Discuss about the Service Quality And Customer Satisfaction In The Airline Industry.
Background of industry and the company
The network of transportation is growing widely to cope up with the high demand and increasing population. In this situation, Aviation industry is one of the fasted growing transportation industry that provides a sophisticated transportation service while covering a large distance in very short period (Albers et al., 2017). In this report the GriffJet Airlines has been chosen to examine the industrial condition, growth opportunity and management constrains as well as considerations. The report will investigate three unbundled flight products of GriffJet Airlines, namely Ticket exchange fees, Baggage fees and Seat reservation fees while considering both consumer and industry perspectives.
The background of this company and the airline industry in its operating zone will be discussed at the initial part of the paper. The situational analysis of the company will be analysed with the help of SWOT analysis tool. The industry level strategy will be examined with Porters 5 Force tool. Then the appropriate strategy for managing changes will be explained. The purpose of the report is to investigate the unbundled flight products of GriffJet Airline and to provide appropriate recommendations to the senior management regarding the Ticket exchange fees, Baggage fees and Seat reservation fees.
GriffJet Airline Company was established in 2000. GriffJet Airlines owns and operates Flokker aircraft models including Flokker 50 Turboprop, Flokker 70, flocker 100and Boeing 717’s jet aircrafts. Griffjet operates completely as a domestic airline within the region of New South Wales, Sydney, Hobart, Tasmania and many other part of the Australia under a scheduled Flight plan. The Hub Airport of the GriffJet Airline is Darwin International Airport. The company also provides Charters throughout Australia including the Inbound and domestic tourism, corporate flight, Sports team travel, Educational Group travel and others. Therefore, the consumer base of GriffJet is huge and diverse where individual customer group has their own perspective and expectation from Airline product and services. The company has individual pricing strategy for Ticket exchange fees, Baggage fees, Seat reservation fees, which are influenced by the service groups, described earlier.
The Australian airline and aviation industry have experience a major change in their domestic operation in the past decade. The imposed ATC rules and regulation and altered flight path planning have changed the behavior of international aviation companies regarding their operation of both inbound and outbound international flight in Australia. At the same time, the Qantas, Virgin group and other international airlines are taking capturing many domestic airline company to increase their market share in southern hemisphere as well (Baker, Merkert & Kamruzzaman, 2015). The domestic operation of Australian airline is chiefly dependent on the national and international tourism industry while operating with domestic and inbound flight. Apart from that, individual States imposed different restriction on Air Traffic Control and Flight Path Management, which caused additional investment for legal compliance and licensing operation for domestic and inbound flight operation. Consumers are becoming more price sensitive, especially for Ticket exchange fees, Baggage fees and Seat reservation fees (O'Connell & Williams, 2016). As a result of these dilemmas GriffJet faced a huge drop in their profit margin that influence their annual revenue generation as well.
To recommend GriffJet for their sustainable growth and profit enhancement, internal and external situational analysis is essential. The internal strength and weakness of the company can be identified through internal situational analysis. On the other hand, through external situational analysis the industry condition, political environment, economical condition can be indentified. For the situational analysis of GriffJet Strength, Weakness, Opportunity, Threat or SWOT analysis tool has been used in this report.
· Market experience of more than 17 years
· Wide and diverse consumer base
· Segmented service packages for individual group of consumers, namely Civil, Corporate, Sorts, Education, Tourism and others
· The service quality is poor
· Lack of Marketing and Promotional activities
· The high employee turnover and financial fluctuation
· Increasing the utilisation of advance technology can minimise the operational cost and increase the return on investment
· Reducing the Ticket price while maintaining their service quality
· Utilising social media based promotion to increase their brand equity
· The ever changing interstate level flight rules and regulations can cause distorted ATC incorporation
· The increasing number of subsidiaries of international airlines
One of the major strengths of GriffJet is its market experience. The company has the market experience of more than 17 years. Apart from that GriffJet has wide and diverse consumer base including the Civil, Corporate, Sorts, Education, Tourism and others. The company has strong influence on various small to medium level business groups due to have a wide customer base specially in B2B purpose.
One of the major weaknesses of GiffJet is its poor service quality. The high employee turnover and financial fluctuation are weakening the business operation of the company. It also influences the operational expanse that defines the service quality of any airline company. Therefore, the service quality of GriffJet not adequate to compete the subsidiary companies of international airlines. Apart from that, the Marketing and Promotional activities of GriffJet are poor and enven partially challenged. In the last 5 years, the company has not adopted any advance promotional and marketing strategy.
Depending on the industrial value and scope of development the company has many opportunities. GriffJet can increase the utilisation of advance technology to minimise their operational price and to increase the return on investment. While reducing their cost, GriffJet can reduce their Ticket price while maintaining their service quality as well. To increase their market reputation and brand equity Griffjet can also utilise social media based promotional activities (Forsyth, 2017).
The ever-changing interstate level flight rules and regulations can cause distorted ATC incorporation in the traditional plight path development plan. It can cause further increase is operational cost as well as the price of the services. Apart from that, the increasing number of subsidiaries of international airlines is causing major threat (Whyte, Prideaux & Sakata, 2012).
In order To recommend GriffJet for their sustainable growth and profit enhancement, identifying the industry level strategies is essential. The competitiveness and the regulatory factors can be analysed Porters 5 Force analysis within the Airline industry of Australia. The five main components of porters 5 force are Rivalry within industry, Threat from substitute, Threat from new Entrees, Bargaining power of the suppliers and Bargaining power of the Customers (Sarker, Hossan & Zaman, 2012).
Air Link, Airlines of Tasmania, Airnorth, Alliance Airlines, Cobham Aviation Services Australia, Fly Corporate, JetEx, Jetstar Airways, JetGo Australia, Virgin Australia Regional Airlines are the major competitors of the GriffJet Company. Most of these companies were established before GriffJet. Apart from that, a large number of airline companies are subsidiaries of strong international airlines such as Qantas, Virgin Airlines and others. The financial background and market experience of the competitors have made the rivalry within the aviation industry significantly High (Zhang, 2015).
Many domestic independent airlines in Australia serve for either civil flight or corporate flight or tourism industry. Some of them are also active in cargo transportation. However, GriffJet is a very rare independent domestic airline company who serves for Inbound and domestic tourism, corporate flight, Sports team travel and Educational Group travel. Therefore, considering the versatile business activities the threat from substitutes are Low.
Starting a business in Aviation industry requires a huge amount of assets and business capital as well as significant political influences (O’Connell, 2016). At the same time, after the intervention of the subsidiaries of international Aviation groups the Australian aviation industry has become more difficult for any novice company. Therefore, the threat form new entrees is very Low.
After the intervention of subsidiary companies of globalised aviation companies, the perception of negotiable price has been changed for the suppliers. These companies have string financial base and market reputation by default. Therefore, the can grow supplier interest with better price and band equity. In this situation being the domestic independent aviation company GriffJet faces a significantly High bargaining power of the supplier.
Due to the high financial support and corporate establishment, the subsidiary companies of international aviation groups are offering higher quality service in reasonable low price. The aim of their business is to capture the larger area of consumer base in Australian domestic aviation (O'Connell & Williams, 2016). Therefore, the existing and potential customers have lots of options to choose from. Hence, the bargaining power of the customer in Australian aviation industry is High.
In order to reduce the employee turnover rate that is continuously reducing the service quality GriffJet airline company should utilise strategic management for change. For altering the operation cost of service while increasing the promotional activity the company has to do lots of amendment in their internal operation and organisation structure. In strategic change management GriffJet Airline Company has to consider the Force field analysis and the Implementation procedure of change management.
In force field analysis, the company can identify the drivers for change and the resistance force within the organisation. Along with the identification process, measuring the magnetite of these forces is also essential to maintain an equilibrium condition
Figure1: Force Field Analysis Model
Source: (Bamber, 2018)
As per the above description, the major drivers of the changes are high employee turnover, requirement of advanced promotional activity, development of strategic pricing strategy, maintaining strong consumer relationship and Reducing the operational Cost. At the same time the potential resistance force can be the rigid perspective employees, weak employee-employer relationship, lack of expertise within the workforce and others. In order to implement the proposed changes Griffjet has to reduce the resistances against the proposed change.
In the current situation, GrifJent needs a simplistic and effective change management process to reduce the resistance and implement the proposed changes. To do so, the company should also ensure the situational leadership approach that will help to execute the Lewin’s Change Management Model.
Figure2: Lewin’s Change Management Model
Source: (Duval, 2013)
As per the change management model GriffJet should follow the Unfreeze, Change and Refreeze phases respectively. In the Unfreeze phase the mission vision and the purpose of the proposed change should be well established in the workforce. In Change phase, the required activities should be executed with proper evaluation and monitoring. In Refreeze phase, the management has to ensure that the implemented changes are sustainable and efficient as well.
As per the above discussion, it can be said that, Aviation industry is one of the fasted growing transportation industry that provides a sophisticated transportation service while covering a large distance in very short period. One of the major strengths of GriffJet is its market experience of more than 17 years. The company needs to reduce their high employee turnover, incorporate social media based promotional activity, develop strategic pricing strategy while maintaining strong consumer relationship and reducing the operational Cost. Implementing new pricing strategy in Ticket exchange fees, Baggage fees and Seat reservation fees will be effective to increase their competence level. A large number of airline companies are subsidiaries of strong international airlines such as Qantas, Virgin Airlines and others that increase the financial background and market influence of these companies.
From the above discussion, it can be concluded, that starting and maintaining a business in Aviation industry requires a huge amount of assets and business capital as well as significant political influences. In order to sustain their business and market share with increasing profit, GriffJet needs a simplistic and effective change management process to reduce the resistance and implement the proposed changes. In order to implement the proposed changes Griffjet has to reduce the resistances against the proposed change.
- Ticket exchange fees:
Griffjet should reduce their ticket exchange fees by reducing their operational cost in order to attract more customer towards them
- Baggage fees:
GriffJet is a Domestic Airline company that deals with low amount of baggage transportation. The company has to deal with a large amount of baggage for inbound and tourism flight. Therefore, increasing the baggage fees will not change their reputation within consumer.
- Seat reservation fees
Griffjet should reduce their domestic seat reservation fees by reducing their operational cost in order to attract more customers towards them. However they can increase the seat reservation for inbound flight
Reference and Bibliography:
Albers, S., Baum, H., Auerbach, S., & Delfmann, W. (2017). Strategic management in the aviation industry. Routledge.
Baker, D., Merkert, R., & Kamruzzaman, M. (2015). Regional aviation and economic growth: cointegration and causality analysis in Australia. Journal of Transport Geography, 43, 140-150.
Bamber, G. J. (2018). Low-cost airlines’ product and labor market strategic choices: Australian perspectives. Members-only Library.
Borenstein, S., & Rose, N. L. (2014). How airline markets work… or do they? Regulatory reform in the airline industry. In Economic Regulation and Its Reform: What Have We Learned? (pp. 63-135). University of Chicago Press.
David Mc A, B. (2013). Service quality and customer satisfaction in the airline industry: A comparison between legacy airlines and low-cost airlines. American Journal of Tourism Research, 2(1), 67-77.
Duval, D. T. (2013). Critical issues in air transport and tourism. Tourism Geographies, 15(3), 494-510.
Forsyth, P. (2017). The regulation and deregulation of Australia's domestic airline industry. In Airline Deregulation(pp. 48-84). Routledge.
Gregson, S., Hampson, I., Junor, A., Fraser, D., Quinlan, M., & Williamson, A. (2015). Supply chains, maintenance and safety in the Australian airline industry. Journal of Industrial Relations, 57(4), 604-623.
O’Connell, J. F. (2016). Airlines: an inherently turbulent industry. In Air Transport in the 21st Century (pp. 109-146). Routledge.
O'Connell, J. F., & Williams, G. (2016). Ancillary revenues: The new trend in strategic airline marketing. In Air Transport in the 21st Century (pp. 195-220). Routledge.
Sarker, M. A. R., Hossan, C. G., & Zaman, L. (2012). Sustainability and growth of low cost airlines: an industry analysis in global perspective. American Journal of Business and Management, 1(3), 162-171.
Starkie, D. (2016). Aviation markets: studies in competition and regulatory reform. Routledge.
Whyte, R., Prideaux, B., & Sakata, H. (2012). The evolution of Virgin Australia from a low-cost carrier to a full-service airline–Implications for the tourism industry. In Advances in hospitality and leisure (pp. 215-231). Emerald Group Publishing Limited.
Williams, G. (2017). The airline industry and the impact of deregulation. Routledge.
Wu, H. C., & Cheng, C. C. (2013). A hierarchical model of service quality in the airline industry. Journal of Hospitality and Tourism Management, 20, 13-22.
Zhang, Y. (2015). International arrivals to Australia: Determinants and the role of air transport policy. Journal of Air Transport Management, 44, 21-24.
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