Customers Satisfaction Towards The Services

China-USA
Business Review
Volume 14, Number 1, January 2015 (Serial Number 139)
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China-USA
Business Review
Volume 14, Number 1, January 2015 (Serial Number 139)
Contents
Economics
Firm’s Asset Structure Change: Evidence From Industrial, Commercial Machinery and
Computer Equipment in the U.S. Market 1
Gang Chen, Mahfuzul Haque
Effectiveness of Direct and Non-direct Investment in the Stock Market Indices 10
Monika Hadaś-Dyduch
Management
Fundamental Principles and Financial Managements of the Insured Education System

Model (IESM) 21
Seniha Çelikhan
E-learning Content and Knowledge Characteristics Empirical Case Study 29
Asmahan Majed Altaher
Communication Points and Tools in the Air Transportation Operation Service Process:
Ataturk Airport Implementation 35
Savaş Selahattin Ateş, Celal Hakan Kağnıcıoğlu
Customers Satisfaction Towards the Services Provided in Kuala Lumpur International

Airport, Malaysia 45
Mohani Abdul, Mohd Khairi Abdul Aziz, Mastora Yahya

China-USA Business Review, January 2015, Vol. 14, No. 1, 1-9
doi: 10.17265/1537-1514/2015.01.001
D DAVID PUBLISHING
Firm’s Asset Structure Change: Evidence From Industrial,

Commercial Machinery and Computer Equipment
in the U.S. Market
Gang Chen
Shandong University of Technology, Zibo, China
Mahfuzul Haque
Indiana State University, Terre Haute, USA
Asset structure is an important and explicit indicator of asset investment and financial performance of a firm. As
previous studies on asset structure did not reveal the actual tendency of specific manufacturing industry, this
research examines the asset structure of the chosen manufacturing industry. Using panel data of the sample
companies and generalized moment method (GMM) for the empirical testing, the results of the empirical analysis
indicate that the average of the asset structure (represented by the ratio of current asset to total asset) almost holds
on firmly to a constant value of 0.6, through the period of 2006 to 2013. No evidence reveals the collective
characteristic of volatility during this period. In addition, the observed data present a slight-downward curve in the
level of average current asset ratio during this period. Asset structure, together with first difference of return on
asset (ROA) and return on equity (ROE), is the significant determinant of ROA. These findings may have a
profound influence on directing internal investment and some sample companies may be taken as an example by
corporate financial policy maker from both developed and developing countries.
Keywords: asset structure, financial ratios, financial performance, return on asset (ROA), return on equity (ROE)
Introduction
A firm operates utilizing its assets and capital. Generally, assets have been decided, established, or
purchased, since the firm started and the assets soon became firm specific, because their size and type
demonstrate the characteristic and the management of the industry in which the firm is engaged in. The above

Project Supported: This work was supported by International Cooperation Training Program, Shandong Education Department
and Research Fund for the Doctoral Program, Shandong University of Technology. Gang Chen wishes to express sincere thanks
and tremendous respect to Dean of SCOB Dr. Brien Smith and Chair of AFIRM, SCOB Dr. Steven Lamb for providing him the
opportunity to be a visiting scholar at SCOB, ISU during 2013 to 2014. He also wishes to express his gratitude and special thanks
to Dr. Mahfuzul Haque for the guidance, encouragement, and joint efforts in carrying out the research. But any error or omission
is the sole responsibility of the authors. The original data applied in this paper is intended to send to any reader upon request.
Gang Chen, Ph.D., associate professor, Department of Financial Management, Business School, Shandong University of
Technology, Zibo, 255012 Shandong, P. R. China.
Mahfuzul Haque, Ph.D., professor of Finance, Department of AFIRM, Scott College of Business, Indiana State University,
Terre Haute, IN 47809, USA.
Correspondence concerning this article should be addressed to Gang Chen, Business School, Shandong University of
Technology, Gongqingtuan West Road 88#, Zhangdian, Zibo, 255012 Shandong, P. R. China. E-mail: sdutcg@126.com.

2 FIRM’S ASSET STRUCTURE CHANGE
description is based on the whole industry level. In terms of assets themselves, there is a problem of structure.
The structure within the assets is formed from the desire of the management to operate effectively and produce
increased return, because each asset serves in different side of the operation and functions in its own way. It
follows that the structure issue is the decision of matching and proportion among the assets. Why would
different parts of total asset of a firm, ordinarily grouped as current assets and long-term assets, be matched or
in proportion? The reason is that a concept, which connotes a firm, is involved in a tradeoff in daily operation
that it will have lower return on investment, when it invests more fund in current assets while it may get lower
liquidity risk, has been existing both in academic theory and financial management practice for quite a long
time. Consequently, in this sense, the management has the intrinsic motivation to reach or maintain the target
asset structure.
In fact, the asset structure of a firm is at the discretion of the firm management individually. The practice
may also have deviation from the theory. In addition, that fact raises another problem: Which structure is better
or the best in practice and how to structure the assets will be favorable now that asset structure may markedly
impact on the financial performance? Therefore, this paper attempts to investigate the asset structure feature of
manufacturing industry in the United States market and gives conclusions about better practice and financial
policy recommendations.
Following the introduction in section 1, the paper is organized as follows: Section 2 presents the literature
review followed by section 3, which presents the data source. Section 4 presents empirical methodology and the
model. Section 5 discusses the findings and analyzes the results and finally section 6 concludes the paper.
Literature Review
On one hand, comparably, capital structure has been widely researched after the remarkable literature of
Modigliani and Miller (1958), especially after “the capital structure puzzle” (Myers, 1984) aroused in 1984. As
the literatures on this topic grow, it has been recognized nowadays as a profound field in finance. On the other
hand, only a few literatures, which can be categorized into several following groups, discussed asset structure
of a firm.
Literatures of Myers (1977), Myers and Majluf (1984), Stulz and Johnson, (1985), Sibilkov (2009), and
Muritala and Ajibola (2013), which can be seen as the first group on this subject, aim to study the relationship
between asset structure and capital structure from the standpoint of financial decision-making. They depict that
corporate assets often impose a direct and significant impact on the financial policy. The study of Sanyal and
Mann (2010) reveals that start-up firms with different physical assets level may opt to have various financial
resource and structure. Akintoye (2008) also argued that a firm will have smaller costs of financial distress than
that relies more on intangible assets, if it retains large investments in tangible assets. To a certain degree, they
emphasize capital structure while imply asset structure.
The second group, like Czyzewski and Hicks (1992) and Jose, Lancaster, and Stevens (1996), is
exemplary in explaining how ongoing cash or other asset, on the item basis, affects firm profitability, whereas
Arbidane and Zelgalve (2012) mainly focused on asset management that how the average level of current asset
changed over a certain period of time and were influenced by macro or micro factors. An (2013) also asserted
that policy of private property protection in China has apparently increased the investment willingness in both
fixed assets and intangible assets of an enterprise. All of these articles suggest the possible factors that may
affect the formation of the asset structure.

FIRM’S ASSET STRUCTURE CHANGE 3
The third group examines how working capital policy affects financial performance, which is oftentimes
represented by some measures, like return on asset (ROA) and return on equity (ROE) and how working capital
management is able to impact financial policy. De Almeida and Eid (2014) suggested that more cash
engagement than working capital investment and increasing the level of working capital at the beginning of a
fiscal year can reduce company value averagely. Ding, Guariglia, and Knight (2013) explained that an active
management of working capital may help firms to alleviate the effects of financing constraints on fixed
investment.
The fourth group focuses on some other functions that the asset structure serves in the firm operation or in
special circumstances. Ambrose and Megginson (1992) showed that an increasing fraction of fixed assets in a
firm’s total asset structure is significantly associated with the chance that the firm becomes an acquisition target.
The empirical analysis of Constand, Osteryoung, and Nast (1991) indicates that a small firm’s asset structure is
the most important determinant of the use of debt financing. Still in the work of Muritala and Ajibola (2013), it
is found that firms who have more tangible assets are less likely to experience financial constraint. Obviously,
with these views, researchers are expanding their inspection areas on asset structure.
Lately few literatures on this subject are emerging. Based on the above literatures and their findings, this
article attempts to test asset structure change over 2006 through 2013, which is across the special period near
2008, in order to find probable tendency of asset structure in a certain type of industry of the United States
market and provide ideas on asset structure policy.
Data
Manufacturing industry is normally the most important indicator of an economy in an industrialized
developed country. In this article, the “major group 35—Industrial and Commercial Machinery and Computer
Equipment” of “Division D—manufacturing” in Standard Industrial Classification (SIC) is chosen as the object
to investigate. It includes establishments engaged in manufacturing industrial and commercial machinery and
equipment and computers. Using SIC or North American Industrial Classification System (NAICS) codes is a
practical way to identify and compare firms in the main stock markets in the US. This article prefers SIC to
NAICS or the Industry Classification Benchmark (ICB), which is accepted and used in NYSE, when the search
of sample industry as SIC is still widely used under SEC, though NAICS has been adopted as the primary
industry classification system since 1997.
In choosing sample firms, 157 firms among the above major group 35 with consecutive eight-year 10-K
annual reports (fiscal year of 2006 to 2013, 1,256 observations) are screened out. The data used in this research
is abstracted from Edgar, MSN, Yahoo, and Google, or calculated by the authors, except otherwise indicated.
10-K reports of those sample firms, though they may have been filed on different dates of a year, which
result from different fiscal year of the listed companies, are always superior and preferable to other types of
reports in the same year, since the former is generally audited by CPA and the latter are normally unaudited. If
the fiscal year of a company ends in the early months of a calendar year, the fiscal year-end annual report
should be treated as the report for the previous year, because most part of the report covers the operation year
prior to the current calendar year (MFRI, DGTW, and CMCO as the examples). If, occasionally, there was no
10-K of a year for the specific company, then its latest 10-Q is selected for the substitution. Latest 10-K/A is
preferable to 10-K. Some financial data are from 10-Q for substitution, especially for those firms who
terminated in 2013. 10-K of 2008 serves as a turning point when the trend is investigated.

Changes in ownership operations in the market always happen from time to time to break the continuity of
financial condition and asset structure data of acquired companies. These transactions also affect the process of
choosing sample companies. Most of the initial chosen samples are filtered out once any acquirement
transaction appeared. The time lag of different fiscal year among different companies is disregarded because of
the continuous time series of financial statements. If a company changed its fiscal year, the 10-K annual report
of that right year may have not filed. Therefore, a 10-Q quarter report is chosen instead. If a firm has more than
one class of stocks, “A-share” is preferable. Some data, which are obtained from nearly non-operating
companies, or affected significantly by merger and acquisition (M&A), have been expelled. All the authors
have done for the data screening is to reinforce the qualification and representativeness of the sample
companies.
Methodology and Model

Panel Data
To some extent, panel data models may allow for analysis to a number of important economic issues that
cannot be addressed using cross-sectional or time-series data individually and are often superior to those data,
because it combines both of the data information for the analysis. Due to the pattern of the chosen sample data,
it employs panel Workfile in EVIEWS, which is more applicable to a micro-panel data set.
Variables
ROA is commonly used as net income/total asset (NI/TA) and a useful indicator for comparing peer
companies in the same industry. It remains in the same industry, so it will stay to be the similar level and not
vary widely. Some investors add interest expense back into net income when performing this calculation,
because they would like to use operating returns before cost of borrowing. Then ROA = NI/TA is got.
Asset structure ratio (RA) is equal to current assets divided by total assets. Current asset is closely related
to working capital, though this paper does not take account of any current liability here, because it is concerned
with the sole effect caused by current asset and its proportion. In addition, the part of current asset has been
distinguished clearly from the rest of assets in the financial statement. It can be used as the proxy of asset
structure and is a determining factor of firm liquidity.
ROE (net income/shareholder’s equity) measures a firm’s profitability on the side of shareholders and is
widely used in most situations.
Furthermore, in order to avoid spurious regression, other two control variables are included in the
regression process as followed: Debt ratio (RD) is calculated by debt/total asset (TA) and log (TA) is equal to
log (total asset).
Generalized Moment Method-diff
Arellano and Bond (1991) developed generalized moment method (GMM) based on first difference of the
dependent variable, as:
yit   y it 1   i   it ,   1
i  1, 2,  , N , t  1, 2, , T
The advantages of GMM include that it may not lead to parameter heterogeneity in the model specification
or avoid inconsistent results in simple dynamic panel models via introducing necessary instrumental variable

estimators. Therefore, it is used in the following procedure for testing the relationship between ROA and the
asset structure.
Hypothesis and Model
Authors are interested in whether ROA is correlated and how it is related to asset structure (RA). Therefore,
authors build the following two hypotheses. If H1 holds after examination, then it can explain that RA is
commonly viewed as a positive determinant of ROA.
H0: RA is not or negatively related to ROA.
H1: RA is positively related to ROA.
The GMM model is
ROAit   i ROAit 1  1i R Ait   2 i RDit   3 i log(TA) it  vi  u it
where i  1, 2,  , N , t  1, 2, , T , the other notations have been specified above.
Results and Analysis

When authors review the individual ratio curve of current assets to total assets, they appear to cluster near
0.5 to 0.7 as showed in Figure 1. Among those curves, few seem to be volatile dramatically out of most of
stable curves and other few are quite lower than normal trend.
1.0
0.8
0.6
0.4
0.2
0.0
2006 2007 2008 2009 2010 2011 2012 2013
Figure 1. Current asset to total asset ratio of the 157 sample companies.
The test of sample mean shows that it equals to 0.603460 with a small standard deviation of 0.012695. The
whole sample presents an obvious stability of current asset ratio. The findings are presented in Table 1.
The extent of stability is further illustrated by the test of individual time series of current asset ratio. The
summary test of group unit root, as in Table 2, shows the 157 sample series, 1,037 observations, rejects the null
hypothesis of unit root process, and proves that the summary of the sample series is stable as described above.
Based on this sense, along with the above tests, it can be asserted that the aggregate trend of the asset structure
has not changed through the observation period under any test type of LLC, Im, Pesaran and Shin W-stat, ADF,
or PP.

Table 1
Test of Average Current Asset Ratio Mean
Hypothesis Testing for SER01_AVERAGEOFCA2TA
Sample: 2006 2013
Included observations: 8
Test of hypothesis: Mean = 0.600000
Sample Mean = 0.603460
Sample Std. Dev. = 0.012695
Method Value Probability
t-statistic 0.770820 0.4660
Table 2
Test of Individual Time Series of Current Asset Ratio
Group unit root test: Summary
Sample: 2006 2013
Exogenous variables: Individual effects
Automatic selection of maximum lags
Automatic lag length selection based on SIC: 0 to 1
Newey-West automatic bandwidth selection and Bartlett kernel
Method Statistic Prob.** Cross-sections Obs
Null: Unit root (assumes common unit root process)
Levin, Lin, and Chu t* -24.0362 0.0000 157 1,037
Null: Unit root (assumes individual unit root process)
Im, Pesaran and Shin W-stat -4.02225 0.0000 157 1,037
ADF—Fisher Chi-square 460.175 0.0000 157 1,037
PP—Fisher Chi-square 408.316 0.0003 157 1,092
Notes. ** Probabilities for Fisher tests are computed using an asymptotic Chi-square distribution; all other tests assume
asymptotic normality.
The statement given above does not mean the same trend in other situations. When authors investigate
some individual sample series or even the average value of the current asset ratio, things may be different.
Apparently, Figure 2 shows a slight downward curve of the average current asset ratio. Immediately, this
change indicates that the liquidity and solvency may have slightly decreased in average, and that may result in
increasing operating leverage, operating risk, and future return on asset. This is may result from firm liquidity
constraint during those period. Relating current asset to current liability, the current ratio measures the solvency
more precisely. Authors can see the slight increase of average current ratio over the same period in Figure 3 and
the discrepancy of the two curves in Figure 4. That is equal to say, averagely, the management pays more
attention to the financial risk when it decreases the current asset ratio, which is a better move in the longer run.
Test results showed in Table 3 demonstrate the expected outcomes. All the variables, ROA(-1), RA, and
ROE are positively related to ROA, which are represented by the sign ahead of these variables. Moreover, the
result is significant under the criteria because of the very small probability of 0.0000, 0.0005, and 0.0000.
Authors are quite straightforward and certain to reject H0 and accept H1, that is, RA is positively related to ROA
significantly.

.625
.620
.615
.610
.605
.600
.595
.590
.585
.580
2006 2007 2008 2009 2010 2011 2012 2013
Figure 2. The average of current asset to total asset ratio through 2006 to 2013.
3.1
3.0
2.9
2.8
2.7
2.6
2006 2007 2008 2009 2010 2011 2012 2013
Figure 3. The average of current ratio through 2006 to 2013.
3.5
3.0
2.5
2.0
1.5
1.0
0.5
2006 2007 2008 2009 2010 2011 2012 2013
Figure 4. The discrepancy of current asset ratio and current ratio.

Table 3
Test of ROA Model
Dependent variable: ROA
Method: Panel generalized method of moments
Transformation: First Differences
Sample (adjusted): 2008 2013
Periods included: 6
Cross-sections included: 137
Total panel (unbalanced) observations: 798
White period instrument weighting matrix
White period standard errors and covariance (d.f. corrected)
Instrument specification: @DYN (ROA,-2)
Constant added to instrument list
Variable Coefficient Std. Error t-Statistic Prob.
ROA(-1) 0.324785 0.021115 15.38153 0.0000

RA 42.70295 12.27969 3.477527 0.0005
ROE 0.197362 0.013911 14.18793 0.0000
RD 0.063835 0.357242 0.178689 0.8582
Log (TA) -0.000233 0.000505 -0.461171 0.6448
Effects specification
Cross-section fixed (first differences)
Mean dependent var 0.401128 S.D. dependent var 21.96733
S.E. of regression 27.08573 Sum squared resid 581,774.1
J-statistic 15.42473 Instrument rank 21
Conclusions
This paper investigates the asset structure of chosen listed companies in U.S. and its change trend and
develops several empirical models to conclude on the ground of analysis. It is found, as expected but differs
from previous literature works, that the average of the asset structure almost remains the same level through the
period of 2006 to 2013, but at the later part of the period, the current asset ratio goes slightly downward. When
comparing to the current ratio in the same period, the curve presents a discrepant trend of slight upward.
Overall, that discrepancy shows a kind of conservatism in asset management and financial risk.
The data set used indicates that most of the sample companies keep their normal asset structure near to 0.6
and remain constant, while few of them deviate from that normal level and are volatile remarkably. The figure
0.6 seems to be the most favorable ratio of current asset to total asset, though some exceptional data still exist.
This number is believed to be at the discretion of the firm management and viewed as a reasonable level of
current asset. Therefore, this level might be useful for the decision-making in asset management.
The findings support the hypothesis that managerial decision on asset structure has a strong effect on firm
return on asset. The ratio of current asset to total asset is one of the most important determinants of ROA. The
effect is straightforward and significant. These findings may be very useful for strengthening the concept of
asset structure and for the financial management, especially for the managers who are seeking better practice of
financial policy for asset investment and liquidity of asset. When these findings are used as a norm or
benchmark, those firms who stay in the same industry are able to adjust their asset structure according to their
asset investment strategy.

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doi: 10.17265/1537-1514/2015.01.002
D DAVID PUBLISHING
Effectiveness of Direct and Non-direct Investment

in the Stock Market Indices
Monika Hadaś-Dyduch
University of Economics in Katowice, Katowice, Poland
The article attempts to compare the direct and non-direct investment in the stock market indices. Indirect
investment means a purchase of a strictly preferred particular stock index by an investor on the stock exchange. In
contrast, indirect investment is the one of structured products based on stock market indices, i.e., the products of
which the final result depends on the development of the stock market indices. The aim of the study is to evaluate
the effectiveness of direct and non-direct investment in the stock market indices. Furthermore, the purpose of this
article is an attempt to answer the following questions: Is the investment in structured products a substitute of
investment in the stock market indices? Which method is more efficient, direct or indirect investment? Are
structured products substitutes for traditional investments and whether they give satisfactory profits for investors?
The questions may be answered by setting returns on structured products completed on 31.12.2013 in the Polish
capital market. The results relating to structured products launched and completed during the period
01.01.2000-31.12.2013 in the Polish capital market were compared with the rate of return of selected stock indices.
As comparison, the method of direct and indirect investments was selected for the following indices: the Hang Seng,
Dow Jones, WIG, WIG 20, Hang Seng, Nikkei, and Shanghai Composite reflecting the different economies of the
world and also the specifics of different investors.
Keywords: structured products, alternative investments, banking products, stock indices, the underlying instrument
Introduction
Structured products are financial instruments whose price is dependent on the value of a particular market
index. Thanks to their specific design, structured products provide the investor with capital protection (full or
partial) and at the same time make it possible (though not certain) to obtain income, while the payoff function is
always an option. Like other investment products, the rate of return is not known ex ante. Therefore, it can be
said that in the current era, structured products are complementary or may even replace the more traditional
investments in stocks, bonds, and investments. They give the ability to connect traditional investing with one’s
hobbies and reportedly more than average profits. However, the question that must be put at this point is
whether the investment is actually always profitable, giving more than average profits and favorable to the
investor. Is the profit what the investor has in front of their eyes real or just an illusion? Is investing savings in
Monika Hadaś-Dyduch, Ph.D., Faculty of Economics, Department of Statistical and Mathematical Methods in Economics,
University of Economics in Katowice, Poland.
Correspondence concerning this article should be addressed to Monika Hadaś-Dyduch, Faculty of Economics, Department of
Statistical and Mathematical Methods in Economics, University of Economics in Katowice, ul. 1 Maja 50, 40-287 Katowice,
Poland. E-mail: monika.dyduch@ue.katowice.pl.
INVESTMENT IN THE STOCK MARKET INDICES 11
investment products really worth it? Is it a worthwhile investment decision? Do your dreams of a gain of
settlement investment remain unfulfilled or unrealized? Is the investment in structured products a substitute for
real-life investing in stock market indices?
The questions may be answered by setting returns on structured products ended on 31.12.2013 in the
Polish capital market. The results relating to structured products launched and completed during the period
from 01.01.2000 to 31.12.2013 in the Polish capital market were compared with the rate of return of selected
stock indices. As comparison, the method of direct and indirect investments was selected for the following
indices: the Hang Seng, Dow Jones, WIG, WIG 20, Hang Seng, Nikkei, and Shanghai Composite.
Literature Review
The results of the research presented in this article are fully copyright, partially based on the previous
studies concerning this issue (Hadaś-Dyduch, 2013a, 2013b, 2013c, 2013d, 2013e, 2013f, 2013g, 2014a, 2014b,
2014c, 2014e). The calculation is based on data of the basic parameters measurable on structured products. The
data necessary to carry out the research presented in the article were obtained from financial portals banks and
financial institutions issuing structured products.
Definition and status of structured products in Poland are presented in the report of financial supervision.
Research Methods
The questions posed in the article may be answered by setting returns on structured products ended on
31.12.2013 in the Polish capital market. The results relating to structured products launched and completed
during the period from 01.01.2000 to 31.12.2013 in the Polish capital market were compared with the rate of
return of selected stock indices. As comparison, the method of direct and indirect investments was selected for
the following indices: the Hang Seng, Dow Jones, WIG, WIG 20, Hang Seng, Nikkei, and Shanghai
Composite.
The analysis was based on 802 structured products with different legal forms whose base index was based
on the index or basket of stock indices. Sixty-three bank securities, 39 structured certificates 23 closed-end
investment funds, seven foreign funds, 108 structured deposits, 51 structured bonds, 483 investment policies,
and 28 life insurances with the insurance capital fund were investigated.
Most of the studies which were included structured products (260 products) began in 2009 and the least 2
products in 2000 and 2013 (Table 1). In contrast, most of structured products (560) were completed in 2012 and
the least (4 products) in 2004 year (Table 2).
The study also recognizes structured products with different periods of investment. Most structured
products were found for a period of 35 months (Table 3).
Table 1
Number of Structured Products Launched in Each Year of the Research Period
Year* 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Quantity** 2 6 6 5 6 9 22 73 171 242 184 63 11 2
Notes. * Number of structured products launched and completed at the same time to 31.12.2013 year; ** Start year structured
product.
For each of the 802 structured products, gross return per month and year were designated, in order to
compare the rate of return on a direct investment in the stock market index.
12 INVESTMENT IN THE STOCK MARKET INDICES
Comparative analysis of indirect and direct method is illustrated by the indices: Dow Jones, WIG, WIG 20,
Hang Seng, Nikkei, and Shanghai Composite. Data on the indices were downloaded from the archives of the
relevant stock exchanges.
Structured products completed in the years from 2000 to 2013 reached a gross rate of return on an annual
basis in the range from -12.29% to 38.58%. The average gross rate of return of structured products which were
completed in the years from 2000 to 2013 was 2.55% per year (Table 4).
Table 2
Number of Structured Products in Each Year of Completed Study Period
Year* 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Quantity 2 2 6 6 13 7 38 106 200 270 152
Note. * End year a structured product.
Table 3
Number of Completed Structured Products for a Specified Duration of the Product (in Months)
Duration of product The number of Duration of product The number of Duration of product The number of
(in months) completed products (in months) completed products (in months) completed products
3 1 26 1 39 1
6 21 28 4 41 1
9 11 29 4 42 17
10 1 30 16 44 1
12 116 34 8 45 1
18 24 36 231 48 135
24 182 37 2 60 17
72 7
Table 4
Basic Statistics Presenting a Series of Tax Return for Completed Structured Products in the Years From 2000
to 2013
Statistics Value of statistics Statistics Value of statistics
Average 2.55% Median 0.37%
Standard error of mean 0.18 Minimum -12.29%
Dominant 0.00% Maximum 38.58%
Standard deviation 5.22
Table 5
Percentiles Series Presenting Gross Return Per Month of Structured Products Completed in the Years From
2000 to 2013
Percentile Value of precentile Percentile Value of precentile Percentile Value of precentile
10 0% 60 1.66% 20 0%
25 0% 75 4.01% 30 0%
40 0% 90 10.00% 50 0.37%
80 5.12% 70 3.23%
Frequently finished products had a gross return of 0% per year, including 292 structured products in the
period, which accounted for 36.4% of the products, for which gross rate of return on the investment’s
completion has been designated.
Seventy-five percent completed structured products ended up with reaching a gross rate of return per year
of at most 4.01% (Table 5).
Negative Gross Rate of Return
All structured products of 6.97% in that period were completed with a negative rate of return
(Hadaś-Dyduch, 2013a, 2014a, 2014b, 2014c, 2014e). The value of -10% per year among the negative returns
dominated (Table 6). In addition, 50% of return of structured products which ended with a negative rate had a
rate of return of -4.72% at most (Table 7).
Table 6
Basic Statistics Series Presenting Gross Negative Return of Completed Structured Products in the Years From
2000 to 2013
Average -5.66% Median -12.29%
Standard error of mean 0.45 Minimum -0.52%
Dominant -4.72% Maximum -10%
Table 7
Percentiles Series Presenting Gross Negative Return for the Year of Completed Structured Products in the
Years From 2000 to 2013
Percentile Value of precentile Percentile Value of precentile Percentile Value of precentile
10 -10% 60 -3.33% 20 -10%
25 -10% 75 -3.04% 30 -8.57%
40 -7% 90 -1.59% 50 -4.72%
80 -2.52% 70 -3.33%
Seventy-five percent structured products completed with a negative rate of return ended up with reaching a
gross rate of return per year of at most -3.04% (Table 7).
Positive Rate of Return Before Tax
The products of 56.54% resulted in achieving positive returns. Among them, the rate of return of 10% per
year dominated (Hadaś-Dyduch, 2013d, 2013e, 2013f, 2013g, 2014a). About 50% of completed structured
products with a positive rate of return on investment settlement resulted in achieving a rate of return at least at
the level of 3.36% per year (Table 8).
Seventy-five percent of products completed with a positive rate of return on structured products resulted in
reaching a gross rate of return per year of at most 8.33% (Table 9).
Table 8
Basic Statistics Presenting a Series of Positive Gross Returns of Structured Products Completed in the Years
From 2000 to 2013
Average 5.21% Median 0.01%
Standard error of mean 0.24 Minimum 38.58%
Dominant 3.36% Maximum 10%
Table 9
Percentiles Series Presenting Gross Negative Return for the Year Ended in the Years From 2000 to 2013 of
Structured Products
Percentile Value of precentile Percentile Value of precentile
10 0.33% 20 1.09%
25 1.44% 30 1.77%
40 2.59% 50 3.36%
60 4.58% 70 6.21%
75 8.33% 80 9.63%
90 12.51%
Research Results and Analysis

Preliminary results of a study on the rate of return achieved by the structured products whose underlying
index was based on stock market indices are presented in the following. This chapter focuses on the comparison
of return on a direct investment in the index with no direct investment, which is an investment in a structured
product based on the stock index or basket of indices.
The results of the study and the attempt to answer the question were divided into several sections,
depending on the duration of the investment. Time is a key element in determining the gain or loss on
investment. For a comparative analysis, the indices: Dow Jones, WIG, WIG 20, Hang Seng, Nikkei, and
Shanghai Composite were selected. The aim was to reflect the return on structured products in different world
economies and the comparison of direct and non-direct method in the scale of the global market.
Possible Maximum and Minimum Rate of Return in the Considered Period
With non-direct investment in stock market indices, i.e. through structured products based on stock market
indices completed in the years from 2000 to 2013 in the Polish capital market, it could achieve a gross rate of
return per year ranging from -12.29% to 3.215% (Hadaś-Dyduch, 2013a, 2013b, 2013c, 2013d, 2013e, 2013f,
2013g, 2014a, 2014b, 2014c, 2014e).
Worst Non-direct Investment
The lowest rate of return, i.e. -12.29% per year, was reached by the structured product “Certificate of
Brazilian Express”, whose investment lasted for 36 months. The project was started on 13.11.2010 and ended
on 12.11.2013. It was a structured product based on the iShares MSCI Brazil Index Fund.
As shown by the data in Table 10, during the period of direct investment in the iShares MSCI from
13.11.2010 to 12.11.2013, Brazil Index Fund was finished with a loss. The loss would be 11.87% per year
(Table 10). Thus, both the base index of investment in structured product “Certificate of Brazilian Express” and
the direct investment in structured product ended up at a significant loss.
Table 10
Rate of Return of Ishares MSCI Brazil Index Fund for the Period From 15.11.2010 to 12.11.2013
Data reading according to the opening i-Shares MSCI Brazil Index Fund
2010.11.15 70.16
2013.11.12 45.18
Rate of return -35.61%
Moreover, the investment in the WIG and the Dow Jones Industrial would make a profit at the level of
4.2% and 13.64% per year (Table 11). In any case, direct investment would not be worse than the non-direct
investment.
Table 11
Quotations Index for the Period From 15.11.2010 to 12.11.2013
Data reading Index
according to Dow Jones Shanghai
the opening WIG WIG 20 Hang Seng Nikkei
Industrial Composite
2010.11.15 47,455.78 2,733.86 24,371.77 11,194.02 9,782.11 2,984.87
2013.11.12 53,430.78 2,516.63 23,051.76 15,773.15 14,289.87 2,126.77
Rate of return 12.59% -7.95% -5.42% 40.91% 46.08% -28.75%
Best Non-direct Investment

The highest rate of return of completed structured products during the period from 2000 to 2013 based on
the market indices was reached by a structured product called “Ark Global Index 2007”, which was issued by
“Bank Zachodni WBK AIB Towarzystwo Funduszy Inwetycyjnych”. The product was based on a basket of
indices S & P 500, DJ Eurostoxx 50, and Nikkei 225. At the end of the structured product investments, it
should have paid a higher value of 100%, as a result of the cart or guaranteed rate of return. The project was a
success. Gross rate of return of the total investment amounted to 154.33%, which is 38.58% per year. The
project lasted 48 months, i.e. from 29.12.2003 to 28.12.2007.
Investing for a period of 48 months in the stock indices, the following rate of return on an annual basis
would be obtained: 42.42% for the WIG, 30.39% WIG 20, 30.27% for the Hang Seng, 7.36% for the Dow
Jones Industrial, 11.86% for the Nikkei, 63.12% for the Shanghai Composite, 8.76% for the S & P, and 15.14%
for the DJ Eurostoxx 50 (Table 12). Thus, in the investment, portfolio (direct investment in the stock market
indices) identical with the index underlying an analyzed structured product, consisting of 1/3 of the indices of
the S & P 500, DJ Eurostoxx 50, and Nikkei 225 average rate of return of the portfolio (direct investment in the
stock market indices) would be 11.92% per year. Therefore, no direct investment in the index, i.e. an
investment in structured product “Arka Global Index 2007” would be more beneficial for the investor. The
investor could gain 26.66% more from investment in structured product than a direct investment in a portfolio
of S & P500 index, DJ Eurostoxx 50, and Nikkei 225.
Table 12
Rate of Return Indices for the Period from 29.12.2003 to 28.12.2007
Data reading Index
according to Dow Jones Shanghai DJ
the opening WIG WIG 20 Hang Seng Nikkei 225 S&P 500
Industrial Composite Eurostoxx 50
29.12.2003 20,892.74 1,581.84 12,443.56 10,321.35 10,454.69 1,509.28 1,095.89 2,743.4
28.12.2007 56,342.48 3,504.62 27,511.54 13,361.23 15,413.37 5,320.01 1,479.83 4,404.64
Rate of return 169.67% 121.55% 121.09% 29.45% 47.43% 252.49% 35.03% 60.55%
Legal form and return. Structured products completed in Poland during the year from 1.01.2000 to
31.12.2013 adopt one of the forms: bank securities, structured certificates Closed Investment Fund, foreign
fund, investment banking, structured notes, investment policy, and life insurance unit-linked.
Average rate of return. The highest average rate of return achieved in the form of structured products
structured certificates 7.88% gross per annum and the lowest in the form of investment policy -1.09% gross per
annum (Table 13).
Table 13
Average Rate of Return (Gross Per Year) Achieved Through Structured Products in Different Legal Forms
Legal forms Rate of return
bank securities 2.53%
structured certificates 7.88%
Closed Investment Fund 6.50%
foreign fund 6.86%
investment 4.54%
structured bond 5.92%
investment policy 1.09%
life insurance unit-linked 2.32%
Compared to the average rates of return achieved by the WIG 20, WIG, Hang Seng, Dow Jones Industrial,
Nikkei, and Shanghai Composite, non-direct investment, excluding investments in investment policy, was more
favorable for each item (Table 14). Only the Dow Jones Industrial Index reached a rate of return that exceeds
the lowest return gross achieved in non-direct investment.
Table 14
Average Rate of Return Achieved by the Stock Market Indices in the Period From 1.01.2000 to 31.12.2013
Index Average rate of return
WIG 20 0.02%
WIG 0.04%
Hang Seng 0.04%
Dow Jones Industrial 1.48%
Nikkei 0.12%
Shanghai Composite 0.04%
Lowest rate of return. As previously mentioned, the return of investment in indirect investment ranged
from -12.29% to 3.215%. Depending on the legal form of a structured product, the minimum rate of return
ranged from -12.29% to 0.14% (Table 15).
Table 15
Lowest Rate of Return (Gross Per Year) Achieved Through Structured Products in Different Legal Forms
structured certificates -12.29%
Closed Investment Fund -1.43%
foreign fund 0.14%
investment 0.00%
structured bond -0.67%
investment policy -10.00%
life insurance unit-linked -3.16%
Investment in bank securities reached the lowest rate of return of 0% per year. Structured products in the
form of bank securities, culminating with zero rate of return, accounted for 30.2% of total bank securities
completed in the period (Table 16).
Table 16
Gross Rate of Return Achieved by the Bank Securities
Gross rate of return per year Bank interest securities
0.00% 30.16%
0.02% 4.76%
0.05% 1.59%
0.10% 4.76%
0.13% 1.59%
0.20% 3.17%
0.34% 1.59%
0.36% 4.76%
0.75% 1.59%
0.87% 1.59%
2.05% 1.59%
2.34% 1.59%
2.72% 1.59%
3.05% 1.59%
3.33% 1.59%
3.36% 3.17%
3.82% 3.17%
4.01% 1.59%
4.05% 1.59%
4.25% 1.59%
4.58% 3.17%
4.60% 3.17%
4.86% 1.59%
4.87% 1.59%
5.00% 1.59%
5.52% 3.17%
6.75% 1.59%
7.57% 1.59%
8.88% 1.59%
9.01% 1.59%
10.00% 1.59%
10.32% 1.59%
18.75% 1.59%
Among the structured products in the form of bank securities which were completed with a zero rate of
return, products based on the WIG 20 (Table 17) dominated.
The conclusion of comparing the selected bank securities (Table 18) returns with the possible obtainable
rates of return on direct investment is:
 First product of non-direct investment was more favorable, because the investor did not lose anything.
However, in case of a direct investment in the index WIG 20, the loss is 5.74% of the invested capital over the
period of the investment (Table 19). The loss would be 3.83% per year;
 Second product of non-direct investment was more favorable, because the investor did not lose anything.
However, in case of a direct investment in the RTS index the loss might be 24.99% of the invested capital over
the period of the investment (Table 20). Thus, the loss would be 12.49% per year.
Table 17
Baskets in Completed Structured Products in the Form of Bank Securities With 0% Rate of Return
Basket Percentage of products
WIG20 44.44%
RDX USD 5.56%
FTSE EPRA/NAREIT Euro Zone Index - EPEU 5.56%
Dow Jones Euro Stoxx 50 Index 5.56%
Indeks RDX 5.56%
DJ Euro Stoxx 50, DJ Euro Stoxx Select Dividend 30 16.67%
DJ Euro Stoxx 50 16.67%
Table 18
Indirect Bank Securities Selected for Detailed Analysis
The issuer of the product Data in beginning investment Data completion of the investment Basket
Bank BPH 5.06.2010 5.12.2011 WIG 20
Bank Millennium 5.03.2011 4.03.2013 RTS
Table 19
Data for WIG 20 Index
Data reading according to the opening The value of the index
5.06.2010 2417.86
5.12.2011 2279.03
Table 20
Data for RTS Index
5.03.2011 2012.68
4.03.2013 1509.80
Highest rate of return. As previously mentioned, the return of investment in indirect investments ranged
from -12.29% to 3.215%. Depending on the legal form of a structured product, the maximum rate of return
ranged from 14.94% to 38.58% (Table 21).
Structured product in the form of a life insurance unit-linked, which in this form has reached the maximum
profit, was based on an index SPDR Gold. The project lasted 30 months. The investment period was from
9.10.2010 to 29.04.2013.
Investing directly in an index SPDR Gold the investor would gain 8.07% in the investment, which is
3.23% per year (Table 22). Thus, non-direct investment was more favorable, because the investor gained
14.94% per annum.
Table 21
Greatest Rate of Return (Gross Per Year) Achieved Through Structured Products, Depending on the Legal
Form
structured certificates 24.00%
closed investment fund 38.58%
foreign fund 18.66%
investment 18.62%
structured bond 18.00%
investment policy 30.45%
life insurance unit-linked 14.94%
Table 22
Data for SPDR Gold Index
29.10.2010 131.48
29.04.2013 142.09
Conclusions
The article attempts to compare the direct and non-direct investment in the stock market indices. Indirect
investment means a purchase of a strictly preferred particular stock index by an investor on the stock exchange.
In contrast, indirect investment is the one of structured products based on stock market indices, i.e., the
products of which the final result depends on the development of the stock market indices. The analysis shows
that it is impossible to explicitly answer the question, because at certain times the direct investment would seem
to be more appropriate than a non-direct.
However, knowledge of archival rates of return allows the estimation of the specified error of the
estimated future value of investments using a variety of methods including (Hadaś-Dyduch, 2014d).
References
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doi: 10.17265/1537-1514/2015.01.003
D DAVID PUBLISHING
Fundamental Principles and Financial Managements of the

Insured Education System Model (IESM)
Seniha Çelikhan
Gebze Teknik Üniversitesi, Kocaeli, Turkey
In the educational field, there is a need for a system to become effective, useful, and easily affordable and should
include users’ participation. This need was the main reason; the model named “Insured Education System
Model—IESM” is designed by author. The IESM is based on the principal whose expenditures of education in each
expenditure entry level will not be paid by the person itself. The insurance foundations are established to cover the
educational expenditures of the buyers. Suggested model could bring an auto-control to the mechanism; from the
cycle IESM generates, the educational insurance foundations, educational institutions, buyers, and households get
benefits. Furthermore, IESM can increase the quality of service, educational system, employment, and numbers of
students. The result should decrease the cost of the service. This study draws on the perception that the participating,
payable, profitable, and proponent IESM is likely to be accepted by the families who are already under the burden
of education cost of their children, therefore, it is likely to be applicable in practice. A descriptive and qualitative
research method is employed. A five-point Likert-scales based survey is prepared. Then, approval rates of the
IESM among households, students, and teachers are measured. The results show that the model received a high
approval level. In this paper, the fundamental principles and financial management models, joint education account,
and education investment partnership (EIP), which are the education financing systems proposed in IESM, are
discussed.
Keywords: insurance, education, principles, finance, management, profit
Introduction
Statistical figures on national education data have shown that the resources allocated to the national
education are not adequate; the educational needs of the entire population can’t be met by the state budget; the
supply is insufficient to meet the demand; therefore, education opportunity is not offered on equal terms and
not everybody can benefit from these opportunities equally. The private prep courses out of formal education
system have caused an exponential increase in the cost of education which families have to pay. The figures
also show that there is a huge difference in cost between private and public school spending. Students from
underprivileged households are deprived of the opportunity to attain education up their desired level and
demand for education differs along the line of socio economic levels in the society. Kindergartens are in low
demand except for the compulsory education institutions, private schools can’t flourish within the current
education system, and student can’t attain the education they desire.
Seniha Çelikhan, Ph.D., professor, City and Regional Planning, Gebze Teknik Üniversitesi, Kocaeli, Turkey.
Correspondence concerning this article should be addressed to Seniha Çelikhan, Gebze Teknik Üniversitesi, Mimarlık Fakültesi,
Şehir ve Bölge Planlama Bölümü 41400 Gebze/Kocaeli, Turkey, P.K: 141. E-mail: celikhan@gyte.edu.tr.
22 FUNDAMENTAL PRINCIPLES AND FINANCIAL MANAGEMENTS
In the field of education in Turkey (Türkiye İstatistik Kurumu, 2007; Devlet Planlama Teşkilatı, 2007;
Çelikhan, 2007), there is a need for a financing system, which is affordable, yet effective, as well as profitable,
and is based on user participation. This model establishes the basis for an education financing system after
consideration of the merchanting houses (Retrieved from http://www.irs.gov/newsroom/article/0,,id=107670,00.
html; Retrieved from www.vakifbank.com.tr/1501.aspx; Retrieved from www.akemeklilik.com.
tr/hayat_urunleri/surekli_egitim_sigortasi.asp; Retrieved from www.fortis.com.tr/bireysel/ideal_egitim_
sigortasi.jsp; Retrieved from www.tebsigorta.com.tr/BireyselSigortacilik/CocukEgitimiOzellikler.aspx;
Retrieved from www.axaoyak.com.tr/u-ce.asp) is created by the author based on revenues created through JEIA
and/or Education Investment Partnership (EIP), which would pay for current or future financial needs of
education. In this way, a sustainable funding for education is made affordable through small payments. In case
of death, disability, or retirement of the investor, the education costs are continued to be paid without
interruption by means of education insurance, pension, or through bursaries and loans granted to students. In
this way, young prodigies who might miss out on education due to lack of funding can be integrated into the
society and the humanity. The model also entails more efficient human resource management and creates
employment, all the while paving the way for development of innovation centers where natural resources are
sustainably utilized.
Method in the study, which draws on the perception that the participating, payable, profitable, proponent
insured education system, is likely to be accepted by the families who are already under the burden of
education cost of their children, therefore it is likely to be applicable in practice. A descriptive and qualitative
research method is employed. A five-point Likert-scales based survey is prepared. Then, approval rates of the
IESM among households, students, and teachers are measured. The results show that the model received a high
approval level. The surveys are conducted in preschool, elementary and secondary school levels in selected
districts of Istanbul, namely Kadıköy, Beyoğlu, Fatih, Adalar, and Tuzla. The research units are households
who have children attending in these schools, and the teachers. It is assumed that the selected districts have
appropriate representation of the target groups. The questionnaire is pre-tested for reliability and validity by a
group of 15 people at the Gebze Institute of Technology, and revised accordingly. The survey forms included a
brief explanation of the Insured Education System Model (IESM) in the front page, and the 42 questions on the
next page aiming at measuring the approval rate of the model, in addition to the descriptive information about
respondents. The surveys are sent to the schools through their corresponding District Education Directorates
under the permit of the Provincial Directorate of National Education. During this process, the questionnaire is
controlled by the inspectors of the Provincial Directorate of National Education and a permit document is
issued. Then, a total number of 4,000 surveys are delivered to the District Education Directorates along with the
permit to be forwarded to the schools. Each school principal was in charge of conducting the survey, making
sure that the questions were answered by a teacher and three households for each independent variable, namely,
“number of children”, “education level”, “income level”, and “occupation”, totalling up to 13 units from each
school. Then the principals are sent back with the surveys to the District Education Directorates. The total
number of surveys which were sent back is 2,369. The return rate of the survey is 60%. Statistical analyses on
the data from the surveys are done via SPSS program. The data is examined through frequency analyses, cross
tabulation, descriptive distribution of the variables. Relationships among the variables are tested using
Ki-Square test. A variance analysis is conducted on the answers by the variables. Later, the 42 questions are
grouped under four components through factor analysis, and then the relationship among the four components
FUNDAMENTAL PRINCIPLES AND FINANCIAL MANAGEMENTS 23
and the variables are examined. In this article, the fundamental principles and financial management models,
joint education account, and EIP, which are the education financing systems proposed in IESM, are discussed.
Joint education account and EIP financial management models reconstruct the approaches of all of the
participants of IESM (government, educational institutions, financial institutions, and households) and all the
transaction practices of the current financial management systems (stipend, banking transacton, cooperatives,
joint-stock companies, sponsors, pension fund, and foundations) in line with the objectives of the IESM.
Fundamental Principles of the Model of Participatory, Payable, Profitable,

Potent, IESM
 Public or private financing companies whose legal frameworks are defined by the law shall prepare
financial schemes in the form of education investment packages, providing alternatives for the types of
payment of the investment, or repayment options (annual, multi-year, total), as deemed appropriate for students
enrolled in schools at different stages of education, and in consideration of education cost demanded by
educational institutions;
 Households, or natural and legal persons who would like to be a sponsor of education, or the student
him/herself shall sign contract with the public or private financing company of their choice for the chosen
education investment package through a JEIA or EIP;
 The cost of education, for which a contract has been signed, shall be paid by the parents, the sponsor
individuals, or institutions (by installments or as immediate payment); the student, who has received bursary or
loan, shall pay back when he/she graduates based on the credit value of that year in terms of compulsory
service or interest free money depending on the circumstances;
 The student shall enroll to a school of his/her choice among those which conform the conditions of the
education investment package he/she has signed for, then shall submit documents of school enrollment to
public or private financing company, which has offered the education investment package in question;
 The public or private financing company, which has offered the education investment package, shall pay
for the education cost of the student in accordance with the conditions set out by the contract signed by the both
parties;
 Educational institutions, which receive quality certificate, shall prepare price lists for payment packages of
financing companies and shall sign contract with any financing company of their choice;
 The government shall prepare legal framework for the IESM model;
 There will be competition among financing companies; a parent, student, individual, or institution
(investor) will choose to sign a payment contract through the most reliable JEIA or EIP which offers better
payment scheme and various combinations of education package; whereas an educational institution will opt
for signing a contract with the most reliable JEIA or EIP, which has the highest capital and ability to pay top
prices;
 There will be competition among educational institutions. A parent or student will enroll to a school which
offers higher quality of education, whereas a financing company will opt for signing a contract with an
educational institution which has the highest capital capacity and offers the best quality of service at the lowest
price;
 There will be interaction among actors of the IES model, such as parent/student, financing company, and
educational institution;
 Actors of the model will create self-control mechanism over one another;
 All of the actors who take part in the IES model will benefit from the system at the highest level;
 Through this model, a sustainable service system with high quality, affordable/expensive, participatory,
and effective, is encouraged;
 The model system is open to improvement on requests of the actors (to increase quality, to lower/increase
price, to increase number of students, to increase employment, to grow capital, and to enlarge service area);
 Education payment packages shall offer different alternatives and shall cover all education levels,
(kindergarten, compulsory education, high school, university, graduate school, and Doctorate program), and all
schools (public or private schools, universities, and higher technology institutions);
 Public schools shall be privatized within the IESM or shall be managed by the state within the framework
of the IESM;
 Household and student will be both the controller and the beneficiary of the system;
 The quality gap among educational institutions will diminish;
 There will be no social class differences in education; students coming from low income or poor
background will exercise their constitutional right of education on equal setting as those of higher income;
 Household and student who choose not to sign a payment contract through a JEIA or EIP will pay
education cost to the school on their own;
 The IESM is encouraging in its core;
 The system is subject to the relevant open market rules;
 The system provides education opportunity at any level in any condition;
 This model promotes institutional cooperation amount financing companies, educational institutions and
household/students.
Financing Structure of Model of Participating, Payable, Profitable,

Proponent IESM
The model is structured to create an auto-control mechanism through a financing system based on
cooperation among educational support institutions, educational finance Institutions, and beneficiaries, and to
increase service and quality based on free market principles, while maximizing benefit and minimizing
education cost. This system can briefly be described as a model based on certain basic principles, which
functions through joint education accounts or education investment funds within finance institutions and
flexible to adjust advantages provided to the beneficiaries. Education support institutions are expected to
deposit money in these accounts and the money collected in these escrow accounts will be paid by the financing
agency to the contracted educational institutions under education insurance framework to cover all the
educational cost of the beneficiary, and the profit from these transactions of lump sum money is to be
transferred into education expenses.
JEIA
JEIA will be based on individual education saving accounts with tax reduction and dividend income,
which will be consolidated under a joint account where the dividend of the joint account is allocated to
individual accounts, so that the users of the system receive higher profits. Fundamentals of the JEIA are as
follows:
(1) On behalf of a beneficiary and annual tuition fee premiums for at least one year period, starting from
the beginning of the academic year is deposited by an investor in the appropriate JEIA based on the level, the
year and the duration of education, and the total cost and the payment intervals (monthly, quarterly,
six-monthly, annually, or as payment in full) of education.
(2) At the end of each year, depending on the circumstances, consolidated dividend income in each JEIA
is allocated as beneficiary dividend. The consolidated dividend income cannot be lower than that of individual
education investment account.
(3) When used as tuition fee, the dividend income will be exempted from tax.
(4) The tuition cost of the beneficiary is paid by the financing institution to the educational institution at
the periods set out in the agreement between the two.
(5) The surplus of the dividend income in the joint invest account, after the tuition cost is paid, is taken
into account, when the reduced-rate premium payments for the next tuition payments are deposited.
(6) In case that the student cannot complete the education (due to illness or death), the money is paid back
to the investor along with the dividend income in accordance with the terms of a regular saving account. The
investor is not eligible to the higher dividend income benefit accrued through joint account. The profits made
by the financing institution through these practices are put to use as scholarships or loans for students.
(7) In case that the investor dies or becomes unable to pay (due to unemployment) before paying up all
installments of tuition costs, an appropriate education insurance (risk/ or cumulative) becomes operational. If
the money coming from education insurance program is not sufficient for the student to finish his/her education,
then, in lieu of the investor, the pension insurance program of the parents, or any other public or private
insurance programs the parents might have, will pay for the remaining premiums to the JEIA. Those who do
not have any insurance support within family are given scholarship or student loan. The beneficiary can apply
for a scholarship or a student loan at any public or private financial institution. The student will pay this
financial support in forms of compulsory service, or as money after employment at the value of the year, the
loan was taken with no interest, in installments or in full.
(8) The investor can deposit money in JEIA to pay for his/her own tuition cost or that of any number of
students.
(9) Any students regardless of age who provide proof of enrollment in any educational institutions can
benefit from JEIA.
(10) Anyone can invest in individual education investment account to pay for his/her tuition cost.
(11) Investment by those who do not have children in JEIA is considered as charitable endowment. These
moneys are given to educational institutions named after the investors or to the ones where the students in need
of scholarship are enrolled by the financing institutions to pay for their tuition costs.
(12) Financial institutions take precautions to keep the dividend income at the highest level in the JEIA.
(13) The JEIA can be opened in the bank or in institutions approved by the government.
(14) The JEIA is supported (through tax reduction, Social Security, Bağ-Kur, Pension Security Program
payments, and etc.) and controlled by the state.
(15) Finance institution can make group buying deals or preferential trade agreement with education
institutions so that the tuition costs are minimized. The profit arising from such agreements is transferred to the
investor.
(16) Financing institutions which open JEIA provide all support measures to make the investment
appealing for the investor.
(17) The JEIA cannot be closed or transferred until the proof of termination of education by the given
student is presented.
(18) Payments of JEIA premiums are made in money, which cannot be exchanged for any other assets.
The money transferred to the education investment trust is exempt from the terms set out in topic 6, and is not
subject to penalty provisions.
(19) Those who invest in individual education investment account are directly considered as having
education insurance.
(20) The tuition fee might vary by the institutions; and depending on the circumstances, the expenditure on
books, stationary items, school uniforms, research material, school fees, food and accommodation, and
transportation are considered as part of the tuition.
(21) Premium payment due to financial institutions can be calculated either based on the remaining
amount after the payment, or based on the annual cost.
(22) Those investors who do not wish to participate in JEIA can open individual education investment
account, which is a tax-exempt account with dividend income.
(23) A law on the joint and individual education investment accounts should be enacted; and the laws
regulating social security, pension security, and Bag-Kur system should be necessitated by the implementation
of the IESM.
(24) Individual education account is subject to the terms and conditions of individual education investment
accounts except for the account properties (Çelikhan, 2007). In order for the individual and joint education
investments accounts to be operational, the education system has to be adjusted to the IESM.
EIP
EIP will be a part of the education sector. The education sector, which has input and output relations with
many sectors, such as teaching, construction, stationary materials, computer and software, publishing, food,
clothing, furniture, and etc., is one of the major driving forces of the economy. It creates sustainable
employment and generates added value in a wide range of production areas and processes. EIP will be
established as high-profit generating finance institutions within the capital market on the basis that the
participants invest in large-scale education projects in order to pay their specified education cost. EIP builds
and operates educational facilities at all levels of education, dormitories for students, training courses (language,
vocational, sport, music, art, and etc.), and undertakes through production or procurements the materials and
services needed by the aforementioned facilities.
(1) These are some considerations regarding EIP. A law regarding EIP must be enacted.
(2) Any household who has or plans to have children will be entitled to buy stock shares of specified
amount, installments, and payment rate, depending on the level of education desired, the year of schooling,
costs involved, and income level of the household.
(3) Stock dividends of shares will be exempt from income tax.
(4) At each disbursement time, the amount of the profit made from the stock dividends will be deducted
from the remaining payments, and will be added to the partnership share so that the profit margin will increase
and the payment time will be shortened. When the student starts to go to school, the cost of education will be
deducted from the partnership share in the interest of the beneficiary according to the specified payment period
agreed by the educational institution.
(5) It is for the benefit of low income families to start buying equity shares at least one year ahead of the
start of the schooling for their children to make their payments easier.
(6) In EIP, it is essential that the investor not only gains benefit from his/her own investment, but also
takes shares from the higher profit gained by the total capital accumulated through partnership. Through this
stipulation, any increase in the number of partners in the program means a decrease of education cost per
capita.
(7) In case that the partners of the EIP declare bankruptcy or that profit from the investment is less than the
annual minimum earned interest, the state will interfere as a guarantor.
(8) The education expenses of the beneficiary will be paid against invoice to the relevant education
institution by the EIP in accordance with predetermined periods and the amounts.
(9) It is important that the profit made through in advance or bulk purchases will be distributed among
partnership shares.
(10) Once the profit which falls to the beneficiary’s share reaches the amount of predetermined cost of
education, payments in installments will come to an end. However, the profit made by the EIP from its
collective account will be used to balance off investments in bursaries, credits, and retirement funds.
(11) EIP expires at the end of schooling of the beneficiary.
(12) If profit from EIP is used outside of investment in education or educational expenses, it will be
subjected to the income tax and a penalty of 10%.
(13) Partners in EIP can take advantage of group discounts when enrolling in enterprise-established or
contracted schools.
(14) EIP guarantees the payment of education cost as specified in the contract to the relevant institutions.
All necessary corporate affairs to this effect will be undertaken by EIP.
(15) An EIP will not be an impediment to the schooling of the beneficiary at an institution that is not
affiliated with the partnership.
(16) Those who would like to make donation for education will buy a share from EIP for each student
he/she would like to make the donation for. The EIP will distribute the donation to the specified student or the
ones that are selected based on merit or financial need.
(17) In case of a death/disability/retirement of a partner who has signed the EIP contract, the amount of
dividend is not enough to cover education cost, then the beneficiary is entitled to a suitable education insurance
scheme. In the case that the fund from the education insurance scheme is not enough to cover the cost of
education, then the terms laid down in the contract will be carried out by the retirement insurance agency of the
investor. In case that the student is not eligible to any insurance, he/she will be granted credit or bursary. The
beneficiary will pay back the credit during or after graduation at the credit value of that year in terms of
compulsory service or money free of interest.
(18) The state will take necessary legal actions to amend internal or inter-organizational systems in order
to make sure that retirement insurance agencies will be able to take on the terms and conditions of the
partnership contract on behalf of the investor as prescribed by the model.
(19) The retirement insurance agency, which takes the partnership on behalf of the investor, will not
terminate the partnership, unless its expenditure for each beneficiary is reimbursed as dividend. There will be
legal regulations to this end.

(20) In case of death or disability/unemployment of the partner, if the beneficiary is still in school, the
dividend will be spend to cover the remaining education cost of the student; or the stipulations in topic 17 are in
effect. If the beneficiary is no longer in school, the remaining money will be paid back to the beneficiary or the
investor/successors as dividend off and liable to tax.
(21) EIP is subject to state inspection and support (tax exemption, retirement insurance investment, and
land provision).
(22) Those who invest in EIP will be entitled to benefits from an appropriate education insurance scheme.
Conclusions
When education programs and levels are taken into account the Financial Management Models of IESM,
households not only will benefit in terms of education cost, but also will enjoy opportunities of employment
and higher education quality provided by the IESM system. If investing in JEIA and EIP becomes appealing to
households even before they have children or just after they have children, the money accrued in these accounts
will help reduce Turkey’s demand for foreign credits and increase investment credits
In a simple, calculation can be illustrated that the benefits of payments of education cost through financing
institutions as proposed by the model are rather individual payments by households. When the IES model
becomes operational, the profits made through bulk deposits and preferential trade will be given back to the
stakeholders, thus will spread to the society as a whole. If implemented with duly precautions and security
measures, Turkey can set an example for other countries with IESM.
References
Akbank sigorta verileri. (2007). Akemeklilik for education insurance. Retrieved from
www.akemeklilik.com.tr/hayat_urunleri/surekli_egitim_sigortasi.asp
Axa Oyak sigorta verileri. (2007). Axa Oyak for education insurance. Retrieved from www.axaoyak.com.tr/u-ce.asp
Çelikhan, S. (2007). Katılımlı, Ödenebilir, Yararlı, Etkin, Sigortalı Eğitim Sistemi (Köye-SES) Modeli (The model of
participating payable, profitable, potent insured education system (4pes-IESM)). Kocaeli: Gebze Yüksek Teknoloji
Enstitüsü.
Devlet Planlama Teşkilatı. (2007). Beş Yıllık Kalkınma Raporu (Five-year development report). Retrieved from http://www.
dpt.gov.tr
Fortis Bank A.Ş. sigorta verileri. (2007). Fortis for education insurance. Retrieved from www.fortis.com.
tr/bireysel/ideal_egitim_sigortasi.jsp
IRS. (2007). IRS for insurance. Retrieved from http://www.irs.gov/newsroom/article/0,,id=107670,00.html
TEB sigorta verileri. (2007). Tebsigorta for education insurance. Retrieved from www.tebsigorta.com.
tr/BireyselSigortacilik/CocukEgitimiOzellikler.aspx
Türkiye İstatistik Kurumu. (2007). Data of Turkish Statistical Institute (TSI). Retrieved from http://www.tuik.gov.tr
Vakıf Bank sigorta verileri. (2007). VakifBank for insurance. Retrieved from www.vakifbank.com.tr/1501.aspx
doi: 10.17265/1537-1514/2015.01.004
D DAVID PUBLISHING
E-learning Content and Knowledge Characteristics

Empirical Case Study
Asmahan Majed Altaher

Applied Science University, Amman, Jordan
Knowledge characteristics are essential in leveraging knowledge value; they are more evident with explicit
knowledge ease of use, transfer, and mobility. However, tacit knowledge exhibits other characteristics, in order
to contribute and transfer. The aim of this article is to show how knowledge management has a positive
contribution on e-learning contents through a model proposed to support this perception. The article focuses on
the characteristics of knowledge and its effect on e-learning content, the nature of knowledge, and the quality
of content in e-learning system, in order to improve the content of the knowledge and facilitate the e-learning
system usage, especially that knowledge and e-learning have much to offer each other. The result lead
recommends that the education institutions should understand the knowledge characteristics and the potential
techniques that support transfer knowledge as Edraak Jordanian initiative goes on doing, in addition, the education
institutions should understand which types of knowledge can by articulated or which knowledge can be through
practices or apprenticeship. Finally, the education institutions need to organize and categorize the knowledge so
that it can retrieve when it’s needed, Edraak initiative is successful to introduce many courses in deferent topics and
the content was clear and helpful for many learners to have training course and keep continuance learning in all
society.
Keywords: knowledge characteristics, e-learning content, explicit knowledge, tacit knowledge, codify-ability,
explicitness, teach-ability
Introduction
Knowledge management is the access to experience and expertise that creates new capabilities enables
superior performance and encourages innovation (Maryan & Dorothy, 2001). Knowledge management is
concerned with the exploitation and development of the knowledge assets, managing entails processes
associated with the identification, and sharing and creation of knowledge. Knowledge management is likely to
view knowledge as an asset to develop organizational norms and values, which support the creation and sharing
knowledge (Anantatmula & Stankosky, 2008). Many education institutions start to create their knowledge
repositories in order to support learning process and the new e-learning content. The education institutions
offering degree courses in new media produce with basic competencies in standard graphic and authoring tools,
rather than the specific mixture of learning-related (Trentin, 2010). Knowledge and skills are required to carry
out effective e-learning content development (Belisle, 2008)
Asmahan Majed Altaher, associate professor. Applied Science Private University, Amman, Jordan.
Correspondence concerning this article should be addressed to Asmahan Majed Altaher, P.O. Box: 166-11391, Amman, Jordan.
E-mail: a_altaher68@hotmail.com.
30 KNOWLEDGE CHARACTERISTICS EMPIRICAL CASE STUDY
E-learning can be considered as a process of combining content with support and community. Networked
technologies are used to create, foster, deliver, and facilitate learning anytime and anywhere (Holsapple &
Joshi, 1999). In addition to providing delivery mechanisms for content, internet tools are also used to mentor
and monitor learners, facilitate interaction among dispersed learners, introduce subject matter experts, evaluate
the learning experience, and foster virtual communities among practitioners (Bassoppo-Moyo, 2006; Trentin,
2010).
The primary mission of educational institutions is the creation, preservation, integration, transmission,
and knowledge application. Educational institutions are synchronized with the functionalities of
knowledge management. Thus it is logical that knowledge management tools and technologies can be applied
to e-learning in several ways such as e-learning portal, dynamic delivery, and presentation of the content
(Coulson, 2000).
E-learning can provide a single experience and the e‐learning concept can be treated as a technological
advancement with advantages and disadvantages. The ability of information, knowledge, and communication
technologies starts to realize its various components, formulating a wide range of applied informatics. The
common practice to create an e‐learning platform, adapt content or buy content, and deliver on a 24‐hour basis
the learning material to various learners has a justification: It provides an easy way to claim presence on
e‐learning irrelevant to the absence of mechanisms that exploit the value diffusion for the learners and the
trainers (Sharp, 2006). The dynamic nature of learning, the different learners’ preferences, the customized
learning content, and the establishment of non-sequential learning scenarios seem to be crucial obstacles for the
majority of e‐learning platforms. From this point of view, e‐learning is not an effective solution, nor a
motivational driver, when people do not capitalize on its value dimension. E-learning can offer individualized,
as well as group instruction, allows you to combine knowledge management, learning content in order to
support the learning processes; it is not a process in itself. The key to e-learning success in an organization is to
tie e-learning to the students’ needs and then measure its impact on those needs (Mishra & Ramesh, 2005;
Siemens, 2004).
Knowledge content delivered through the internet is instantly updatable. E-learning allows people to keep
up with the rapid changes that define the global world. In order to access the characteristics in each content area,
the education institutions should find a way that develop and uphold the quality of the educational experience
to provide valuable content, providing valuable content is accomplished through the use of animation software
and interactive multimedia, which are capable of illustrating interconnected processes within complex systems
and need to course management systems that are used to create e-learning training type and delivery approach
from institution to institution (Widding, 2007). The article was focused on the knowledge characteristics and
e-learning content. Many writers believe that there is a relationship between the two concepts (Dick, L. Carey,
& J. Carey, 2005). The paper is organized as follows: In first section, it is introduced literature review; the
second section will be about research framework and discuss-phase of this framework; next, it is about
methodology, and then statistical analysis; and finally the conclusions.
Knowledge Characteristics and E-learning Content Framework

E-learning content will explain through deferent example from Edraak initiative. The three types of the
knowledge characteristics were discussed below in the article. Next section will be about the effect of
knowledge characteristics e-learning (Figure 1).
KNOWLEDGE CHARACTERISTICS EMPIRICAL CASE STUDY 31
E-learning Content
Knowledge Knowledge
Explicitness Knowledge Codifi-ability Teach-ability
Figure 1. Framework of e-learning content and Knowledge characteristics. Source: Researcher’s adapt.
Effect of Knowledge Characteristics E-learning

Knowledge characteristics and e-learning will converge into knowledge collaboration portals that will
efficiently transfer knowledge in an interdisciplinary and cross functional environment. In addition, knowledge
characteristics have to develop a set of content specific characteristics that demonstrate highly effective
teaching and learning (Rowley, 2000). The goal of e-learning is to train adult learners by increasing and adding
knowledge to their schemas. Therefore, e-learner is learner-controlled, because learners must apply their
current knowledge and integrate the content elements into a learning platform that learners can access
(Williams, 2007). E-learning contents are defined as those digital learning materials which are bias-free,
pedagogically flexible, customisable, and accessible. E-learning may be in or out of the traditional location. It
can be self-paced or may be instructor-led and synchronous. E-learning is suited to flexible learning, but it can
also be used in conjunction with face-to-face teaching (Keenan & Yao-kuei, 2006). One of the important
foundation in Jordan that supports the education in Arab world is Queen Rania Foundation (QRF). It introduced
Edraak initiative and was aimed to revolutionize the quality of education by introducing a massive courses
online for anyone at anytime anywhere. Edraak is a massive open online course (MOOC) platform. Next
section intrudes knowledge characteristics and its important in e-learning content with deferent example from
Edraak initiative.
Types of the knowledge characteristics of were discussed below:
 explicitness;
 codify-ability;
 teach-ability.
The education institutions purpose must adopt wide variety knowledge in e-learning, such as virtual
learning, the university, and self-directed learning (Barker, 2005).
Knowledge Explicitness
There is a common view prevent that knowledge begins with an individual minds (Bassoppo, 2006). The
individual or group that acts with e-learning system can always add necessary value through the interactive
with a system; in order to introduce explicit knowledge to the e-learning system, the institutions should
commitment to triggering new questions and enquiries, plus add a high level of content (Rowley, 2000). The
system must encourage and help the student to transfer their ideas and enable them to have a knowledge, also
the e-learning should have the ability to convert the tacit knowledge into the right content, which should
connect with interactive learning system that can help to improve the student’ ability, skills, and responsibilities
(Goh, 2002), for example, the new MOOC platform will present the Arab world with unique and vital
opportunities that can be part of a necessary revolution in education and learning. Edraak has been a pan-Arab
effort meant to serve the entire Arab region. As such, the QRF has sought support from visionary leaders across
the Arab world, as founding partners.
Knowledge Teach-ability
Teach-ability reflects the extent to which the knowledge can be taught to other students, through training,
apprenticeship, and so on. Of course, some knowledge could be high in teach-ability (Barker, 2005), as
knowledge maturing is basically the interconnection of individual learning process where knowledge is taught
and learnt. Whereas immature knowledge is hard to teach, in order to increase the knowledge teach-ability, the
institutions should create e-learning content transferred to student and support this system with verity tools to
help students to practice themselves (Wafula, Miriti, & Goodman, 2012). Edraak initiative allows professors to
inspire thousands of Arab learners thirsting for currant and relevant content and provide education institution
with an opportunity to explore realm of online education.
Knowledge Codifi-ability
Knowledge codification is about transferring the knowledge to application. The institutions should have a
perspective toward the knowledge capability and determine what they need from the application. Further,
researchers define codification in tow side as explicit and tacit, as regards to the knowledge types. Codification
is high, when institution has tacit knowledge. The codification and diffusion knowledge can align long
continuum explicitness, teach-ability (Goh, 2002).
Exploring the knowledge codification is important in order to create the e-learning system. Codification is
treated as a multidimensional construct. They focus on three different forms of codification: knowledge
encoded in codes and figures form (Maryan & Dorothy, 2001); knowledge encoded in words and texts which
are less abstract form; and knowledge encoded in pictures and images which are the least abstract form. They
find that the effect of knowledge codification on organizational is moderated by a strategic content. The literature
about knowledge codification, diffusion, and application reveals some issues that need to be reviewed.
The knowledge codification needs to be specific and have many details, when explaining knowledge flow
in an institution (Keenan & Yao-kuei, 2006). The example here from Edraak initiative gives great opportunity
for institutions to locate and attract talent from across the region.
Design and Methodology

The data and information are developed as the following action plan:
(1) To ensure that knowledge characteristics is important to support e-learning content with regard to
knowledge management;
(2) To identify e-learning content ensures knowledge linked to objectives and targets of education and
learning plans.
To collect data, researcher conducted primary and secondary resource. The researcher adapts the
descriptive studies, because it can answer questions such as “what is” or “what was”. The researcher, involving
data collection and using existing records to collect data important to emphasize research methods, can describe
KNOWLEDGE CHARACTERISTICS EMPIRICAL CASE STUDY 33
a set of observations or the data collected (Sekaran, 2003). The article adapts the descriptive study, which
focuses on important area related to knowledge characteristics and e-learning content. It is a kind of
collaborative research’s efforts. In order to spot in e-learning, the researcher presents foundation that supports
the field called Edraak as the case study. The researcher used deferent web site, scientific previous books, and
articles related.
Result and Discussion

Knowledge and electronic learning is an important research area, as the emerging of new landscape of
knowledge economy and requiring integration of knowledge and learning (Coulson, 2000). Knowledge
management tools and technologies must be applied to e-learning in several ways, such as e-learning portal,
dynamic delivery, and presentation of the content. In nowadays, knowledge is the power and the education
institutions should take their responsibility to help student and society development. To achieve this goal, they
should start to support people for continues learning through using e-learning systems, and in order to make the
learning effective and efficient, the university and education institutions start to take care of the learning
content and the nature of knowledge (Goh, 2002). The e-learning system must encourage and help the student
to transfer their ideas, enabling them to have knowledge. It should have the ability to convert the tacit
knowledge into the right content and this is a need to connect the learners with interactive learning system
which can help to improve the student’s ability, skills, and responsibilities. Knowledge built the history,
because the education sector starts to create new plans for disseminating knowledge by focusing on the
characteristics of the knowledge to make it effective. The education institutions should understand the type of
knowledge and how it can be useful, teachable, and easy for coding. To draw a helpful plan in developing
learners, the institutions should have a perspective toward the knowledge capability and determine what it
needs. In Jordan, Edraak, which helped the e-learning sector, represents a good example to disseminate and
share knowledge for student and learners in all society.
Conclusions
The article introduced important concepts area of the field of e-learning content and knowledge
characteristics through retrieving the previous resource and articles. Knowledge is very important and the
student work hard to accumulate high levels of knowledge, in order to achieve this goal. The learning
institutions care about the knowledge and make it explicate and available, whenever and wherever it needs.
Knowledge should be codify-ability, explicitness, teach-ability, and suitable for new forms of learning like
e-learning and distance learning. E-learning is a fundamental area in the new world, because of that, the
research was focused on Edraak initiative as a case example of e-learning content. The initiative was granted by
the QRF, aiming to support and revolutionize the quality of education and continues learning. The writer
recommends that the education institutions should understand the knowledge characteristics, in order to make
the e-learning content rich, achiness, and depth. To aggregate a high level of e-learning content, Edraak
initiative introduces many courses in deferent topics and the content was clear and helpful for many learners to
have training courses and keep continuance learning.
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doi: 10.17265/1537-1514/2015.01.005
D DAVID PUBLISHING
Communication Points and Tools in the Air Transportation

Operation Service Process: Ataturk Airport Implementation
Savaş Selahattin Ateş, Celal Hakan Kağnıcıoğlu

Anadolu University, Eskisehir, Turkey
Air transportation service is given by the complementary services of private companies like airline, airport, airport
ground handling companies, and public institutions like customs, security, and border health administration. The
companies in the process must communicate and interact each other and themselves fast and correct in order to
present the planned air services. In this study, the tools and the usage places of these tools in the process of air
transportation companies’ operations are examined for Atatürk airport which is selected as the largest airport in
Turkey. In the first part of this study, a literature review is given about the airline operation process used for flight
planning, monitoring, and ground operation processes in the air transportation companies. In the second part,
communication tools are listed by content analysis. In the last part of the study, the lists are evaluated by the
operational personnel of the air transportation companies in Atatürk Airport with semi-structured interviews.
Finally, a network diagram showing the communication points and communication tools in air transportation
operation service process for Atatürk Airport is developed.
Keywords: air transportation operation service, communication points, communication tools, Atatürk airport
Introduction
Air transportation is a service to get advantage of place and time for transportation of passengers,
baggage, mails, and cargos between two points with an aircraft. Airline passengers and cargo companies
take the transportation services from the other air service companies. However, the services supplied by
the airlines are the integration of more than one companies’ services that are complementary to each other.
Airline companies work with other companies such as airports, airport ground handlings, security, customs, and
etc. to perform the flight operations. The shareholders use various tools for the planning of flight operation
process. These tools serve as a bridge connecting the participating companies to each other during the service
process.
The most important shareholders in the flight operation process are airline, airport, and ground handling
companies. The presentation of service safely, economically and uninterruptedly depends on working with the
* Project Supported: This study was supported by Anadolu University Scientific Research Projects Commission under the grant of
No. 1005F105.

Savaş Selahattin Ateş, Ph.D., assistant professor, Anadolu University, Faculty of Aeronautics and Astronautic Department of
Aviation Management.
Celal Hakan Kağnıcıoğlu, Ph.D., associate professor, Anadolu University, Faculty of Economics and Administrative Sciences,
Department of Business Administration, Eskişehir, Turkey.
Correspondence concerning this article should be addressed to Celal Hakan Kağnıcıoğlu, Anadolu University, İİBF Yunus Emre
Kampusu, 26470, Eskisehir, Turkey. E-mail: chkagnic@anadolu.edu.tr.
36 ATATURK AIRPORT IMPLEMENTATION
standards set by ICAO (International Civil Aviation Organization). These standards determine the structure and
content of the communication points and tools in the operation. Therefore, airline services can be given on time
with required safety and reliability standards (Kazda & Caves, 2000).
The airline companies manage the operation process under the control of A-OCC (Airline Operation
Control Center) (Castro & Lewis, 2011). There are tactical units under A-OCC. These units are responsible for
the management of daily flight operations. The A-OCC is responsible for the implementation of the planned
schedules and for updating the operation schedules in the operation process (Kazda & Caves, 2000). The
success of the operation depends on the coordinated working of A-OCC’s departments with other companies.
Departments of A-OCC can be listed as follows (Kazda & Caves, 2000; Kohl, A. Larsen, J. Lasren, Ross, &
Tiourine, 2004) :
 operation management group;
 flight dispatch department;
 crew planning department;
 station operation control department;
 maintenance operation control department;
 support group.
The sub-groups of A-OCC have communication interactively with the airport in the process of
operation. Airports are the most important infrastructure providers of the flight operation process. Capacity
planning is under the responsibility of slot planning and slot coordination departments in airports. Air Traffic
Control Department is responsible for transit overflights, approaches of aircrafts, and movement area
operations (operation of an aircraft in the Runway, Apron, and Taxiway). In addition to these departments,
apron management service department is responsible for the services performed in the apron. Slot planning,
ATC, and Apron Management Departments have plans according to the operation decisions of airline
companies. These departments manage the operations like flight information systems, security services,
allocation systems of check-in desks and gates, announcement systems, baggage carousels, ramp area, and etc.
in the movement area and terminal building according to the plans of A-OCC (Directorate General of Civil
Aviation, 2008). For this reason, the information coming from A-OCC plays an important role in the
management of these operations.
Another shareholder that always has communication with the departments of A-OCC is airport ground
handling companies. Airport ground handling is defined as a service that is given to aircraft, passenger,
baggage, and cargo during the period of landing to take off an aircraft (Directorate General of Civil Aviation,
1996). Airport ground handling companies are responsible for most of the services supplied directly to aircrafts,
crews, passengers, baggage, mails, and cargos. These service operations are managed by G-OCC (Ground
Handling Operation Control Center) with departments of resource planning, ramp, operation, passenger service,
cargo, and support group (Figure 1). Supplied services by these departments are described in detail in the
SGHA (Standard Ground Handling Agreement).
Other companies which are contributing to the flight operation process are listed as cargo agents, aircraft
maintenance companies, corporations of aviation security, customs, and meteorology, civil aviation authorities,
and other aviation companies. All of these companies (shareholders) work together directly or indirectly for the
planning and management of the flights operation process (Clarke, Lettovsk, & Smith, 2000).
ATATURK AIRPORT IMPLEMENTATION 37
Figure 1. Ground handling operation control center.
The service process steps that are given by the shareholders can be summarized as follows:
 Departing passenger: The process is started with entrance to the airport for the departing passenger.
Passengers and baggage are separated during the check-in step. After that, departing passenger passes through
the security check. The passengers are subject to passport control, if the flight is an international one. After the
boarding step, the passengers get on the plane (Curcio, Longo, Mirabelli, & Pappoff, 2007; Ma, Kleinschmidt,
Fookes, & Yarlagadda, 2011).
 Departing baggage: Departing baggage, separated from the passenger after the check-in step, is subject to
baggage screening. Then, loading process begins after the baggage is sorted according to the flights (Jim &
Chang, 1998);
 Departing cargo: The process started with acceptance of the departing cargo. Documentation and security
control steps are completed after the cargo is unloaded from the land vehicles. Re-packaging (pelleting)
operation is performed in the next step. Finally, departing cargo is brought to the aircraft and then loaded on the
aircraft (Khan, 2000);
 Departing crew: Departing crew passes through the security and passport control process. After that, they
get on the aircraft;
 Arriving/Departing aircraft: After arriving aircraft landing in the runway, it goes to the park position
through the taxiways. Then, GPU (Ground Power Unit) is connected to the aircraft, chocks and safety cones are
positioned, and flashing lights are switched off. The passenger bridges and steps are connected to the aircraft
and gates are opened. After that, unboarding of the cargo, baggage, mail, and passengers is performed. After the
crew takes over the aircraft, the information is entered to the computers by the pilots. Furthermore, pilots brief
the weather conditions of arrival airports and calculate the performance of the flight legs. Fuelling, cleaning,
watering, air conditioning, and other necessity services are delivered to the aircraft simultaneously. Aircraft
gates are closed, after is the completion of technical controls, weight balance calculations, loading of cargo,
baggage, and passengers. The GPU is disconnected and chocks and safety cones are displaced. Flashing lights
are turned on, push-back is started, and then de/anti-icing is finished if it is necessary. After the air traffic control
clearance, aircraft can use taxiway and go to the holding position. And then, aircraft takes off (Norin, 2008);
 Arriving passenger: After the unloading of arriving passengers, they are carried to terminal building and wait
for their baggage. Arriving passengers go out of the terminal, after they take baggage (Gatersleben & Weij, 1999);
 Arriving baggage: Arriving baggage is unloaded from the aircraft. Then it is loaded to the baggage belt of
the carousels and meets with the owners (Jim & Chang, 1998);
 Arriving cargo: The pallets are distributed, after the arriving cargo is unloaded from the aircraft. The cargo
is passed through the document check and loaded into the land vehicles (Khan, 2000);
 Transit-transfer passenger: The transit-transfer passengers get out of the aircraft and are directed to the
connected flight.
Purpose and Method

Air transportation sector employs over 56.6 million people in the world. The sector’s contribution to the world
GDP is about 2.2 billon dollar (Air Transport Action Group, 2013). The air transportation sector is very sensitive
to the external risk factors, such as economic and political crises, fluctuation of fuel prices, and development of
new technologies. It is not possible for the companies in this sector to manage the external risk factors directly
originated from the outside of this sector. Therefore, the planning and managing of the flight operation service
effectively are very important for the sustainability of companies which have low-cost flexibility.
The study is carried out to define the flight operation process, to expose the tools which are used for
communication, and to determine the important process steps in which some verbal communications have to be
done. Finally, a network diagram showing the communication points and tools in the flight operation service
process for Atatürk Airport was developed.
Atatürk Airport, the biggest airport in Turkey, was selected for the implementation. The report notebooks
of 34 Anadolu University Civil Aviation Management students completing their summer practice in the Atatürk
Airport from 2006 to 2010 years, were used for the content analysis.
The communication tools and points which are used in the flight operation services were listed at the end of
content analysis. These lists were verified by 10 operation personnel who have been working in the air transportation
sector in Atatürk Airport. Semi-structured interview method was preferred during the verification stage.
The data of content analysis and semi-structured interviews were evaluated with the method of Miles and
Huberman interpretative approaches (1994). This method allows researchers to explain human activity and
social action. Interviews and observational data are recorded into written text for analysis. Framing data are
used by coding or various sorting operations as tables and figures. This method provides a means for
discovering the practical understanding of meanings and actions (Miles & Huberman, 1994). In the first stage
of study, the data which were collected from content analysis and semi-structured interviews were sorted as
items. In the second stage, items were summarized by tables. In the third and final stage, the results were
recovered from themes and relations in the tables. Then, a network diagram showing the communication points
and tools was developed for Atatürk Airport.
Results and Analysis

Routinely used documents, tools, and verbal communication points in the flight operation service are
demonstrated by the tables with results of semi-structured interviews and content analysis of the internships
report books. Shareholders usually prefer documents set by international standards for communication by
themselves and other companies. The documents routinely used in the flight operation management are listed in
Table 1. These documents, which are filled by authorized personal, include information about the operations of
the companies. These documents can be shared with other companies for giving information, if it is needed.
Table 1
Documents Routinely Used in Flight Operation
Documents
Contents Edited By Distributed To
Abbv.
ADCS Arrival-departure checking and searching form Handling Co. Customs
ADR Aircraft damage report Handling Co. Airline Co.
ASD Agency security declaration form Cargo Agnt. Shareholders
AWB Airway bill Cargo Agnt. Shareholders
BL Baggage label Handling Co. Baggage
BLCL Bulk load check list Operation Per. RampPer.
BP Boarding Pass Handling Co. Passenger
CCAF Check-in counters assigned to the form Terminal Co. Handling Co.
CF Catering form Catering Co. Airline Co.
CCF Cabin cleaning form Hanling Co. Airline Co.
CDF Customs declaration form Hanling Co. Customs
CI Captain info Hanling Co. Pilots
CIS Cabin information sheet Hanling Co Cabin Crew
CL Cargo label Cargo Agnt. Cargo
CM Cargo manifest Hanling Co. Shareholders
COM Comail Hanling Co. Hanling Co.
DPF Deportee passenger form Hanling Co. Shareholders
EBF Excess baggage form Handling Co. Passenger
FE Flight envelope Dispatch Pilots
FMF Flight and maintenance form Technic Per. Shareholders
FP Flight plan Airline Co. Shareholders
GENDEC General Declaration Crew Customs
HIR Handling irregularity report Hanling Co. Airline Co.
LI Load info Hanling Co. Pilots
LIR Loading instruction report Operation Per. Ramp Per.
LS Load sheet Hanling Co. Pilots
NOTAM Notice to airmen Authority Shareholders
PBF Passenger bridge form Terminal Co. Airline Co.
PIR Property irregularity report Hanling Co. Passenger
PM Passenger manifest Hanling Co. Shareholders
PRL Passenger reservation list Airline Co. Hanling Co.
PT Passenger ticket Airline Co. Shareholders
PS Passenger service list Airline Co. Shareholders
SCI Special cargo information Cargo Agnt. Shareholders
SE Slot extension parking space availability form Airport Co. Airline Co.
SF Service form Hanling Co. Airline Co.
TI Trip info Pilot Fuel Co.
TL Technical logbook Technic Per. Shareholders
ULDL ULD load check list Operation Per. Cargo Per.
UM UM forms Handling Co. Passenger
WDF Weapon delivery form Security Co. Handling Co.
WBF Weight and balance form Operation Per. Ramp Per.
WI TAF-METAR-SPECI-Weather charts Methorology Shareholders
In addition to these documents, there are also some verbal communication points in the steps of the
operation process. Verbal communication is preferred for fast communication. Start and finish times of
process steps, data used for calculation, and permission for the start of operations are reported to the
shareholders via verbal communications. That data are transmitted to G-OCC (Ground Handling Companies
Operation Control Center) and then recorded. The shareholders have the right to access G-OCC to get the
information when it is required. The verbal communication points in the operation process are demonstrated in
Table 2.
Table 2
Verbal Communication Points Routinely Used in Flight Operation
Verbal
Contents By To
Abbv.
ACII Aircraft inbound info G-OCC Departments
ACIP Aircraft in park position Operation Per. G-OCC
AGCI Aircraft gate close time info Operation Per. G-OCC
AGOI Aircraft gate open time info Operation Per. G-OCC
ATCC Air Traffic Clearance Pilot ATC
BFTI Boarding finish time info Passenger S. Per. G-OCC
BOSC Boarding start clearance Passenger S. Per. Cabin Crew
BPCI Boarded passenger count info Passenger S. Per. G-OCC
BSTI Boarding start time info Passenger S. Per. G-OCC
CACC Cabin cleaning clearance Ramp Per. Cabin Crew
CHBI Checked baggage count and weight info Passenger S. Per. G-OCC
CHCI Check-in close time info Passenger S. Per. G-OCC
CHOI Check-in open time info Passenger S. Per. G-OCC
CHPI Checked passenger count info Passenger S. Per. G-OCC
LNDI Aircraft landing time info G-OCC Departments
PLTI Passenger loading finish time info Operation Per. G-OCC
PUTI Passenger unloading finish time info Operation Per. G-OCC
TOFI Aircraft takeoff time info Operation Per. G-OCC
Not only documents but also verbal communication points are important for the management of the airline
service process. After the documents are filled, they are send to the other related service process steps. In this
way, information about the content of the document is clearly understood. Verbal and documental
communication points are demonstrated in Figure 2 which is developed by the study of Operation-Based
Network Diagram of Atatürk Airport Service Process Diagram (Ateş & Kağnıcıoğlu, 2013). Abbreviations
(Abbv.), used in the tables, are used in the figures, as well. Therefore, it is aimed to show the communication
process for the steps of airline services process in Atatürk Airport completely.
Some tools are used for planning and monitoring of flight operations, getting the permission of some
process, and announcement of the data to the shareholders in flight service process. Types and properties of
tools which are used in the steps of the operation process are asked to operation personnel during the
semi-structured interviews.
Figure 2. Communication points in the operation based network diagram of Ataturk Airport service process.
The most widely used tools are transceiver, telephone, and SITA (Société Internationale de
Télécommunications Aéronautiques) as it is shown in Table 3. The transceiver is a tool that is portable and has
channel options and low cost. It has a limited range and can serve only one user at a time in a channel. These
are some important limitations of a transceiver. SITA is a tool that has been used since 1949 by the air
transportation companies for a network of communications that allows sharing of operation information (SITA,
2013). Besides, SITA has been offering some other solutions like operation planning tools and decision support
systems for airports, airlines, terminals, and other shareholders for the last 20 years. Telephone is another tool
which is preferred by shareholders for the communication. Moreover, the tools, working with the internet
infrastructure, are also used in the management of operations. The most important reason of using these tools is
the speed and low cost of these tools.
Table 3
Tools Used For the Flight Operation Management
Company Type Position Tools
Station Control & Coordination Manager OIS-ACARS-FWZ-Transceiver
Airline Co.
Flight Operation Manager NETLINE-CFMU-Telephone-SITA-Internet
Operation Manager Transceiver-Telephone-SITA-OIS
Passenger Service Manager Transceiver-Telephone-SITA-SAP-OIS
Ground Handling Co. Ramp Manager Transceiver-Telephone-SITA
Operation Manager Telephone-Transceiver-Internet-SITA
Operation & Coordination Manager OIS -SITA-ACARS-Telephone-Transceiver
Senior Manager Assistant Transceiver-Telephone-OIS
Terminal&Airport Co. Operation Development Exp. Flight Information Screen-SAP
Flight Man. & Planning Chief Transceiver-Telephone-OIS
Some of the shareholders are working with the OIS (Operation Information System) that are developed by
themselves. Furthermore, a limited number of the OIS’s as FWZ (Sabre f:wz), NETLINE (Lufthansa IT
Systems), and etc. have become the commercial products that are used by the other companies in the
management of flight operation process. In addition, the common ERP programs (Enterprise Resource Planning)
as SAP can also be adopted by the companies. Additionally, the other systems as ACARS (Aircraft
Communications Addressing and Reporting System) integrated to aircrafts can be used. Finally, flight
information screens and announcement systems are used as the basic systems for the communication of the
passengers by the shareholders. All these tools that are used in the steps of the flight operation process are
aimed to facilitate the planning and monitoring of the steps of the operation process.
Conclusions
The documents, verbal communication points and tools, which are routinely used for the management of
airline service process in Atatürk Airport, are listed within this study. Moreover, communication points are
demonstrated on the operation-based network diagram of service process which is developed specially for
Atatürk Airport. It is understood that verbal communication used for the operation process is not adequate for
transmission of complex data. Recording and accessing of operational data after the date of operation are also
important. Because of that, standard documents must be used in the steps of operation process. Well-prepared
documents can accurately transfer a great deal of information in just a few seconds to operation personnel. In
spite of the growing usage of the routine documentation transmission, face to face and voice contacted
communication are still best ways to communicate the problems in operation process.
At the end of this study, one of the important key factors of the success of the operation process is to
prevent the repeated activities like recording and calculation of the same data by different departments in the
communication and documentation. Repeated recording of the same data and calculation of the same statistics
in different ways cause the waste of time for the operation personnel.
Fast and correct communication is determined as an important key factor of the success of the planning,
monitoring, and managing of operation process. In order to increase the productivity and effectiveness of the
activities in the process, communication must be strengthened. One of the weaknesses of the operation
personnel can be the low degree of communication culture. The important cause of communication problem for
people working in different companies, especially in verbal communication, can be the lack of common
communication culture. Not to record the conversations between personnel of shareholders and personnel
working in the ground handling companies is another weakness of the verbal communication when the aircraft
gets service on land.
Another success factor can be to come together by all shareholders semi-annually by meetings in order to
determine the problems in the current system and try to solve them cooperatively, for example, there is no
real-time monitoring system shared by all shareholders in Ataturk Airport. For this reason, operation personnel
need to transmit the information about the starting and finishing times of the job repeatedly both to their
companies and to other related companies. Moreover, routinely used documents are developed by the
companies independently. So, these documents cause many problems when they have to be used for different
companies. This situation increases the workload of the workers and decreases the efficiency of the workers.
Lots of operation data are recorded in different formats and converted to statistics in different ways by the
shareholders. Moreover, companies use various OIS’ and they are not integrated to each other. Therefore, there
are difficulties in data sharing of various companies. Besides, companies develop the same OIS’ independently.
Actually, it is better to develop and use the same OIS for all the companies. The system used for information
screens and announcements is not so sufficient that they cause the delays of the flights due to not reaching the
passengers on time. This system can be developed to increase the interaction between the passengers and
shareholders in Ataturk Airport. One good solution for the close interaction can be the usage of RFID systems
in the boarding tickets.
For the future studies, standards of the verbal communication in the steps of operation process can be
examined and developed. These standards can help the companies to communicate easily and correctly. Some
regulations can be made about the recording of the transceiver communication between the shareholders. Many
of these verbal communication is not recorded, so many conflicts can happen among the shareholders while
they do their jobs. Current models about the airline operation monitoring system are examined and new models
can be suggested for Ataturk Airport.
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doi: 10.17265/1537-1514/2015.01.006
D DAVID PUBLISHING
Customers Satisfaction Towards the Services Provided in Kuala

Lumpur International Airport, Malaysia
Mohani Abdul, Mohd Khairi Abdul Aziz

University Putra Malaysia, Serdang Selangor, Malaysia
Mastora Yahya
Poly-Tech MARA College, Kuala Lumpur, Malaysia
This study is conducted to measure customers satisfaction from the five dimensions of service quality, which are
empathy, tangibility, responsiveness, reliability, and assurance. A quantitative approach, using the
gap-model—SERVQUAL, has been used in the survey to gauge the opinions of Kuala Lumpur International
Airport (KLIA) customers chosen via convenient sampling. Based on 100 respondents picked from several parts of
the airport, the self-administered questionnaires were distributed and collected on the same day. Statistical tests
such as multiple regression and ANOVA were performed and the results obtained among others showed that
tangible elements of KLIA are the most important determinant of customers satisfaction followed by the intangible
elements such as empathy, responsiveness, assurance, and reliability. The results of this study will be helpful to the
management of KLIA in their effort to continuously upgrade their services in improving the customer services.
Keywords: customer satisfaction, empathy, tangibility, assurance, responsiveness, reliability
Introduction
Customer satisfaction is the foundation of any successful business which leads to repeat purchase, brand
loyalty, and positive word of mouth (Hoyer & Maclnnis, 2001). Thus, customer satisfaction has a positive
effect on an organization’s profitability. The issue on customer satisfaction is closely related to the quality of
services provided, which has become the focus for many hospitality-industry researchers. In particular,
knowing that how customers perceive the quality of products and services and that how those perceptions affect
their purchasing decisions is among the important issues for marketing executives. Satisfied customers would
be most likely to rate positively the company’s performance, which ultimately boosts the image or brand of the
company.
Due to the complex construct of customer satisfaction, it has been defined in various ways (Besterfield,
1994; Barsky, 1995; Kanji & Moura, 2002; Fecikova, 2004; Bennet & Rundle-thiele, 2004). The distinction
between customer satisfaction with tangible products and intangible service experiences can be identified by

Mohani Abdul, Ph.D., associate professor of Business Administration, Institute for Social Science Studies, University Putra
Malaysia, Serdang Selangor, Malaysia.
Mohd Khairi Abdul Aziz, Bachelor student, Faculty of Economics and Management, Universiti Putra Malaysia, Serdang
Selangor, Malaysia.
Mastora Yahya, Ph.D., senior lecturer, Poly-Tech MARA College, Kuala Lumpur, Malaysia.
Correspondence concerning this article should be addressed to Mohani Abdul, Institute for Social Science Studies, University
Putra Malaysia, Serdang Selangor, Malaysia. E-mail: mohani@upm.edu.my.
46 SERVICES PROVIDED IN KUALA LUMPUR INTERNATIONAL AIRPORT, MALAYSIA
their inherent intangibility and perish ability, as well as the inability to separate production and consumption.
Hence, customer satisfaction on services and goods may derive from or may be influenced by different factors,
and therefore, these two commodities should be treated as separate and distinct (Veloutsou, Gilbert, Moutinho,
& Good, 2005).
In the absence of tangible evidence, researchers and managers of service firms believe that service quality
involves a comparison of expectations with performance. Parallel to this idea, Gronroos (1982) developed a
model in which he contended that consumers tend to compare their expectation of the service with their
perceptions of the service they receive in evaluating service quality. He postulated that two types of service
quality exist: technical quality, which involves what the customer is actually receiving from the service; and
functional quality, which involves the manner in which the service is delivered.
This study specifically looks at the vibrant airport industry which is changing rapidly and the fact that air
travelers are able to choose their airports of arrival and departure and require airport marketers to differentiate
themselves through serving their customers’ needs satisfactorily comparative to their competitors. Aviation
trade publications and airport press releases provide convincing evidence that managers in the airport industry
clearly understand the importance of their customers’ perceptions of service quality (Tsai, Hsu, & Chou, 2011;
Kim & Lee, 2010; W. G. Kim, Ng, & Y. S. Kim, 2009; Bomenblit, 2002; Gooding, 1999).
KLIA is one of Malaysia Airport Holdings Berhad (MAHB) subsidiaries as well as Asia’s major aviation
hubs, located 50 kilometers south of Kuala Lumpur, in Sepang, Selangor. It has a 100km2 hectares in size and
has been the world’s largest airport with 4,000 meters long run-away. It has been declared as the 13th busiest
airport in the world by passenger traffic, the seventh busiest airport in Asia that handled almost 27 million
passengers and 670,000 metric tons cargo which makes it the 27th busiest airport by cargo traffic (Malaysia
Airport Holdings Berhad, 2011). Located within the ambit of the Multimedia Super Corridor (MSC), KLIA is a
comprehensive airport equipped with all the facilities needed for business, entertainment, and relaxation. KLIA
is bordered by four main cities: Kuala Lumpur, Shah Alam, Seremban, and Malacca.
Tsaur, Chang, and Yen (2002) argued that quality in airline services is difficult to describe and measure
due to its heterogeneity, intangibility, and inseparability. Hence, in this context, the gap-model (SERVQUAL)
has been proposed as a valid and reliable evaluation method in airline service quality studies (Gilbert & Wong,
2003; Park, Robertson, & Wu, 2004). It is used to compare the perceptions of performance (P) to expectation
(E), which has been widely used in past studies by various industries. Specifically, this study replicates the
SERVQUAL measurement of Parasuraman, Zelthaml, and Berry (1991) in determining the existence of
“service-gaps” in KLIA. This paper aims to analyze the relationship between the five dimensions of service
quality (empathy, tangibility, responsiveness, reliability, and assurance) of the KLIA and its customers’
satisfaction.
Dimension of Service Quality

There are various dimensions of service quality declared by previous researchers. Parasuraman, Zelthaml,
and Berry (1985) identified 10 dimensions which were credibility, security, competence, courtesy,
communication, understanding/knowing customers, access, reliability, responsiveness, and tangibility in their
early studies. Subsequently, in 1988, they have narrowed the dimensions of service quality into five important
dimensions: empathy, assurance, reliability, responsiveness, and tangibility. Briefly, the following sub-sections
look at the definitions of these five dimensions which will form the constructs for this study.
SERVICES PROVIDED IN KUALA LUMPUR INTERNATIONAL AIRPORT, MALAYSIA 47
Empathy
Zeithaml, Parasuraman, and Berry (1988) defined empathy as care and the individual attention that the
firm provides to its customers. While Hansen, Samuelsen, and Silseth (2008) defined it as the feeling and
understanding of how a person personalizes compassion and kindness, and gave them the real understanding.
However, Kotler (1999) and Bitner and Zeithaml (2003) interpreted empathy as an act of caring in providing
individualized attention to customers.
Tangibility
Tangibility is defined as the appearance of physical facilities, equipment, personnel, and communication
materials of the organization (Kotler, 1999; Bitner & Zeithaml, 2003; Zeithaml, Parasuraman, & Berry, 1990).
In addition, Parvez (2005) noted that customers look for quality in the equipment, facilities, and communication
materials that are being used by the organization in providing the services to its customers.
Assurance
Kotler (1999), Bitner and Zeithaml (2003), and Zeithaml et al. (1990) defined assurance as knowledge and
courtesy of employees and their ability to convey trust and confidence.
Responsiveness
Responsiveness is defined as the willingness to help customers and provide prompt service (Kotler, 1999;
Bitner, Booms, & Tetreault, 1990), while Parvez (2005) added that the customer must see service provided as
ready and be willing to perform their said service.
Reliability
Reliability is described as the ability to perform the promised service reliably and accurately (Kotler, 1999;
Bitner & Zeithaml, 2003; Zeithaml et al., 1990). In addition, Parvez (2005) stressed that customers want
performance to be consistent and dependable.
INDEPENDENT VARIABLES
EMPATHY
DEPENDENT VARIABLES
TANGIBILITY
CUSTOMER
ASSURANCE SATISFACTION
RESPONSIVENESS
RELIABILITY
Figure 1. Theoretical framework.
Literature Review
Perceived value is an important determinant of customers’ satisfaction and buying behavior. In gaining
competitive advantages in the airline industry, some companies introduce value-added services such as frequent
flyer programs which could increase the long-term value of consumers’ relationship with the airline, offering
greater benefits to repeat passengers than to occasional users (Dube & Maute, 1998; Dennett, Ineson, Stone, &
Colgate, 2000).
Consumers’ overall impression of service quality is linked to how efficiently an organization renders its
services, and it is this impression that determines its customers’ behavioral intentions to continuously
patronize the airline or otherwise. Good service quality helps organizations to increase profits (Buzzel & Gale,
1987) and maintain their competitive advantage within the specific industry (Park et al., 2004; Park,
Robertson, & Wu, 2005). Apart from the concern on competitive advantage, Mansor and Syed Redhwan (2012)
in their study on KLIA stressed the importance of delivering efficient service not only for the development of
the industry, but also to enhance the image of the nation as a whole. Since service quality and delivery are
tangible, customers are able to compare good and poor service providers. Thus, it is important for airlines to
develop passenger-focused services by making an effort to understand passengers’ expectations (Park et al.,
2004). Airlines also need to be aware of differences in service expectations among their passengers in different
parts of the world and among different nationalities (Sultan & Simpson, 2000; Cunningham, Young, & Lee,
2002).
Since airline companies are very concerned about customers’ loyalty, they need to review and reexamine
their strategies not only to sustain customers’ loyalty but also to remain competitive. Natalisa and Subroto
(2003) suggested that domestic airline operators need to honor promises made in their promotional and external
communication materials. Continuous training activities should also be provided to frontline operators, besides
developing various kinds of loyalty programs to ensure unremitting customers’ loyalty. Chin (2002) stated that
an attractive frequent flier program (FFP) could actually contribute to increased loyalty from the repeat
business of the rising number of customers. In addition, Dick and Basu (1994) suggested that reliability and
confidence might encourage loyalty towards the service provider. Loyalty is very important to the survival of
service companies, which can be depicted through customer behaviors such as repurchase intentions and
purchasing sequence (Day, 1969) and attitudinal outcomes, such as recommending the service to others (Cronin
& Taylor, 1992; Zeithaml et al., 1990; Selnes, 1993).
Methodology
This study adopts the quantitative approach, where a survey was conducted in several parts of the KLIA.
The respondents were stratified according to the stipulated criteria and the self-administered questionnaires
were distributed accordingly.
Sampling Procedures
A convenient sampling was adopted whereby a sample of 100 respondents from several spaces in KLIA
such as the departure hall, arrival hall, baggage carousel area, food court, waiting lounge, and many other parts
of KLIA. They were asked to complete the self-administered questionnaires to provide accurate portrayal of
characteristics understudied, for example, behavior, opinions, abilities, beliefs, and knowledge of the
respondents (Burns & Grove, 1993).
Criteria of the Respondent
In order to become a respondent for this study, the following criteria must be met: (i) They have already
used the services provided by KLIA, (ii) they have experienced using services and facilities provided by KLIA,
(iii) they are willing to participate, and (iv) they are 16 years and older.
Analysis of the Data

The descriptive statistic was chosen to provide simple but meaningful analysis which can show pattern and
trend in the opinion of the KLIA customers. However, the key focus is to meet the objectives of this research
which is to determine the relationship between service quality dimension and customers’ satisfaction as
proposed by Parasuraman, Zelthaml, and Berry (1988). Some of the analyses done in this study are as follows:
(i) Frequency and percentage is used to compare the travelling behavior of respondents; (ii) means and standard
deviations are compared among the independent variables that relate to service quality, (iii) Pearson’s
correlation analysis is used to test any significant relationship between dependent and independent variables,
and (iv) multiple regression is performed to test for significance of the regression model as a whole and the
second significance test (ANOVA) is conducted to determine if the estimated parameters of each explanatory
variable derived from the regression are statistically significance.
Questionnaire
The questionnaire consists of three sections in which: Section A aims to collect information on
demographic data such as gender, age, marital status, and nationality; section B comprises four items which
gauge information regarding respondent’s traveling behavior; and section C is the most important section since
it measures the relationships between the independent variables and dependent variable. Each variable has five
items intended to measure the understudied phenomena.
Results
Reliability of the Instrument
The reliability of a measure is the extent to which the items measure the variable in a reliable, accurate,
and unbiased manner (Cavana, Delahaye, & Sekaran, 2001). According to Sayuti (2011), the reliability of a
measure indicated the stability and consistency in which the instrument measures the concepts and helps to
access the goodness of the measure. A Cronbach’s Alpha value of 0.70 is deemed acceptable and thus reliable
(Nunnally, 1978; Nunnally & Bernstein, 1994; Sekaran, 2005; Hair, Black, Babin, & Anderson, 2010). Table 1
below shows that all of the coefficient reliability is at the acceptable and reliable level.
Table 1
Reliability of the Data
Variable No. of item Cronbach’s Alpha Results
Empathy (IV1) 5 0.814 Good
Tangible (IV2) 5 0.832 Good
Assurance (IV3) 5 0.819 Good
Responsiveness (IV4) 5 0.800 Good
Reliability (IV5) 5 0.907 Very Good
Customer Satisfaction (DV) 5 0.902 Very Good
Demographic Profile of Respondents

Section A of the questionnaires solicits the demographic information of the respondents. There are four
items asked: gender, age, nationality, and marital status of the respondent. Table 2 below appends the summary
of frequencies and percentages of the demographic variables. Most of the respondents were males (65%) and
only 35% of them were females. In terms of age, most of them (40%) aged between 21 to 30 years old, majority
of whom are Malaysians (75%) and are singles (50%).
Table 2
Demographic Variables of Respondents
Demographic variables Category Frequency Percent
Male 65 65.0
1. Gender
Female 35 35.0
Below 20 20 20.0
2. Age Between 21-30 40 40.0
Between 31-40 30 30.0
Above 41 10 10.0
3. Nationality Malaysian 75 75.0
Non-Malaysian 25 25.0
Single 50 50.0
4. Marital status Married 35 35.0
Others 15 15.0
Respondents’ Travel Behavior

Section B of the questionnaire asked the respondents about their travel behavior. The questions precisely
asked, how many times the respondents have traveled per month, for what purpose, name of the airline they
usually travel, and the reasons for his or her choice of airlines.
Table 3 below shows the results of respondent’s frequency of travelling per month, purpose of his/her
travel, name of airline of his/her choice, and finally the reason for his/her choice of the airline. For frequency of
the travelling, the highest frequency was in the range of zero to one times (55%), followed by two to three
times (25%), four to five times (12%), and only 8%, of the respondents flew more than six times.
In terms of the respondents’ purpose of travelling, the highest range was for holiday (45%), followed
by business or official (22%), study (16%), for urgent matters (11%), and the remaining respondents chose
for other purposes (6%). Pertaining to the airline they usually used, 49 respondents (49%) chose Air Asia,
followed by other airline (46%), Jet Star Airways (3%), and Firefly and Emirates with one respondent
each (1%).
In the last item of respondents’ travel behavior, they stated the reasons for their choice of airline. More
than a third of the respondents (37%) stated that they have selected the airlines for better service, followed by
cheaper tickets offered (25%), recommendation by others (16%), familiarity (13%), appealing sales promotion
(6%), and lastly other reason(s) with only 3%.
Table 3
Respondents’ Travel Behavior
Travel behavior Category Frequency Percent
0-1 times 55 55.0
1. Frequency travelled 2-3 times 25 25.0
(per month) 4-5 times 12 12.0
6 times and above 8 8.0
Business/official 22 22.0
Holiday 45 45.0
2. Purpose of travelling Study purpose 16 16.0
Urgent matters 11 11.0
Others 6 6.0
Table 3 to be continued
Travel behavior Category Frequency Percent
Air Asia 49 49.0
Firefly 1 1.0
3. Name of airline Jet Star Airways 3 3.0
Emirates airlines 1 1.0
Others 46 46.0
Appealing sales promotion 6 6.0
Familiarity 13 13.0
Recommendation 16 16.0
4. Reason for choice
Cheaper tickets 25 25.0
Better services 37 37.0
Others 3 3.0
Descriptive Statistics
The next section presents the descriptive statistics such as maximum, minimum, means, and standard
deviation which were obtained for interval scale independent and dependent variables (Sekaran, 2003). Besides,
descriptive statistics is used to described or summarize information about a population or sample (Zikmund,
2003) and therefore this allows observation in the trend of the respondents.
Independent Variables:
Empathy. Table 4 above shows the list of mean and standard deviation of the first independent variable of
service quality which is empathy. The scale of the mean is based on five-point Likert scale. The first
question—KLIA employees give individual attention—scored the highest mean with an average of 4.790. This
indicates that passengers are satisfied with employees’ attitude in providing individual attention, followed
closely by the respondents agreeing on the KLIA employees dealing with them in a good manner (4.771) and
the ability to solve the customers’ problem (4.770). On the other two items which states “KLIA employees
always make me feel special and important” and “employees of KLIA always understand my needs”, the scores
were 3.581 and 3.580 respectively.
Table 4
Empathy as Independent Variable
Items No. Minimum Maximum Mean Std. Deviation
KLIA employees always give me an individual attention 100 2.00 5.00 4.790 0.62434
KLIA employees always deal with customers in a good
100 1.00 5.00 4.771 0.70861
manner
KLIA employees always make me feel special and
100 3.00 5.00 3.581 0.63850
important
Employees of KLIA always understand my needs 100 3.00 5.00 3.580 0.63850
KLIA employees have the best interest at heart in
100 1.00 5.00 4.770 0.70861
solving my problems
TOTAL 100
Tangibility. From Table 5, the accessibility of the airport’s physical layouts (i.e. restaurants, restrooms,
gates, and etc.) scored the highest mean 4.790, followed by KLIA which has visually appealing facilities (4.770)
and passengers agreeing that KLIA used modern equipment, with a mean score of 4.500. While the other two
items on the confusion of excessive signage at the airport scored 4.740 and the neatness and professional
appearance of KLIA employees scored the lowest 3.580. The irony is that the signage which is supposed to
facilitate their movement in the airport has indeed confused them.
Table 5
Tangibility as Independent Variable
An airport’s physical layouts make me easy to find
100 2.00 5.00 4.790 0.62434
what I need (i.e. restaurants, restrooms, gates, and etc )
KLIA used modern equipment 100 1.00 5.00 4.500 0.83485
Employees of KLIA have a neat and professional
100 3.00 5.00 3.580 0.63850
appearance
KLIA has visually appealing facilities 100 1.00 5.00 4.770 0.70861
At the airports, the excessive number of signages
100 1.00 5.00 4.740 0.70525
always confuses me.
TOTAL 100
Assurance. The means for all the items related to assurance (Table 6) are quite strong which indicate that
the passengers agreed with the statement in the questionnaire. The highest mean is 4.730 for the item which the
passengers felt safe in every transaction made by KLIA employees and the lowest mean is 3.540 which is “I am
satisfied with the security inspection at KLIA’’.
Table 6
Assurance as Independent Variable
I trust airport employees 100 3.00 5.00 4.710 0.53739
Employees of KLIA are consistently courteous 100 1.00 5.00 4.690 0.70632
I am satisfied with the security inspection at KLIA 100 3.00 5.00 3.540 0.59323
Employees of KLIA always consult correct and 0.87617
100 1.00 5.00 4.200
accurate information
I always feel safe in every transaction made by KLIA
100 1.0 5.0 4.730 0.69420
employees
TOTAL 100
Responsiveness. Table 7 below shows the means and standard deviations on the responsiveness of the
KLIA employees. The highest mean is 4.771 where the respondents agreed that KLIA employees provide
prompt service to their customers.
Table 7
Responsiveness as Independent Variable
Employees at the airport always respond to my request
100 2.00 5.00 4.660 0.68490
promptly
Employees always willing to help customers whenever
100 1.00 5.00 4.640 0.73195
they have problems
Employees at an airport always keep me informed of
100 3.00 5.00 3.580 0.63850
any changes that may occur.
Employees of KLIA always respond to my complaints
100 1.00 5.00 4.770 0.70861
immediately
Employees of KLIA always provide prompt service to
100 1.00 5.00 4.771 0.70861
customers
TOTAL 100
Reliability. Table 8 shows the list of mean and standard deviation for the items that measure reliability of
the services provided. Many respondents agreed that KLIA airport is dependable and sympathetic, thus giving
the item a score of 4.730. However, the item on the ability of the KLIA employees to solve their problems
satisfactorily scored the lowest mean 3.550.
Table 8
Reliability as Independent Variable
The airport management always provide me services as
100 .00 5.00 4.550 0.92524
they promised
Employees of KLIA always reassuring me whenever I
100 .00 5.00 4.670 0.91071
have problem
KLIA always provide services according to the
100 .00 5.00 3.550 0.72995
schedule
Employees of KLIA are able to solve my problem with
100 .00 5.00 4.720 0.85375
satisfactory
The KLIA airport is always reliable for the customer to
100 .00 5.00 4.730 0.85375
use its services
TOTAL 100
Dependent Variable—Customer Satisfaction

Table 9 below shows the list of means for items measuring the dependent variable, customer satisfaction.
The highest mean is 4.790 which indicates that majority of the respondents are happy to use the service. The
second highest mean is 4.780, where the respondents feel that the decision to use the KLIA service has been a
wise decision. In general, the mean for the items in this section was quite high as compared to the other
variables.
Table 9
Customer Satisfaction as Dependent Variable
I am happy that I used this service 100 2.00 5.00 4.790 0.62434
My choice to use this service was a wise one 100 1.00 5.00 4.780 0.70891
The service have worked out as well as I thought it
100 3.00 5.00 3.580 0.63850
would
I will recommend KLIA services to other people 100 1.00 5.00 4.760 0.70361
I will continue using the services provided at KLIA 100 1.00 5.00 4.774 0.70841
TOTAL 100
Pearson’s Correlation Analysis

The Pearson correlation table below determines the presence of the relationships between independent and
dependent variable. The result of the correlation matrix is presented in Table 10 below. From the table, all
variables are found to be significant and positively correlated.
There are five hypotheses proposed in this study. To test the first five relationships or hypotheses, all of
them are supported. The results show that all variables are significant and positively related to customer
satisfaction. All these variables, empathy (r = 0.954, p = 0.000), tangibility (r = 0.969, p = 0.000), assurance (r
= 0.392, p = 0.000), responsiveness (r = 0.949, p = 0.000), and reliability (r = 0.758, p = 0.000), show moderate
and substantial relationship towards customer satisfaction.
Table 10
Pearson Correlation for the Independent Variables and Dependent Variable
Customer
Empathy Tangibility Assurance Responsiveness Reliability
Satisfaction
Pearson
1 0.940** 0.426** 0.921** 0.743** 0.954**
Correlation
Empathy Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000
N 100 100 100 100 100 100
Pearson
1 0.388** 0.959** 0.732** 0.969**
Correlation
Tangibility Sig. (2-tailed) 0.000 0.000 0.000 0.000
N 100 100 100 100 100
Pearson
1 0.392** 0.297** 0.392**
Correlation
Assurance Sig. (2-tailed) 0.000 0.003 0.000
N 100 100 100 100
Pearson
1 0.719** 0.949**
Correlation
Responsiveness Sig. (2-tailed) 0.000 0.000
N 100 100 100
Pearson
1 0.758**
Correlation
Reliability Sig. (2-tailed) 0.000
N 100 100
Pearson
Customer 0.954** 0.969** 0.392** 0.949** 0.758** 1
Correlation
Satisfaction
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000
No. 100 100 100 100 100 100
Note. **. Correlation is significant at the 0.01 level (2-tailed).
Multiple Regression Analysis

Next, the multiple regression was performed to test for significance of the regression model as a whole and
the second significance test is conducted to determine if the estimated parameters of each explanatory variable
derived from the regression are statistically significance.
For the first significance test, the results of the analysis of variance (ANOVA) and the significance of the
analysis depends on the value of F which is the ratio between explained and unexplained variations of the
dependent variable by all the explanatory variables. The F-ratio derived (437.623) was large enough to render
the analysis of variance yielding a significant result at 0.01 level (p = 0.00), implying that the regression model
as a whole is significant and can be reasonably accepted to represent the relationships between customer
satisfaction and explanatory variables (empathy, tangibles, assurance, responsiveness, and reliability) in the
population under study. The idea is to estimate variance explained in customer’s satisfaction by five dimension
of service quality (Sayuti, 2011). The five dimensions of service quality mentioned above are empathy, tangible,
assurance, responsiveness, and reliability. The results were tabulated in Table 11 below.
The overall influence of service quality factors towards customer satisfaction is presented in Table 11. The
R square value is 0.959, which means that 95.9% of the variance in customer satisfaction has been significantly
explained by the five dimensions of service quality. As such, the results of the study support the statement
which states that service quality has significantly positive effects on customer satisfaction. The second
significance test relates to the issue of whether the parameter estimates for each explanatory variable derived in
the regression is statistically significance. For this purpose, regression analysis uses t-test as a measure of
significance. Table 12 below summarizes the results.
Table 11
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 0.979 0.959 0.957 0.11987
Note. Predictors (constant), reliability (rc), empathy (rc), assurance (rc), and tangible (rc).
Table 12
Coefficientsa of the Explanatory Variable
Non-standardized Coefficients Standardized Coefficients
Model t Sig.
Beta Std. Error Beta
(Constant) -0.209 0.125 -1.680 0.096
Empathy 0.361 0.075 0.316 4.835 0.000
Tangibility 0.501 0.090 0.482 5.570 0.000
1
Assurance -0.009 0.025 -0.008 -0.359 0.720
Responsiveness 0.172 0.084 0.155 2.043 0.044
Reliability 0.049 0.025 0.062 1.957 0.053
Note. a Dependent variable: Customer satisfaction.
From Table 12, tangibility of the service quality appeared to be the strongest explanatory variable in
predicting customer satisfaction (β = 0.501, t = 5.570) followed by empathy (β = 0.361, t = 4.835) and
responsiveness (β = 0.172, t = 2.043). However, the results show that assurance and reliability have not been
able to predict customer satisfaction significantly.
Conclusions
In this study, the results have shown that the tangible components of KLIA which include the physical
appearance, equipment, personnel, and communication materials are the essential elements that lead to
customers’ satisfaction. Following that, empathy and responsiveness become the next important determinants
that contribute to customers’ satisfaction. However, assurance and reliability of the services in KLIA have not
been able to satisfy its customers’ satisfaction significantly. This confirms the importance of products’
tangibility besides the perceived quality services provided to its customers in determining its customers’
satisfaction. Hence, the KLIA management should focus on upgrading its employees’ performance in
delivering its services to the customers to promote satisfaction and brand loyalty. It is very crucial that the
services provided by KLIA are not only accurate and reliable, but it must also provide the needed information
timely. Another aspect of assurance which should be addressed is the issue of airport security inspection which
the customers feel to be the weakest feature of the airport. The findings of this study if taken seriously would
provide a good indication to the KLIA management as to which aspects of the services should be improved.
For future research, perhaps it would be useful to profile the respondents and conduct qualitative studies
where certain issues can be further clarified. Another point of interest is that, although the opportunity to
generalize this study on other airports is limited, there are lessons on customer satisfactions which other airport
can learn from KLIA.
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Customers Satisfaction Towards The Services

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China-USA

David Publishing Company

David Publishing Company

Gang Chen, Mahfuzul Haque

Effectiveness of Direct and Non-direct Investment in the Stock Market Indices 10

Fundamental Principles and Financial Managements of the Insured Education System

E-learning Content and Knowledge Characteristics Empirical Case Study 29

Asmahan Majed Altaher

Savaş Selahattin Ateş, Celal Hakan Kağnıcıoğlu

Customers Satisfaction Towards the Services Provided in Kuala Lumpur International

Mohani Abdul, Mohd Khairi Abdul Aziz, Mastora Yahya

Firm’s Asset Structure Change: Evidence From Industrial,

Methodology and Model

ROAit   i ROAit 1  1i R Ait   2 i RDit   3 i log(TA) it  vi  u it

where i  1, 2,  , N , t  1, 2, , T , the other notations have been specified above.

Results and Analysis

ROA(-1) 0.324785 0.021115 15.38153 0.0000

Effectiveness of Direct and Non-direct Investment

Research Results and Analysis

Best Non-direct Investment

Fundamental Principles and Financial Managements of the

Keywords: insurance, education, principles, finance, management, profit

Fundamental Principles of the Model of Participatory, Payable, Profitable,

Financing Structure of Model of Participating, Payable, Profitable,

legal regulations to this end.

E-learning Content and Knowledge Characteristics

Asmahan Majed Altaher

Knowledge Characteristics and E-learning Content Framework

Effect of Knowledge Characteristics E-learning

Design and Methodology

Result and Discussion

Communication Points and Tools in the Air Transportation

Savaş Selahattin Ateş, Celal Hakan Kağnıcıoğlu

Figure 1. Ground handling operation control center.

Purpose and Method

Results and Analysis

Customers Satisfaction Towards the Services Provided in Kuala

Mohani Abdul, Mohd Khairi Abdul Aziz

Keywords: customer satisfaction, empathy, tangibility, assurance, responsiveness, reliability

Dimension of Service Quality

Figure 1. Theoretical framework.

Analysis of the Data

Demographic Profile of Respondents

Respondents’ Travel Behavior

Dependent Variable—Customer Satisfaction

Pearson’s Correlation Analysis

Multiple Regression Analysis

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