Strategies for enhancing true loyalty of airline passengers and employees through customer-oriented service employees: a study of the low-cost airline business in Thailand

Abstract

Despite the continuous growth in the demand for low-cost airlines (LCAs) in Thailand, airline profits are less impressive than they may seem due to several challenges especially intense competition and price wars, the two key factors likely to have an impact on LCAs’ earnings and competitiveness. Although proactive strategies have been devised to address the issue, they are unable to create sustainability and maintain customer retention. This study employed the concept of customer orientation of service employee (COSE) that could increase the service values to enhance true passenger loyalty. True loyalty of LCA service employees was also studied because they served a key role in delivering service values to passengers. The purposes of this study were 1) to study the customer orientation of LCAs’ service employees in Thailand and their true loyalty, 2) to study perceived COSE of LCA passengers in Thailand and their true loyalty, 3) to assess the difference between perceived COSE of LCA service employees and passengers, 4) to formulate appropriate strategies for enhancing true loyalty of LCAs’ passengers and service employees in Thailand through customer-oriented service employees.

Mixed methods research was employed in this study. Two sets of self-administered questionnaires were used as the tools of quantitative research. While the first set of questionnaires was distributed to LCA service employees, the second set was distributed to LCA passengers. 373 completed questionnaires were collected from LCA service employees, and 327 completed questionnaires were collected from LCA passengers. In addition, a semi-structured interview was conducted to collect qualitative data from five interviewees.

Descriptive statistics (frequency, percentage, mean and standard deviation) and inferential statistics (MANOVA and multiple regression analysis) were employed to analyze the quantitative data. The qualitative data was also analyzed using content analysis.

The results revealed that overall 1) LCA employees in Thailand rated the firm-level and individual-level COSE at a high degree, and the degree of their true loyalty was also relatively high, 2) LCA passengers perceived the COSE at the firm and individual levels and true passenger loyalty at a relatively high degree, 3) LCA passengers perceived the firm-level and individual-level COSE lower than the degree that LCA service employees had delivered, 4) three components of organizational socialization, namely commitment, climate for service, and motivational direction were shown to enhance LCA employees’ perceived firm-level COSE, 5) three components of person-to-person interaction, namely motivation to serve, social skill and technical skill) positively influenced the perceptions of LCA employees toward the individual-level COSE. Three personality traits (need for activity, agreeability, conscientiousness) also had positive effects on the perceptions of service employees toward the individual-level COSE while openness for experience negatively affected perceived COSE, 6) cultivating the firm-level and individual-level COSE by LCAs in Thailand could enhance true employee loyalty, 7) LCAs in Thailand were required to emphasize responding to their ground services (airport experience), service quality and safety of airlines. These factors had positive effects on LCA passengers’ perceived firm-level COSE. Moreover, two components of overall service quality (namely, servicescape and employee service performance) also positively affected COSE, 8) four components of person-to-person interaction including social skill, decision-making authority, motivation to serve and technical skill positively affected LCA passengers’ perceived individual-level COSE. Additionally, Four components of customer-oriented behaviors (namely, need to pamper, need for a personal relationship, need to deliver and need to read customers) also had positive effects on the individual-level COSE, and 9) enhancing the perceptions of LCA passengers toward the firm-level and individual-level COSE could enhance their true loyalty.

Lastly, this study presents the appropriate strategies for enhancing true loyalty of Thai LCA passengers and employees through customer-oriented service employees. The overall strategies and action items were verified by a panel of experts. The final strategies were categorized into four main groups based on LCAs’ relating functional activities: recruitment and selection, training and HR development, HR management, and service management and support units.

Recommendations, limitation of this study, suggestions for further study and conclusion are also presented in the last chapter.