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Service Quality in the Airline Industry: Comparison Between

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SERVICE QUALITY IN THE AIRLINE INDUSTRY:

COMPARISON BETWEEN TRADITIONAL AND LOW-COST AIRLINES

TAE-HONG AHN* and TIMOTHY JEONGLYEOL LEE†

*Department of Tourism, Hanyang University, Seoul, Korea

†School of Tourism, University of Queensland, Brisbane, QLD, Australia

The aim of this study is to assess service quality in the airline industry from the customer’s perspec-
tive, explore how perceived service quality affects customer satisfaction and loyalty-related behav-
ior, and whether the factors affecting service quality, customer satisfaction, and loyalty differ be-
tween full-service and low-cost airlines. The data were collected through questionnaires based on
previous research and 153 were completed by passengers who had traveled by air in the previous 6
months. Traditional airline passengers have significantly higher perceived service quality and cus-
tomer satisfaction. However, there is no significant difference in loyalty-related behavior. Overall
service quality has significant influence on customer satisfaction in both traditional and low-cost
airlines. However, the effect of service quality on behavioral intentions is only significant for tradi-
tional airlines. The results suggest that management of traditional and low-cost airlines should main-
tain service quality as it affects customer satisfaction.

Key words: Service quality; Airline industry; Low-cost airlines; Customer loyalty

Introduction to determine fares. Competition is fierce (Hanlon,

2007), and research has shown that, when all other
Service industries are the largest contributors to things are equal, passengers respond most to quali-
employment and gross domestic product in most ty of service (Lovelock & Weinburg, 1993). There-
countries (Looy, Gemmel, & Dierdonck, 2003). fore, managing quality of service has become the
Hence, the delivery of high service quality has be- top priority in the airline industry (Wells & Wens-
come a marketing priority for service firms as a veen, 2004).
way to achieve success (Hoffman & Bateson, One of the significant issues in the current airline
2002). This is particularly true in the airline indus- industry is the growth of low cost airlines (Atalik &
try, an extremely competitive industry. The US Özel, 2007). They compete on their low cost, and
Airline Deregulation Act of 1978 gave airlines are characterized by point-to-point short-haul trav-
freedom both to fly where and when they want, and el, no in-flight meals, and direct sales. These air-
Address correspondence to Timothy Jeonglyeol Lee, Ph.D., School of Tourism, University of Queensland, Brisbane, QLD 4072 Austra-
lia. Tel: +61 7 3346 6246; Fax: +61 7 3346 8716; E-mail: timothy.lee@uq.edu.au

TA16-5_600.indd 1 11/17/2011 4:11:25 PM

 2 AHN AND LEE
lines are not using service quality for competitive
advantages, but instead appeal to cost-conscious
market segments (Graham & Vowels, 2006). Air-
line managers need to know which factors affect
passengers’ choice of airlines. This study assesses
service quality in the airline industry from the cus-
tomer’s perspective. The study explores how per-
ceived service quality affects customer satisfaction
and customer loyalty-related behavior. Moreover,
it identifies whether the factors affecting service
quality, customer satisfaction, and loyalty differ
between full-service and low-cost airlines.
Service Quality in the Airline Industry
For airline companies, delivering high service
quality has become a marketing requisite as com-
petitive pressures increase (Doganis, 2006). Among
competitive variables for airlines such as fares, fre-
quency, equipment, service quality, market access,
and advertising, service quality is the most highly
emphasized competitive variable (Aksoy, Atilgan,
& Akinci, 2003). It is the service quality given to
customers that differentiate an airline among its
competitors, determine market share, and ultimate-
ly profitability (Martin, Roman, & Espino, 2008).
Most major traditional airlines have taken this ap-
proach (Witt & Muhlemann, 1994). However, to
deliver better services, airlines need to understand
passengers’ needs and expectations (Aksoy et al.,
2003) because customers’ expectations provide a
standard against which they judge performance
(Walker & Baker, 2000).
Service quality assessment from the airline cus-
tomers’ view point first appeared in the dissertation
of Keanery (1986), and the first publication on air-
line service quality appeared in 1988 by Gourdin
(Young, Cunningham, & Lee, 1994). Fick and
Ritchie (1991) measured perceived service quality
within several service industries, including the air-
line industry, using the SERVQUAL instrument
while Gourdin and Kloppenborg (1991) used in-
dustry-based service quality measures. However,
low-cost airlines do not offer high quality service to
customers, thereby minimizing their operating cost
and offer low fares. In other words, these airlines
are not using service quality for competitive advan-
tage (Jarach, 2004). Airlines started to focus on
how improvements in service quality affect profit-
TA16-5_600.indd 2
ability, also to examine whether perceived service
quality is a prime driver for customer satisfaction
and loyalty. Airline managers need to know which
factors affect passengers’ choice of airlines and
which attributes really do matter to satisfaction and
loyalty (Martin et al., 2008).
Methodology
A self-administered questionnaire was selected
for this study. The questionnaire was designed on
the basis of previous work: a) a refined SERVQUAL
to fit the airline industry as used by Gilbert and
Wong (2003); and b) airline industry-based dimen-
sions from the work of Young et al. (1994). The
questionnaire consists of three parts. Part A con-
tained questions regarding respondents’ demograph-
ic profiles and their latest flight experience. Re-
spondents are asked which kind of airline they used
(traditional or low-cost airlines), the purpose of the
trip, the number of times they travel by air every
year, as well as their age group and gender. Part B
consisted of 15 questions that measure the airline’s
service quality from the passenger’s point of view.
It includes the five SERVQUAL dimensions: Tan-
gibles, Reliability, Responsiveness, Assurance, and
Empathy, with each dimension having three ques-
tions. Part C examined the overall assessment of
airline service. It included overall perception of
service quality, level of satisfaction, and future be-
havioral intentions (intention to reuse and recom-
mend to friends and family). Questions in Parts B
and C used a 7-point Likert scale.
The target population was people who have trav-
eled by air in the previous 6 months. These passen-
gers are more likely to remember their perceptions
of service quality and flight experience. Nonprob-
ability sampling, specifically convenient sampling,
was chosen since it is less expensive. The field sur-
vey was conducted in July 2008 in central London
and London Gatwick airport, United Kingdom. A
total of 153 useful questionnaires were collected.
Hypotheses Development
Based on the objectives of the study, the follow-
ing seven hypotheses were formulated.
H1: Service quality dimension “Reliability” has a
positive influence on customers’ overall per-
ception of service quality.
11/17/2011 4:11:25 PM
 SERVICE QUALITY IN THE AIRLINE INDUSTRY 3

H2: Service quality dimension “Assurance” has a equation for a straight line (Hair, Anderson, Ta-
positive influence on customers’ overall per- tham, & Black, 1998).
ception of service quality.
H3: Service quality dimension “Tangibles” has a Findings of the Study
positive influence on customers’ overall per-
Of the 153 respondents, 81 were female and 72
ception of service quality.
male; 44% of the respondents were aged between
H4: Service quality dimension “Empathy” has a
25 and 34, 20% under 25 years old, 22% from 35 to
positive influence on customers’ overall per-
44 years old, 9% from 45 to 54, and 5% were over
ception of service quality.
54 years old. Eighty respondents had used tradi-
H5: Service quality dimension “Responsiveness”
tional airlines for their latest air travel and 73 low-
has a positive influence on customers’ overall
cost airlines. Sixty-five percent of the respondents
perception of service quality.
traveled for leisure whereas 18% were visiting
H6: Customers’ overall perception of service qual-
friends or family, 13% for business, and 4% for
ity positively affects customer satisfaction.
other reasons such as education, attending a fair,
H7: Customers’ overall perception of service qual-
etc. Respondents who had traveled by air once in
ity positively affects customers’ future behav-
the last 12 months represented 24%, 20% had trav-
ioral intentions.
eled by air twice, 24% and 16% had traveled 3 and
4 times, respectively, and 16% more than four
Figure 1 describes the relationship between vari-
times.
ables based on the developed hypotheses.
Data collected from questionnaires were ana-
Descriptive Statistics of Service
lyzed by SPSS 16.0 for Windows software pack-
Quality Dimensions
age. Before analyzing the data, Cronbach’s alpha
was used to test reliability of data (Sekaran, 2003). Table 1 shows the mean score of each item of the
The closer Cronbach’s is to 1, the higher the inter- “Service Quality” dimensions for traditional and
nal consistency reliability (Pallant, 2005). All sev- low-cost airlines.
en hypotheses were tested by multiple regression For “Tangibility,” all three mean scores for tradi-
analysis. Multiple regression analysis is a statistical tional airlines were higher than low-cost airlines.
technique that analyzes the linear relationship be- The lowest score was for comfortable in-flight
tween a dependent variable and multiple indepen- seats. When the difference between traditional and
dent variables by estimating coefficients for the low-cost airlines was tested by independent sam-

Figure 1.  Relationship between variables of the hypotheses.

TA16-5_600.indd 3 11/17/2011 4:11:29 PM

 4 AHN AND LEE

Table 1
Descriptive Statistics of Service Quality Dimensions

Dimension Traditional Low-Cost

Tangibility
  Q1: The in-flight facilities and interiors of the airline were clean. 5.15 4.44
  Q2: The airline had comfortable in-flight seats. 4.28 3.21
  Q3: Employees of the airline appeared neat and tidy. 5.35 4.15
Reliability
  Q4: The airline had on-time departure and arrival. 5.40 4.62
  Q5: The airline provided good ground/in-flight services consistently. 5.00 4.14
  Q6: The airline performed the service right the first time. 5.30 4.36
Responsiveness
  Q7: The airline had efficient check-in and baggage handling service. 4.73 4.14
  Q8: Employees of the airline gave you prompt service. 5.25 4.19
  Q9: Employees of the airline were always willing to help you. 5.08 4.10
Assurance
  Q10: The airline made you feel safe. 5.18 3.62
  Q11: Employees of the airline had the knowledge to answer your questions. 5.00 4.10
  Q12: Employees of the airline were polite. 5.23 4.49
Empathy
  Q13: Employees of the airline gave you individual attention. 4.33 3.74
  Q14: Employees of the airline understood your specific needs. 4.65 3.95
  Q15: The airline had convenient flight schedules and enough frequencies. 4.88 4.12

Values are means, measured on a 7-point Likert-type scale.

ples t-test, there were significant differences for all
items (sig. value = 0.000). As illustrated in Table 1,
traditional airlines showed higher mean scores than
low-cost airlines for all three items of “Reliability.”
Both had highest mean score for “on-time depar-
ture and arrival” and lowest for “providing good
service consistently.” Again the differences of
mean scores were significant. The mean scores of
traditional airlines for all three items of “Respon-
siveness” were higher than low-cost airlines and
the differences were significant. Traditional air-
lines had the lowest mean score for “efficient check
in and baggage handling service” and highest mean
score for “prompt service.” On the other hand, low-
cost airlines had the lowest mean for “willing to
help.”
For “Assurance,” the mean scores of traditional
airlines were higher than low-cost airlines and the
difference was statistically significant. In tradition-
al airlines, “polite” had the highest mean score and
“employees have knowledge to answer” the lowest.
Low-cost airlines passengers showed the lowest
agreement with “Safe” and the highest for “Em-
ployees are polite.” All mean scores for traditional
airlines were significantly higher than low-cost air-
lines for “Empathy.” Both airlines had the lowest
score for individual attention and the highest for
convenient schedule. Low-cost airline passengers
had the lowest perception on “Tangibles” whereas
traditional airline passengers on “Empathy.” Both
traditional and low-cost airlines had the highest
agreement on “Reliability.”
Descriptive Statistics of Overall Assessment
Traditional airlines had the highest mean score
for overall service quality whereas low-cost air-
lines had the lowest mean scores for all four items.
This result supports the idea that most traditional
airlines set good service quality as their top priority
while low-cost airlines focus on other factors.
Among the four assessment items for low-cost air-
lines, the highest was “intention to reuse.” This
suggests that low-cost airline passengers had inten-
tions to reuse even though they had relatively low
perceived service quality and satisfaction. The dif-
ferences between traditional and low-cost airlines
were statistically significant for “Service Quality”
and “Customer Satisfaction” (sig. value = 0.000).
However, the difference was not significant for be-
havioral intentions as the sig. value was over 0.05.
Cronbach’s alpha value was 0.78 (Tangibles), 0.82
(Reliability), 0.87 (Responsiveness), 0.90 (Assur-
ance), and 0.71 (Empathy). Cronbach’s alpha coef-

TA16-5_600.indd 4 11/17/2011 4:11:29 PM

 SERVICE QUALITY IN THE AIRLINE INDUSTRY
ficient suggests good internal consistency reliabili-
ty. Thus, there was no need to remove any item to
improve reliability.
Hypotheses Testing
Relationship Between Dimensions
and Service Quality
The five service quality dimensions were set as
independent variables and “overall service quality”
as the dependent variable. The regression analysis
for traditional and low-cost airlines was conducted
separately and the results compared. The regression
was statistically significant (p = 0.000). The R2 val-
ue tells how much of the variance in the dependent
variable is explained by the model (Pallant, 2005).
This model explained 81% of the variance in ser-
vice quality. Only one independent variable, “As-
surance” (sig. value = 0.000), makes statistically
significant unique contribution to overall service
quality.
From the multiple regression analysis between
SERVQUAL dimensions and perceived service
quality for low-cost airlines, it was found that the
two independent variable, “Tangibles” and “Assur-
ance” (sig. value = 0.000), make statistically sig-
nificant unique contributions to overall service
quality. The other three dimensions do not have
statistically significant influence on service quality
in low-cost airlines. Based on these two regression
results, it can be concluded that H1, H4, and H5 are
rejected and H3 is partially accepted (only for low-
cost airlines). H2 is fully supported.
Effects of Service Quality on Customer
Satisfaction and Behavioral Intentions
To test H6, “Service Quality” was set as an inde-
pendent variable and “customer satisfaction” as the
dependent variable. The regression analysis was
carried out separately for both airlines and com-
pared. “Service Quality” had a statistically signifi-
cant influence on “Customer Satisfaction” (p =
0.000) for both traditional and low-cost airlines
with beta value 0.922 and 0.709. respectively.
Therefore, based on this regression, H6 is accepted.
To test H7, again “`Service Quality” was set as
an independent variable and two variables (inten-
tion to reuse and intention to recommend) were
TA16-5_600.indd 5
5
merged into “behavioral intentions” and set as the
dependent variable. “Service Quality” has statisti-
cally significant influence on “Behavioral Inten-
tions” for traditional airlines (sig. value = 0.000),
but not for low-cost airlines (sig. value is over
0.05). Therefore, H7 is partially accepted only for
traditional airlines.
Summary of Findings
The goodness of data in terms of reliability was
assessed by Cronbach’s alpha. Traditional airlines
passengers scored all five service quality dimen-
sions, overall service quality, customer satisfaction,
and behavioral intentions higher. Standard multiple
regression analysis was executed to test H1 to H7.
Only “Assurance” showed a significant influence
on overall perceived service quality for both tradi-
tional and low-cost airlines. “Tangibles” signifi-
cantly influenced service quality in low-cost air-
lines. The other dimensions did not have significant
influence on service quality. It was found that ser-
vice quality significantly and positively influenced
customer satisfaction in both traditional and low-
cost airlines. However, behavioral intentions were
significantly affected by service quality only in tra-
ditional airlines. The differences between the two
airlines were significant for “Service Quality” and
“Customer Satisfaction,” whereas there was no sig-
nificant difference for “Intention to Reuse” and
“Intention to recommend.” The results for the sev-
en hypotheses are summarized in Table 2.
Conclusions
As competition in the service sectors has in-
creased, the notion of service quality has become
increasingly important because it is recognized that
providing a high quality service retains customers,
and ensures survival and growth in the market
(Dabholkar, Shepherd, & Thorpe, 2000). Improv-
ing the quality of service is a key concern in the
airline industry (Hoffman & Bateson, 2002). Pre­
vious research has shown that among various
­competitive variables for airlines such as fares,
­frequency, market access, and service quality, ser-
vice quality is the most highly competitive variable
(Banfe, 1992). With the rise of low-cost airlines it
has become prudent to examine whether perceived
service quality is a prime driver for customer satis-
11/17/2011 4:11:30 PM
 6 AHN AND LEE

Table 2
Summary of the Results of Hypotheses Test

Hypotheses Results

H1: Service quality dimension “Reliability” has a positive influence on customer’s

overall perception of service quality. Rejected
H2: Service quality dimension “Assurance” has a positive influence on customer’s
overall perception of service quality. Accepted
H3: Service quality dimension “Tangibles” has a positive influence on customer’s
overall perception of service quality. Partially accepted
H4: Service quality dimension “Empathy” has a positive influence on customer’s
overall perception of service quality. Rejected
H5: Service quality dimension “Responsiveness: has a positive influence on
customer’s overall perception of service quality. Rejected
H6: Customer’s overall perception of service quality positively affects customer
satisfaction. Accepted
H7: Customer’s overall perception of service quality positively affects customer’s
future behavioral intentions. Partially accepted

faction and future behavioral intentions for both
traditional full-service and low-cost airlines.
The main findings of the study are: (1) Tradi-
tional airline passengers perceive service quality
significantly higher than low-cost airline passen-
gers for all five service quality dimensions; (2) Tra-
ditional airline passengers have significantly higher
overall perceived quality and customer satisfaction
than low-cost airline passengers; (3) There is no
significant difference in behavioral intentions such
as “intention to reuse” and “intention to recom-
mend to friends/family” between traditional and
low-cost airlines; (4) Both traditional and low-cost
airline passengers gave the highest score to “Reli-
ability” among the five service quality dimensions;
(5) Traditional airline passengers gave the lowest
score to “Empathy” and low-cost airline passengers
to “Tangibles”; (6) Among service quality dimen-
sions, “Assurance” has a significant influence on
overall service quality of traditional airlines; and
(7) “Tangibles” and “Assurance” had significant
influences on overall service quality of low-cost
airlines.
A number of studies have looked at the effects of
service quality in the service sectors, but relatively
few have focused on the airline industry. In particu-
lar, little research has been done on low-cost air-
lines. Thus, there is a need for further research on
service quality, customer satisfaction, and loyalty
for airlines, particularly low-cost airlines. This study
provides a better understanding of service quality
in the context of the airline industry, especially low-
cost airlines. Although low-cost airlines’ top prior-
ity is not a high quality service, they still need to
meet customer expectations. By identifying cus-
tomer assessment of service quality and the main
factors affecting customer satisfaction and loyalty,
airlines will be able to maintain their competitive
advantages by enhancing their strengths and im-
proving their weak areas. In particular, by compar-
ing and identifying the differences between tradi-
tional full service and low cost airlines, this study is
valuable to help with marketing strategies such as
how to differentiate and maintain competitive ad-
vantages.
Managerial Implications and Recommendations
The results of this study indicate that passengers’
perception and evaluation towards traditional and
low-cost airlines are significantly different in gen-
eral. Also, perceived service quality affects cus-
tomer satisfaction in both traditional and low-cost
airlines. Based on the findings, managerial implica-
tions and recommendations are suggested.
First, traditional airlines should improve the
“Empathy” factor of service quality. Empathy in
this study means “The caring, individualized atten-
tion the airline provides its customers.” Thus tradi-
tional airlines should pay individual attention to
passengers and try to customize services to their
various needs. Airline services often encompass
multiple interactions between customers and airline
staff. In other words, employees play a crucial role

TA16-5_600.indd 6 11/17/2011 4:11:30 PM

 SERVICE QUALITY IN THE AIRLINE INDUSTRY
in determining the quality of service, as the staff
and their actions are visible to the customer and are
assessed constantly.
Secondly, low-cost airline passengers have the
lowest perception on the “Tangibles” dimension.
Also, “Tangibles” significantly influence the over-
all perceived service quality of low-cost airlines.
Low-cost airlines may not be able to offer comfort-
able seats or good in-flight facilities as their busi-
ness model is all about “simplify” and “lower price.”
However, if they could differentiate their tangible
facilities such as in-flight seats and interiors, they
can have competitive advantages over other low-
cost airline competitors.
Thirdly, the “Assurance” dimension significant-
ly affects overall service quality for both traditional
and low-cost airlines. Thus, passengers must be sat-
isfied with “Assurance.” Passengers should feel
safe during flights. In particular, low-cost airline
passengers have very low perception on the “feel
safe during the flight.” Thus, flight safety must be
assured and flight staff needs to be knowledgeable
to answer passenger inquiries. Lastly, it was found
that overall service quality positively affects cus-
tomer satisfaction in both traditional and low-cost
airlines. In particular, service quality significantly
influences behavioral intentions such as to reuse
and recommend for traditional airlines. Thus, tradi-
tional airlines should improve and manage their
service quality as it is positively affecting their cus-
tomer satisfaction as well as customer loyalty. On
the other hand, perceived service quality of low-
cost airlines does not significantly affect behavioral
intentions. However, they still need to manage good
service quality as it affects customer satisfaction
significantly and also to take competitive advan-
tages over other low-cost airline competitors.
The study has the following limitations. The
field study was conducted for a certain period of
time with a convenience sampling method due to
budget and time constraints. The limited sample
may not reflect perceptions and evaluations of all
airline passengers. Thus, generalization should be
approached cautiously. The majority of the respon-
dents belong to a certain age group, 25–34 years
old. The number of total respondents is relatively
small too. Lastly, passengers who did not have a
comfortable understanding of English were not in-
cluded in this study. Further research could be con-
TA16-5_600.indd 7
7
ducted to identify the different perceptions towards
service quality among more diverse demographic
groups by gender, age, frequency of flight, income
level, nationality, and so forth. Using scales espe-
cially designed for airlines should provide results
with higher levels of reliability and validity.
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