name of a particular product or service, rather than from the product or service itself.

 

Research conducted by multiple researchers Cobb Walgen and Mohr, 1998; Laroche and Brisoux, 1989; Laroche et.al. 1995 clearly depicts that there is strong correlation between “Brand Equity” and “Brand Perception”, “Decision making” and “Purchase Intentions”. Grace and O’Cass, 2005 and Jamal and Goode, 2001 concluded that sometimes branding has stronger influence on pre-purchase service selection. Hence, it is extremely important for us to conduct brief literature review before proceeding ahead with our survey.

 

Wong and Musa, 2011 conducted research surveys in terms of airline pre-purchase brand satisfaction in Malaysia based on 9 dimensions of service quality i.e. “Brand”, “Price”, “Core Service” ,”Feeling” ,”Reputation”, “Employee”, “WOM”, “Service Scape”, “Publicity and Advertising”. It accurately predicted the pre-purchase criterion used by passenger for different domestic Malaysian airlines.

 

Dolnicar et. al., 2011 found that business travellers show stronger sense of brand loyalty then leisure travellers. Hence, frequent flyer programs are of greater relevance for business travellers as it reduces the impact of switching cost and helps the airline in retaining the customer base (Carlsson and Lofgren, 2006). Sarabia and Ostrovskaya, 2014 illustrated the “branding” alone cannot be used as pre-purchase selection criteria, rather it act as faster way to make purchase decision. In many cases, it has found that repeat purchase behaviour is highly influenced by frontline employee’s behaviour (Akamavi et. al., 2015). Though the concept of service recovery can be used to restore the customer’s faith on service provider (Maxhum and Netemeyer, 2002). Service recovery has strong influence over the customer future purchase behaviour. Hence, it must be designed in such a manner to meet perceived justice (Smith and Bolton, 1998). Intention to re-purchase and sharing positive WOM to prospective customer is found to dependent on customer satisfaction level in past experiences (Nadiri et. al., 2008). Dowling and Uncles, 1997 found that frequent flyer programmes have very little impact on pre-purchase or repeat-purchase behaviour of the customer as competitive market forces tends to overshadow the benefits it provides. Furthermore, Nadiri et. al., 2008 contended that service tangibles have more impact on customer purchase behaviour then loyalty programmes such as Frequent Flyer one.

 

For sake of brevity for readers, authors have consolidated the observations drawn from different literature reviews in tabular form as depicted in Table No. 1 above. Most of researchers conducted surveys to evaluate the post-purchase customer behaviour. Hence, their research outcome has been extensive used in further studies to model the scenario for next-generation air traveller in Indian Aviation Sector only.

 

3. METHODOLOGY:

A quantitative approach is adopted by administering a questionnaire among the respondents for primary data to evaluate the quality of service provided by the domestic airliner’s in which they have travelled, the perceived service quality of each variable was measured through questions designed on a 5 point Likert scale ranging from Important (1) to Not at all important (5). The questionnaire was administered to 153 customers/passengers. “Factor Analysis” and “Discriminant Analysis” was performed on the data.

 

a)    Factor Analysis: A survey was conducted to determine the factors which influence the Airline Service Quality. The survey was conducted with a sample of 153 air travellers from different age and income groups. The respondents were a mix of male and female. The question was measured using a 5 point Likert scale (1- Important; 5-Not at all Important).

b)    Discriminant Analysis: In additional to above, a study was conducted to identify the variables which impacts the air traveller’s airline selection decision based on Airline Service Quality. A questionnaire was designed for the purpose. The online survey was conducted on a sample of 153 air travellers in the age group of 21 to 40. We have divided the sample into two groups-one that has high airline selection impact factor (High-1) and the second which has low airline selection impact factor (Low: 2 to 5).

 

4. RESULTS AND DISCUSSIONS:

4.1   FACTOR ANALYSIS:

KMO measure of sampling adequacy and Bartlett’s test of sphericity for judging the appropriateness of a factor model. KMO statistic compares the magnitude of the observed correlation coefficient with the magnitude of the observed correlation coefficient with the magnitude of the partial correlation coefficient. A high value of this statistic (from 0.5 to 1) indicates the appropriateness of the factor analysis. Kaiser has presented the range as follows: statistic 1-0.5 acceptable and < 0.5 unacceptable. Computed KMO statistic in this case was 0.864, which indicates the value in acceptable zone of the factor analysis.

 

The communalities describe the amount of the variance a variable shares with all other variables taken into the study. The extracted communalities as shown in third column of the Table No. 4 is the estimate of the variance in each variable, which can be attributed to the factors in the factor solution. Relatively small value of the communality suggests that the concerned variable is a misfit for the factor solution and can be dropped out from the factor analysis.

 

Table No. 3: Criterion used for analysing communalities data

Basic Requirement:

 

Questionnaire Quality

Extraction Communalities

Criteria

Max >= 0.8

Good Questionnaire

Min < = 0.5

Bad Questionnaire

S.No.

Criteria

Solution

1

Initial Communalities

= Extraction Communalities

Variable should be continued factor analysis

2

Initial Communalities <<<< Extraction Communalities

Variable should be discarded from factor analysis

 

Hence, based on above mentioned criteria following variables will be discarded or continued further for factor analysis

 

Table No. 4: Fit / Unfit Status of variables for factor analysis

Communalities

 

Initial

Extraction

Decision

Flight_ Timings

1.000

.832

Fit for factor analysis

No._of_ Stop_overs

1.000

.796

Fit for factor analysis

Air_Fare

1.000

.733

Fit for factor analysis

Airline's_ Frequent_ Flyer_Program

1.000

.653

Fit for factor analysis

In-flight_ services

1.000

.594

Fit for factor analysis

Efficacy_of_ Ground_services

1.000

.511

Fit for factor analysis

Personal_ Preference

1.000

.550

Fit for factor analysis

Third_Party_ Influence

1.000

.846

Fit for factor analysis

Aircraft's_ Amenities

1.000

.791

Fit for factor analysis

 

Since, we have adopted “principal component method” as the method of analysis in a factor model. The Criterion for extraction of factors: In Rotation Sums of Squared Loadings are as follows;

 i.    Total Eigen Values must be greater than 1 and arranged in descending order.

ii.    Cumulative % Variance must be greater than 60% atleast.

 

In this case, cumulative % variance is 70.052% and at a same time total eigen values were greater than 1 and arranged in descending order. Hence, it is possible to extract factors from the components.

 

Rotated component matrix is often referred as the “pattern matrix for oblique rotation”. The columns in this Table No. 5 represent the factor loading for each variable, for the concerned factor after rotation. The figure clearly shows that interpretability importance of the rotation. The widely applied method of rotation is the “Varimax Procedure”. Although a number of rotation methods have been developed, varimax has been generally regarded as the best orthogonal rotation and is overwhelmingly the most widely used orthogonal rotation in psychological research (Fabriger et. al., 1999).

 

Table No. 5: Rotation Component matrix

Cut-off score of loading:

a)      Max = 0.8 and Min = 0.6

b)     Cross-loading check done

Variables

Factors

F1

F2

F3

Flight_Timings

X1

.874

.198

-.172

No._of_Stop_overs

X2

.849

-.149

.229

Air_Fare

X3

.623

-.133

.573

Airline's_Frequent_Flyer_Program

X4

.067

.796

.121

In-flight_services

X5

-.050

.769

.032

Efficacy_of_Ground_services

X6

.528

.303

.375

Personal_Preference

X7

.109

.712

.173

Third_Party_Influence

X8

-.289

.479

.730

Aircraft's_Amenities

X9

.305

.151

.821

 

Therefore, following variables are assigned to factors as mentioned below;

Factors

Variables

F1

X1

X2

 

F2

X4

X5

X7

F3

X8

X9

 

 

4.2 DISCRIMINANT ANALYSIS:

Group Statistics: It shows the means and standard deviations for both groups. From Table No. 6, few preliminary observations about the groups can be made and it clearly shows that two groups of flyers are widely separated with respect to three variables “Airline’s Frequent Flyer Program”, “Personal Preference” and “Third Party Influence”.

 

Table No. 6: Group Statistics

In terms of mean only

Airline_Selection_

Impact_Factor

High Airline Selection Impact Factor

Low Airline Selection Impact Factor

|Difference|

Flight_Timings

1.27

2.14

0.87

No._of_Stop_overs

1.09

1.79

0.7

Air_Fare

1.09

1.81

0.72

Airline's_Frequent_Flyer_Program

1.00

3.36

2.36

In-flight_services

1.73

2.57

0.84

Efficacy_of_Ground_services

1.45

2.26

0.81

Personal_Preference

1.55

2.71

1.16

Third_Party_Influence

1.45

2.55

1.1

Aircraft's_Amenities

1.36

2.02

0.66

 

Tests of Equality of Group Means:

It determines the variable that should be included in the model and describes that when predicators (independent variables i.e. Sig. < 0.05) are considered individually, only “Airline’s Frequent Flyer Program”, “Personal Preference” and “Third Party Influence” significantly differ between the two groups. The last column of “Test of Equity of Group Means” was shown below (Sig. < 0.05).

 

This clearly shows that “p-value” corresponding to “F-value” and confirms that only “Airline’s Frequent Flyer Program”, “Personal Preference” and “Third Party Influence” differ significantly between the two group of flyers.

 

Table No. 7: Tests of Equality of Group Means

Tests of Equality of Group Means

 

Wilks' Lambda

F

df1

df2

Sig.

Flight_Timings

.925

4.139

1

51

.047

No._of_Stop_overs

.928

3.976

1

51

.052

Air_Fare

.922

4.300

1

51

.043

Airline's_Frequent_Flyer_Program

.474

56.597

1

51

.000

In-flight_services

.898

5.816

1

51

.020

Efficacy_of_Ground_services

.899

5.699

1

51

.021

Personal_Preference

.842

9.595

1

51

.003

Third_Party_Influence

.846

9.297

1

51

.004

Aircraft's_Amenities

.908

5.164

1

51

.027

 

Eigen values:

It indicates the amount of variance explained. The function always accounts for 100% of the variance. A large eigenvalue is an indication of a strong function. Furthermore, to add that canonical correlation measures degree of association between the discriminant scores and the groups (i.e. levels of dependent variables). A high value of the canonical correlation indicates that a function discriminates well between the groups. Canonical correlation associated with function is 0.785, Square of this value is given by (0.785)2 = 0.616225. This indicates that 61.6225 % of variance in the dependent variable can be attributed to this model.

 

Wilk’s lamba:

It is a statistic that assesses whether the discriminant analysis is statistically significant. To test the significance of each independent variable, the corresponding F-value is used. To test the significance of the discriminant function, chi-sqaure transformation of wilk’s lambda is used. A high value of chi-square indicates that the functions significantly differ from each other.

In this case, chi-square value is found to be 44.566 with corresponding p-value as 0. This value is significant at 99% confidence level. Hence, it can be concluded that population means of all the discriminant functions in all the groups are not equal (acceptance of alternative hypothesis). It indicates that the discriminant function is statistically significant and further interpretation of the function can be proceeded.

 

Canonical Discriminant Function Coefficients:

It gives an unstandardized coefficient and a constant value for discriminant equation. After substituting the unstandardized coefficient values with corresponding predicator and constant values, the discriminant equations can be written as mentioned below;

 

D

- 4.349 - 0.130 (Flight_Timings) – 0.351 (No_of_Stop_Overs) + 0.201 (Air_Fare) + 1.081 (Airline's_Frequent_Flyer_Program) - 0.014 (In-flight_services) + 0.238 (Efficacy_of_Ground_services) + 0.096 (Personal_Preference) - 0.042 (Third_Party_Influence) – 0.007 (Aircraft's_Amenities)

 

Functions at Group Centroids: These are unstandardized canonical discriminant functions evaluated at group means and are obtained by placing the variable means for each group in the discriminant equations rather than placing the individual variable values. For, the first group, the group centroid is a negative value (-2.430) and the second group, it is an unequal positive value (0.637). From, the discriminant equation mentioned in preceding paragraphs, it can be noted that 5 and 4 coefficients are associated with the predicators that have positive and negative sign respectively. Therefore, it can be held that “Airline’s Frequent Flyer Program”, “Personal Preference”, “Third Party Influence”, Efficacy_of_Ground_services”, “Air_Fare” and “No_of_Stop_Overs” are likely to have high impact on airline selection based on service quality factors.

 

Of the 9 predicators, only three have got significant p-values i.e. “Airline’s Frequent Flyer Program”, “Personal Preference” and “Third Party Influence”  (Refer: Tests of Equality of Group Means). Hence, it will be useful to develop a profile with these three statistically significant predicators

 

5. RECOMMENDATIONS:

a)    BASED ON FACTOR ANALYSIS:

The airline’s senior management can use the table cited below to regulate various AQR variables which directly influences the factors of service quality performance of the airline from customer’s point of view in Maharashtra state to retain the customer base and become market leader in sector.

Factors

Variables

Flight Planning and Scheduling (F1)

Flight_ Timings (X1)

No._of_Stop_ Overs (X2)

 

Brand Loyalty Programs and Services (F2)

Airline's_Frequent_ Flyer_ Program (X4)

In-flight_ services (X5)

Personal_ Preference (X7)

Word-of-Mouth Marketing about Airline Services (F3)

Third_Party _Influence (X8)

Aircraft's_ Amenities  (X9)

 

 

b)   BASED ON DISCRIMINANT ANALYSIS:

Mathematically, the impact of AQRs on air traveller’s airline selection decision can be determined by using below mentioned equation

 

D

- 4.349 - 0.130 (Flight_Timings) – 0.351 (No_of_Stop_Overs) + 0.201 (Air_Fare) + 1.081 (Airline's_Frequent_Flyer_Program) - 0.014 (In-flight_services) + 0.238 (Efficacy_of_Ground_services) + 0.096 (Personal_Preference) - 0.042 (Third_Party_Influence) – 0.007 (Aircraft's_Amenities)

Here, D = 1 (High Impact); D = 2-5 (Low Impact)

 

These will help the airline to gauge the impact of factors that influences the consumer decision making behaviour vis-à-vis Airline Quality Ratings (AQRs) factors while booking tickets. So, as to enable the airline’s senior management to make customer driven service design and standard and close the service quality gap that exist between the customer expectation and company’s perception about customer expectation. Thereby, achieving high customer satisfaction, retention rate, positive W-o-M Marketing, brand loyalty etc.

 

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Received on 05.06.2019                Modified on 10.07.2019

Accepted on 31.07.2019           ©AandV Publications All right reserved

Asian Journal of Management. 2019; 10(3):167-175.

DOI: 10.5958/2321-5763.2019.00027.1