Factors Affecting Customer Preference For Full Service Carriers And Low Cost Carriers Essay.

You have been approached to complete a questionnaire for a student undertaking the Victoria University postgraduate subject, Business Research Methods. Students in paired groups must administer the Final Questionnaire developed by the unit coordinator to Ten (10) people aged over 18 years of age. This exercise forms part of the assessment for the unit.

Please provide your name and signature to certify that the student (named below) has administered the questionnaire to you.
 

Factors considered as indicators of customer preference

This survey aims to provide better insights about what drives customer preference for full service carrier airlines (FSA) and the low cost carrier airlines (LCA). The factors such as brand image, experience quality and satisfaction have been considered as indicators of customer preference.

 The survey is conducted in order to determine the causes behind the rapid growth of the Low Cost Carriers in the airlines industry that is increasing proving to give fierce and competition to the Full Service Carriers (Srisaeng, Baxter, and Wild, 2014).It is therefore of particular interest for the Department of Infrastructure and Transport to understand and hence try to predict as accurately as possible, the perception and preferences of the customers towards the FSA and LCA.

A questionnaire method has been applied to record the responses of people with regard to their experiences with domestic flights. It constitutes of various close ended as well as open ended questions. Consequently the responses have been documented and summarized to provide the findings in this report.

The questionnaire includes both open ended and closed ended questions. The questions that have been pitched are aimed to reveal information relating to three broad factors. Firstly, the experience of the subject to the most recent domestic flight that he or she had boarded. Secondly, the factors which influence the subject’s preference for an airline. Thirdly, the feedback of the flier with regard to the experience (Whyte and Lohmann, 2016.). The questionnaire fields a set of questions asking to rate the airline the subject had most recently boarded on various factors spanning from customer service, facilities, boarding time among others as well as indicate the compliance of the subject on various statements with respect to the airline’s performance and attributes.

Victoria University has conducted a survey on full service airlines and low cost airlines. This study has been conducted to evaluate the perception of customer about their chosen airlines. Ten customers have been chosen randomly. It is essential to know which domestic flight they took recently between full service airline and low cost airline. It is also necessary to know the reasons behind their choice (Arblaster, 2014).Occupations of the customers have been noted to evaluate who travels most by flight. They are requested to rate their level of experience with some attributes such as unique experience, different experience from the previous flight experience and something new experience of in-flight entertainment facilities( Prideaux and Whyte,  2014.). It would help to calculate which airline provides better experience with respect to these attributes. It is also necessary to know whether the ticket prices of these airlines were reasonable. It would be great to compare among the service process of airlines (Homsombat, Lei, and Fu, 2014). It is also important to know whether they recommend these airlines .This study will also try to find if there is an association between professions of the customers and their chosen airlines.  An approximate idea will be found why people travels in airlines (Lim  and Tkaczynski, 2017). The aim of the study is to find the factors that attract the customers to choice these airlines. It is also important to find between Qantas and Virgin Australia full service airlines, which one is better (Arjomandi and Seufert, 2014). It is necessary to find which low cost airline is preferable.

Evaluation of perceived customer preference about their chosen airlines

The scale of the ratings on the various aspects of the experience for the flights are taken to be between one to five where one is minimum and five maximum. The scores on the factors have been summed to get an overall score for the flight experience. The maximum score possible is then 50 as there are 10 components to the score based off the questionnaire (Bryman, 2015). Factors which they found to be significant in influencing their choice of airlines have also been considered and the scale of those ratings are taken to be one to five as well. Sum of these scores gives an overall measure of expected experience. The maximum score possible is then 100 as there are 20 components to the score based off the questionnaire. The perception of the flier in terms of facilities provided by the airlines is then considered as scores rated between one and five. The overall score for perception towards facilities is then calculated from the sum which can have the maximum value of 75 as there are 15 components to the score based off the questionnaire. Additionally there are scores of compliance which rate the willingness of the subjects to use the airline again, recommend it to another, provide positive feedback and consider it as first choice. These four responses are then compared with the scores to see any tentative association (Healey, 2014).

Based on Question 3 of the questionnaire it has been seen that affordability is the leading reason for the subjects to choose LCAs over FSAs. The figure 1 shows the findings.

Again, it has also been observed that Low cost airlines (low cost airlines) have received higher scores from the subjects in terms of their willingness to fly by the same mode again in comparison to Full service airlines.

However, it has been observed that full service airlines scored better than low cost airlines in all other cases as seen in table 2, figure 2, table 3, figure 3, table 4 and figure 4.

Table 3

Figure 5

Considering the net experience of the subjects in their last domestic flight, the scores for each airline considered are as follows:

It is to be determined degree to which the observed scores and the scores expected by the fliers are being met. The positive deviation from the expected scores are to be considered and it is to be seen whether the deviation is more or less same for full service airlines and low cost airlines or not. A two sample t-test has been carried out for the differences in scores for the two groups of observations, namely full service airlines and low cost airlines (Weiss and Weiss, 2012). No significant difference could be identified.

Inclusion of open ended and closed ended questions in the survey

Table 6

Table 6 shows the results of the two sample t-test. The hypothesis to be tested against the tentative null, states that there is significant difference between low cost carrier airlines and full service carrier airlines in terms of the deviation of expected performance score of the airline by the flier from the overall observed performance of the airline (Weiss and Weiss, 2012). The alternate however fails to reject the tentative null which states that there is no difference between the two groups.  

It is to be noted that even though low cost airlines are seen to be less preferred in terms of their service, fliers show an affinity towards low cost airlines. Additionally, it seems that fliers are well aware of what to expect from their choice of airlines as apparent from Table 6. Therefore, there must exist some other factors which are driving fliers to choose low cost airlines.

Figure 6 shows the expected flight experience of fliers choosing low cost airlines and full service airlines in comparison to the actual experience.

Probability of a person flying for business purpose to fly by full service airline is observed to be same as that of low cost airline. Probability of a person flying with friends and family is seen to be higher at 0.75 for low cost airline than full service airline at 0.25. A frequent flier is defined as a person observed to have travelled at least twice in the last six months. Probability that an infrequent flier would choose a low cost airline is seen to be lower at 0.25 than that of one to choose a full service airline at 0.75 (Weiss and Weiss, 2012).So it seems that people have been opting for LCAs for domestic flights mainly due to how affordable it is. It is suggested that facilities are the main driving factor for a person to choose FSA over LCA and since domestic flights cover less distance, people favor LCAs over FSAs while travelling alone or frequently. The claim is supported by the following figure which shows the distribution of feedback score (which has been calculated from the scores obtained by answering the questions in question 8 of the questionnaire) over the fliers grouped as per the number of times they travelled in the last six months.

Conclusions

It was determined that the fliers are more inclined to fly using low cost airlines over full service airlines. Full service airlines are however seen to be rated higher in terms of overall satisfaction as suggested by their feedback ,willingness to recommend to other fliers and as good options and inclination to consider the airlines as first choice. Additionally, the probability of a flier travelling for business purpose to choose a full service airline is seen to be same as that for low cost airline. However fliers flying alone is seen to have larger probability of flying by full service airlines rather than low cost airlines, for which the probability of flying with friends and family is seen to be larger.

References

Arblaster, M., 2014. The design of light-handed regulation of airports: Lessons from experience in Australia and New Zealand. Journal of Air Transport Management, 38, pp.27-35.

Arjomandi, A. and Seufert, J.H., 2014. An evaluation of the world's major airlines' technical and environmental performance. Economic Modelling, 41, pp.133-144.

Bryman, A. 2015. Social research methods. Oxford university press.

Healey, J. F. 2014. Statistics: A tool for social research. Cengage Learning.

Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-airlines strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and Transportation Review, 63, pp.1-16.

Lim, S.S. and Tkaczynski, A., 2017. Origin and money matter: The airline service quality expectations of international students. Journal of Hospitality and Tourism Management, 31, pp.244-252.

Prideaux, B. and Whyte, R., 2014. Implications for destinations when low-cost carrier operations are disrupted: the case of Tiger Airlines Australia. In Advances in Hospitality and Leisure (pp. 99-118). Emerald Group Publishing Limited.

Srisaeng, P., Baxter, G.S. and Wild, G., 2014. The evolution of low cost carriers in Australia. Aviation, 18(4), pp.203-216.

Weiss, N.A. and Weiss, C.A., 2012. Introductory statistics. London: Pearson Education.

Whyte, R. and Lohmann, G., 2016. Airline business models. Air Transport Management: An International Perspective, p.107.