Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service quality perspective

EXPLORING THE PROSPECT OF OPERATING LOW COST AND LEGACY

CARRIERS FROM THE SAME MAIN AIRPORT TERMINAL – A SERVICE

QUALITY PERSPECTIVE

MASTER THESIS – NIKHIL MENON (CTIS)

JúriPresidente: Luis Guilherme Picado Santos

Orientador: Maria do Rosário Mauricio Ribeiro Macário

Vogal: Vasco Domingos Moreira Lopes Miranda dos Reis

INTRODUCTORY NOTE AND OBJECTIVES

Boom in the aviation industry –> deregulation in the 70s –> LCC revolution (Southwest followed by Ryanair & easyJet)

LCCs –> business model thriving on cost advantage –> operations from smaller airports (time and cost advantage) –> time and cost advantage (customer and producer) with obvious impact on service quality.

Objective: to explore the prospect of operating low cost carriers and the legacy carriers out of the same main airport terminal, from a service quality point of view.

DATA COLLECTION AND METHODOLOGY Passenger questionnaire survey: service attributes

selected for the study focussing on the aspect of defining service quality in airport terminals (extensive litt review)

Target group of the survey – all passengers who use air as a mode of transportation with special reference to low cost airline customers.

Task: The target group’s opinions on the service attributes to be entered in two broad parameters – Importance & Performance.

Range of scale: multi – point likert scale (1-4) Importance: Least Important (1) to Most Important (4) Performance: Bad Performance (1) to High Performance (4)

DATA COLLECTION AND METHODOLOGY 2 methodologies applied

for the dissertation Importance Performance

Analysis (IPA) The 4 Q’s method

IPA – Martilla & James (1977) – used to measure customer satisfaction levels in a variety of segments. Dissertation Perspective –

assessing customer’s perception of the contribution of each service quality attribute in defining quality in an airport terminal.

Results Interpretation – represented on three approaches to get the maximum coverage into the results obtained – Scale Centered, Data Centered and Median Centered.

DATA COLLECTION AND METHODOLOGY

The 4 Q’s method - QUATTRO team (EC, OGM, 1998a, p99) – development of a European standard configuring of quality factors in an urban mobility system. Dissertation Perspective –

to develop a service quality level matrix for addressing the aspect of quality in airport terminals.

Methodology Assessing customer

perceptions of quality in an airport terminal (IPA)

Assessing quality gaps (satisfaction gap scores) that exist from customers’ perspective ( The 4 Q’s method)

Service Quality Level Matrix – matrix of all possible scenarios.

Synergy – Conflict Analysis

RESULTS & DISCUSSIONS Importance Performance

Analysis (IPA) Analyzing the importance and

performance of each service attribute by means of the mean scores obtained on them through the questionnaire survey – 154 respondents – sample adequate.

Gives a clear picture on the customer perception on service quality in an airport terminal.

Most Imp – Availability of transport modes for commute from the terminal.

Least Imp – Accessibility to retail and concessions.

Highest Performing – Thermal Comfort and Visual Impact

Lowest Performing – Level of Congestion.

Importance Performance

13,33 2,83

23,27 2,79

33,06 2,47

42,84 2,79

52,81 2,60

62,79 2,90

72,78 2,99

82,78 2,80

92,59 2,99

102,53 2,57

112,42 2,86

122,23 2,84

Thermal Comfort (Temperature control)

Seat Availability inside the terminal

Visual impact of the terminal (cleanliness and design)

Availability of choices in food or retail

Availability of trolleys

Accessibility to retail and concessions

Availability of transport modes for commute from the terminal

Time taken to do check - in

Level of congestion (crowding)

Number of working check - in counters

Walking distances inside the terminal

Accessibility to food and beverages

Service Factor

RESULTS & DISCUSSIONS - IPA

IPA (SCALE-CENTERED APPROACH) Plotting each of the attributes into the IPA grid

using the coordinates, the initial IPA grid was formed and depicted above in Figure.

For this grid, scale mean was used as the importance (Y) and performance (X) axes intersection point in accordance with the original IPA framework developed by (Martilla & James 1977).


IPA (DATA-CENTERED APPROACH) The second IPA grid was formed using data means as

the intersection point of the X (performance) and Y (importance) axes.

Data means used were the average of the mean scores of attribute importance and attribute performance.

Evident that the use of the data-centered approach will yield more distinctive results as compared to the scale-centered approach.


IPA (MEDIAN – CENTRED APPROACH) The third IPA grid was formed using the median

value of the mean score of attribute importance and performance respectively as the intersection- point of the X (performance) and Y (importance) axes.

RESULTS & DISCUSSIONS - IPA Some observations from the IPA results

Transition from Quad B to Quad A Big change from “Keep Up the Good Work” to “Concentrate Here” Service Factor 2 (Time taken to do check – in) and Service factor 1 (Availability of

transport modes for commute from the terminal) swing in this manner.

Transition from Quad B to Quad C Shift from “Keep Up the Good Work” to “Low Priority” Service Factor 4 (Number of working check – in counters) swings in this manner but this

is less than A –> B & C –> D.

Transition from Quad D to Quad C Shift from “Possible Overkill ” to “Low Priority” Service Factor 11 (Availability of trolleys) , Service Factor 12 (Accessibility to retail and

concessions) and Service Factor 8 (Thermal Comfort) swing in this manner but this is less than A –> B & C –> D.

Transition from Quad A to Quad D Biggest shift from “Concentrate Here” to “Possible Overkill” – opposing effect Usually a situation that should never arise if done with good level of precision in sample

sizes and also good quality responses. No service factors doing this shift.

RESULTS & DISCUSSIONS - IPAQuadrant Attributes Importance Performance Aseesement Model

A (Concentrate Here)

3, 4 Scale - Centered Approach 2,3,4 Data - Centered Approach

2,3,4,7 Median - Centered Approach

B (Keep Up the Good Work)

1,2,5,6,7,8 Scale - Centered Approach 1,6,5 Data - Centered Approach 1, 5 Median - Centered Approach

C (Low Priority)

10 Scale - Centered Approach 10 Data - Centered Approach

7, 10 Median - Centered Approach

D (Possible Overkill)

9,11,12 Scale - Centered Approach 7,8,9,11,12 Data - Centered Approach 8,9,11,12 Median - Centered Approach

Sensitivity Analysis on the Level of Precision

3% 5% 7% 9% 11% 13% 15%

Sample Size n 1099 398 204 123 83 59 44

RESULTS & DISCUSSIONS - IPA ADEQUACY OF THE SAMPLE SIZE Confidence Interval = 95% Degree of variability = 0.5 Population Size, N = 100,000 Level of Precision, e = 0.05 – 0.1, adopted value

= 0.09 Optimal number of samples required,

But sample size of the questionnaire survey = 154 (> 123).

Sample adequate. Corrections: 40% for non response bias. (Israel

1992) Therefore, the sample size for the questionnaire survey would be 154 + 0.4*154 = 216 (>123)

RESULTS & DISCUSSIONS – THE 4 Q’S METHOD Main aim: Establishing quality criteria that will aid in

setting up a service quality level matrix for defining quality in airport terminals.

Various approaches that addressed service quality studied IPA SERVQUAL SQI The 4 Q’s Method

The 4 Q’s method chosen over the other methods: Overall outlook into the aspect of defining service quality

by addressing both customer and producer perspectives Other approaches utilized in airlines/ airports before;

using the 4Q’s method –> novelty and expansion of horizons in the knowledge base.

RESULTS & DISCUSSIONS – THE 4 Q’S METHOD

THE 4 Q’S METHOD Main task: establishment of

quality criteria – service quality level matrix –> defining quality in airport terminals.

Customer perspective –> Evaluation of satisfaction gap scores = Expected Quality (QE) – Perceived Quality (QP)

One major anomaly –> different ranges of mean value scores evaluated (IPA) Solution – harmonization of

scores. Value functions & value

scores –> least significant attribute gets a value score of 0 & the most significant attribute gets a score of 100.


Analysis of customer needs & further trends satisfied by the IPA conducted earlier which gave an insight into the

needs and wants of the customers as against what they perceive. Establishing quality criteria –> Expected Quality (QE) – mapped on is

synonymous with the Importance criteria of IPA (value scores) – assumption.

most studies addressing service quality take an expectation – perception criteria into consideration. Importance

Expected Quality (QE)

3,33100,0

3,2794,5

3,0675,5

2,8455,5

2,81 52,7

2,7950,9

2,7850,0

2,7850,0

2,5932,7

2,53 27,3

2,4217,3

2,230,0


Thermal Comfort (Temperature control)

Visual impact of the terminal (cleanliness and design)



Walking distances inside the terminal







Service Attribute

0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50


ASSESSMENT OF CUSTOMER SATISFACTION

Availability of transport modes for commute from the terminal Dissatisfaction over the choices

available for commute. Dissatisfaction over costs Dissatisfaction over frequencies

Time to do check – in Dissatisfaction over efficiency of

counter staff Dissatisfaction over number of

working counters Dissatisfaction over queue

management system Level of Congestion

(Crowding) Dissatisfaction over space

available Dissatisfaction over design &

visual aspects of terminal



Number of working check – in counters Dissatisfaction over the efficiency

of check – in staff Walking distances inside the

terminal Dissatisfaction over the space

allocation Dissatisfaction over the terminal

design and visual aspects. Accessibility to food and

beverages Satisfaction over the availability of

F&B – special significance to LCC pax

Thermal Comfort Satisfaction over ambient

temperature inside terminal – very limited effect in defining quality



Seat Availability inside the terminal Satisfaction over the large

number of seats available Satisfaction over the presence

of retail and concessions negating the requirement of seating for long hours

Visual Impact of the terminal Satisfaction over the visual

impact – little role to play in defining quality.

Availability of choices in food & retail Satisfaction over availability

of choices as the distances involved are less than legacy flights.

RESULTS & DISCUSSIONS – THE 4 Q’S METHOD ASSESSMENT OF

CUSTOMER SATISFACTION

Availability of Trolleys Satisfaction over

availability of trolleys since most pax (business or short visit) flying low cost do not carry a lot of baggage –> surplus supply for less demand.

Accessibility to retail and concessions Satisfaction over the

availability of retail and concession – LCC pax expectations are very low –> any presence of retail satisfies LCC pax.

RESULTS & DISCUSSIONS – THE 4 Q’S METHOD Setting up Minimum Performance Thresholds – Service quality level

matrixService

Attribute / Service Level





Walking distances inside

the terminal


Thermal Comfort (Temperature

control)


Visual impact of the terminal (cleanliness

and design)




A All modes at all times. ≤ 15 mins

Terminal capable of taking traffic at all times

Check - in counters good

enough to ensure the

process takes ≤ 15 mins.

Walking distances ≤ 300 m

At a walking distance of 100

m from any point inside the

terminal

Terminal ambient temperature at 23

°c.Seats: Demand : :

1:1 ≥ 4 star rating (Skytrax) ≥ 3 alternatives

Trolleys: Demand : :

1:1

At a walking distance of ≤

200 m from any point inside the

terminal

B

All modes during peak, atleast one (taxi) during the

other times. ≤ 25 mins

Terminal capable of taking traffic at all times except the

peak hours.


enough to ensure the

process takes ≤ 25 mins.




terminal

Terminal ambient temperature at 24

°c.Seats: Demand : :

1:2 3 star rating (Skytrax) 2 alternatives


1:2

At a walking distance of ≥


terminal

C

One mode apart from taxi at peak hours, taxi during the

other times 30-40 mins

Terminal not capable of taking traffic at most times including the peak hours. Long queues


enough to snure the process takes only

between 30 - 40 mins




terminal

Terminal ambient temperature at 25 -

26 °c.Seats: Demand : :

1:3 2 star rating (Skytrax) 1 alternative


1:3



terminal

D One mode (taxi) at all times > 40 mins

Terminal not capable of taking traffic at all times

including the peak hours. Extremely

Long queues

Check - in counters not

good enough to ensure the

process takes < 40 mins

Walking distances ≥ 800 m

At a walking distance

exceeding 300 m from any

point inside the terminal

Terminal ambient temperature

exceeding 26 °c.Seats: Demand : : ≥

1:5 1 star rating (Skytrax) NO alternatives

Trolleys: Demand : : ≥

1:5



terminal


SYNERGY CONFLICT ANALYSIS Main task: Grading each service

attribute against the possible impact that it creates on the research question.

whether the objective of the dissertation can be realized (Synergy) or not (Conflict), keeping in mind the current service attribute.

Availability of transport modes for commute from the terminal Some secondary airports – one

mode of transport to the city (cabs). Even when >1, services don’t suit pax always (greater waiting times and costs) –> SYNERGY

Time to do check – in Main airports – more counters – less

time. Main airports – more baggage –

more time. SYNERGY or CONFLICT depending

on the policies of the airport.

Service Attribute Conflict SynergyAvailability of transport modes for commute from the terminal

Time taken to do check - inLevel of congestion

(crowding)Number of working check -

in counters Walking distances inside

the terminalAccessibility to food and

beveragesThermal Comfort

(Temperature control)Seat Availability inside the

terminalVisual impact of the

terminal (cleanliness and design)


Availability of trolleysAccessibility to retail and

concessions


SYNERGY CONFLICT ANALYSIS

Level of Congestion (Crowding) Always going to be a conflict when

more passengers are involved –> More Congestion –> CONFLICT

Number of working check – in counters Secondary airports – less counters –

less baggage – less time. Main airports – more counters –

more baggage – more time. SYNERGY or CONFLICT depending

on the policies of the airport. Walking distances inside the

terminal Difficult to assess preferences –

higher walking distances is preferred if compensated with ample F&B, R&C – main airports – not friendly for old pax –> SYNERGY












concessions



Accessibility to food and beverages Secondary airports – one license

granted for F&B – space constraints; Main airports – more options for pax –> SYNERGY

Thermal Comfort 23 deg – No real effect in

changing the quality aspect –> SYNERGY

Seat Availability inside the terminal Secondary airports – 1:25; Main

airports – almost 1:1 –> SYNERGY

Visual Impact of the terminal No real effect in changing the

service quality – augurs well for the LCC pax –> SYNERGY












concessions



Availability of choices in food and retail Secondary airports – usually

less licenses granted for F&B, R&C – less choices – move benefits LCC pax –> SYNERGY

Availability of trolleys LCC pax – usually have lesser

baggage – so demand is met by the supply – move has no real effects on quality of service –> SYNERGY

Accessibility to retail and concessions Secondary airports – one license

granted for R&C – space constraints; Main airports – more options for pax –> SYNERGY












concessions

CONCLUSIONS & FURTHER RESEARCH Objective – Exploring the prospect of operating low cost and

legacy carriers from the same main airport terminal from a service quality point of view.

Data collection – pax questionnaire survey – 154 respondents (sample adequate)

Methodologies used to examine these aspects introduced ( IPA & The 4 Q’s method)

Results were analysed for IPA – passenger questionnaire survey – service attributes which play a key role identified – IPA interpretations (grids) represented by 3 approaches.

Quality criteria establishment – various approaches that address service quality were studied – The 4 Q’s method selected – satisfaction gaps ascertained – service quality level matrix established – synergy conflict analysis to address the objective.

Further research – Extension of the study to address producers’ perspectives as well – more clarity; In depth surveys – personal level addressing all stakeholders – eliminates risk of non response.

THANK YOU

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Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service quality perspective