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PASSENGERS’ PERCEPTION ON LOWCOST CARRIERS’ SMART QUALITY, CASE STUDY: THE COMPARISION OF NOK AIRLINES AND THAI AIRASIA FLIGHT BANGKOK - CHIANG RAI Pakin Witchayakawin School of Tourism, Chiang Rai Rajabhat University, Chiang Rai, Thailand Corresponding email: [email protected] THE 1ST INTERNATIONAL CONFERENCE ON CREATIVE MANAGEMENT 2014 (1st – ICCM), 17th – 19th September 2014, School of Management and Information Sciences, University of Phayao, Phayao Thailand

Abstract This qualitative research aimed to find quality of lowcost carriers – Nok Airlines and Thai AirAsia on SMART (S-Service, M-Management, A-Activeness, RResponsibility and T-Trendy) quality of flight Bangkok – Chiang Rai, to compare the SMART quality between these two carriers and to suggest all lowcost carriers for better improvement. The research methodology is the structural interview for 12 samples by Maximal Variation and Snowball sampling. The target group is Thai passengers who experienced in flight Nok Airlines and Thai AirAsia routing service Bangkok – Chiang Rai, involved; 4 private company employees, 3 public section employees, 3 undergraduate students and 2 business owners. The type of study is the Phenomenological research that to find data from 12 samples who had received similar experiences in Nok Airlines and AirAsia flight Bangkok – Chiang Rai during 2012 to 2014 as target group. The data collection was run by walking-in to interview the target group in Mae Fah Luang Chiang Rai Airport, office, home and university, 10 samples and by email 2 samples. The data analyzing process involved preparing (to record data into Microsoft Word), segmenting (to separate the group of data), coding (to code data by created group of data), categorizing (to reduce or categorize the group to data) and themetizing (to report the final groups of data). The findings expressed that the sampling group more perceived the satisfaction on Thai AirAsia than Nok Airlines in Activeness and Responsibility while Nok Airlines was more stratified than Thai AirAsia in Service, Management and Trendy. Thai passengers suggested Thai AirAsia should provide more free of charge food & beverage, weekly magazine and baggage weight allowance while Nok Airlines should provide diversity of free of charge on-board food and update flight attendant’s uniform to more trendy.

Keywords: Passengers’ Perception, Lowcost Carriers, SMART Quality, Nok Airlines, Thai AirAsia

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1. INTRODUCTION 1.1 THE SIGNIFICANT The air transportation showed its important role on current Thailand’s Tourism Development Strategy 2012 to 2015 as the first strategic plan. It needs to develop and improve logistics to support tourism, the infrastructure for tourism. The plan also indicated to create neighboring countries and regional communication network and connection system for tourism. Chiang Rai is also a province that developing to connect neighboring country as China by flight. The charming of natural and cultural component of Chiang Rai attracts many tourists to visit this magnificent city. One of tourism element that Chiang Rai provides to tourist is the accessibility by flight. The many flights to Chiang Rai were operated by legacy airline, regional airline and also lowcost carriers. The lowcost carriers reduced traveling condition because the price is reasonable and service quality similar to legacy or regional airline. Thus, lowcost carriers as Nok Air and Thai AirAsia made an important role to import many passengers from Bangkok as tourists into this city. The Thai passenger in airline industry is a major sector within tourism that principally composed of legacy, regional, and lowcost airlines. The legacy airlines support large, complex hub-and-spoke operations with thousands of employees and hundreds of aircraft of various types, with flights to domestic communities of all sizes as well as to international destinations while the regional airlines operate smaller aircraft than legacy such as turboprops or regional jets with up to 100 seats and often operate flights marketed by legacy airlines. Lowcost airlines entered the marketplace after the U.S. airline industry was deregulated in 1978 and typically have a less extensive network and lower operating costs. A lowcost carrier or lowcost airline also popularly known as a no-frills, discount or budget carrier or airline: typically use one type of aircraft with up to 200 seats offering generally low fares in exchange for eliminating many traditional passenger services. To remain competitive, service providers must render quality service to their customers. Lowcost carriers (LCCs) have a competitive advantage over full service carriers (FSCs) in several nations due to their lower fares and similar levels of services quality. Not all customers’ needs are alike, and the market characteristics found in the LCCs industry may influence customers’ attitudes (Kim and Lee, 2010). The intention to understand customers’ behavior is an important predictor in business profit of service firm. Repeat purchasers, positive word-of-mouth recommendation, and customer feedback affect to the service industries’ cost and revenue. 1.2 THE RESEARCH OBJECTIVES The research objectives aim to find SMART quality of Nok Air and Thai AirAsia flight Bangkok-Chiang Rai by experiences of passengers and to compare the SMART quality by these two lowcost carriers.

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2. LITERATURE REVIEW 2.1 SERVICE QUALITY AND PASSENGER SATISFACTION According to the study of Gour (2009), the order of importance of the dimensions of service quality tested is flight schedules; flight attendants; tangibles; and ground staff. Passenger satisfaction with these service-quality dimensions are found to be very important in explaining behavioral intentions. Satisfied passengers are mostly influenced by the schedule. Such customers engage in positive word-of-mouth communication and have high repurchase intentions. Dissatisfied passengers prefer to change airlines, rather than provide feedback to the LCCs. The three lowcost carriers (LCCs) in Thailand have suffered persistent financial losses since their inception. These losses have been attributed to a range of factors over which LCCs have little control – such as high fuel prices, international rivalry, and the entrenched position of dominant full-service carriers (FSCs). However, despite evidence that successful LCCs in other parts of the word have not only offered low fares to their passengers but have also been sensitive to the quality of services they provide, the satisfaction as a solution to their problems. The present study therefore investigated whether service quality and satisfaction influence passengers’ behavioral intentions (word-of-mouth, repurchase intention, and provision of feedback) in the context of LCCs in Thailand. Regarding the study of Baker (2013), while the traditional carriers are converging toward a higher level of service quality, using the four measures, there continue to be significant variation. Over a five year period 2007 to 2011, the service quality of lowcost airlines was generally found to be higher than that of traditional legacy airlines. Implications related to operating costs, market share, infrastructure and customer service were evident. The most obvious attribute of the lowcost carrier is the no-frills service that these carriers provide passengers. Instead of providing passengers with a menu of product choices priced with a range, the lowcost carriers offer a single type of product, coach service. This type of service has become very attractive to travelers. Lowcost carriers do not provide meals on flights, which results in a savings of $5 to $10 per coach passenger. Due to the research of Kalthom, Noor and Kamariah (2007), the perception of Malaysian consumers of the quality of airline services was examined in the study using the SERVQUAL measurement. The results of the study indicate that the most significant factor in Malaysian customers’ perception of service quality is Empathy, Tangibles and Assurance. In addition, the respondents indicated that the airlines surveyed performed better than expected on the Responsiveness dimension of service quality. There is also a strong indication that satisfaction with service quality results in future use and the likelihood of recommending the airline to others. The study of Kim and Lee (2010) found that the significant dimensions of customer satisfaction are tangibles and responsiveness. Moreover, the significant consequences of customer satisfaction including word-of-mouth communication, purchase intentions, and complaining behavior. Based on these results, carriers should develop tangibles and responsiveness for the enhancement of customer satisfaction and behavioral intentions.

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2.2 PASSENGER PERCEPTION ON LOWCOST CARRIERS IN THAILAND A comparative study of satisfaction toward service quality of the lowcost airlines (Thai AirAsia and Nok Air) by Thanathipworanan (2012), showed passengers have positive attitude on lowcost carriers. The passengers’ positive attitude on service was expressed by Thai AirAsia, followed by Orient Thai and Nok Air. The first effective factor to make sure on lowcost carrier services is safety, followed by convenience, fast, air far, promotion, pilot ability, accuracy of timing, the convenience of purchasing channel and clearly information by airlines. Due to the study of Esriyanont (2005), the overall satisfaction of passengers toward the general and ground services, prices ticket reservation agency and marketing promotion is at an average level. The overall satisfaction toward the in-flight services and the flight attendants is at a high level. The results of the satisfaction on comparison are; 1) passengers who are different in gender have different satisfaction toward Nok Air services while there is no difference in satisfaction toward Orient Thai services and Thai AirAsia services, 2) passenger who are different in age not different satisfaction toward services by Nok Air, Orient Thai and Thai AirAsia, 3) passengers who are different in education have different satisfaction toward services by Thai AirAsia while there is not different satisfaction toward services by Nok Air and Orient Thai, 4) passengers who are different in occupation have different satisfaction toward services by Thai AirAsia while there is not different in satisfaction on services by Nok Air Orient Thai, 5) passengers who are different in income have different satisfaction on services by Nok Air, Orient Thai and Thai AirAsia, and 6) passengers who are different in the frequency of flying have different satisfaction on services by Thai AirAsia while there is not different in satisfaction toward services by Nok Air and Orient Thai. Airlines should consider on variety of routing, unfix prices, diversity of ticketing agencies, untruly advertisement and not enough on flight crew. Concerning the study of Samintarapunya (2008), the passengers gave precedence to the service marketing mix of lowcost airlines in the middle level. The most effective factor is selling channel, followed by promotion and price. The respondent gave precedence to product factor in terms of suitable flight timetable, price factor for airline promotion, place for the convenient payment and internet booking or telephone booking, promotional factor for campaigns and special offer on advance booking or booking in website, people factor for effectiveness of the services and problem solving by ground staff, process factor for clearly announcement on flight departure time information or delay, and physical evidence factor for the overall airplane condition. The results also expressed Nok Air and One-to-Go passengers have significant different opinions on promotional and process factor. The passengers displayed the problems such as many times of delayed flights and unstable prices. Regarding the study of Ringle, Sarstedt and Zimmermann (2011), perceived safety is one of the key drivers that can explain the degree of overall customer satisfaction. The relationship is, however, strongly moderated by the purposes for which airline passengers travel (either for business or pleasure). Perceived safety has a significantly greater impact on the overall customer satisfaction of people who travel for pleasure than on that of business travelers, which implies that airlines should more strongly emphasize safety features in advertising aimed at leisure travelers.

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5 3. THE FRAMEWORK Based on the review of the literature, this research framework was developed for studying the passengers’ experiences on SMART of Nok Air and Thai AirAsia. Figure 3.1 Research Model Thai Passengers of Nok Air and Thai AirAsia

Experiences of Nok Air Passengers Experiences of Thai AirAsia Passengers

-Service -Management -Activeness -Responsibility -Trendy

SMART of Nok Air

SMART of Thai AirAsia

From figure 3.1 - the research model, the Thai passengers who have experienced on Nok Air and Thai AirAsia flight Bangkok-Chiang Rai will express their experiences on SMART of these two lowcost carriers. Thus, it will be presented the comparison of SMART quality by Nok Air and Thai AirAsia. 4. METHODOLOGY 41. RESEARCH METHOD The qualitative research design for this study was transcendental (empirical) or psychological phenomenology research that researcher try to explain core of experience (essence of experience) or experience meaning of sample group who have concerned in the same experiences. The transcendental phenomenology research emphasizes to descript the experiences of sample group and the researcher will close his or her experience that might mix with respondents’ experiences for searching the new vision for researcher as new and fresh experience in concept of “transcendental” – everything are looked fresh as it’s happened in the first time. The research methodology is the structural in-depth interview for 12 samples by Maximal Variation and Snowball sampling who experience Nok Air and AirAsia flight Bangkok-Chiang Rai in 2012 to 2014. The data collection was run by walking-in to interview the target group in Mae Fah Luang Chiang Rai Airport, office, home and university, 10 samples and by email 2 samples. 4.2 DATA ANALYSIS The data analyzing process involved preparing (to record data into Microsoft Word), segmenting (to separate the group of data), coding (to code data by created group of data), categorizing (to reduce or categorize the group to data) and themetizing (to report the final groups of data) as figure 4.2 (Creswell, 2005, as cited in Buaraphan, 2011).

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Figure 4.2 Data Analysis by Data Reduction Read Data Read Data in many pages

Manage Data

Coding

Categorizing

Themetizing

Manage data by grouping or part separation

Coding on data by 4050 codes

Categorizing data and reduce to 5 codes

Themetizing the 5 main items

Constant comparative method (Glaser & Strauss, 1967, as cited in Buaraphan, 2011) is used to analyze data in this research that included; 1) coding, comparing (by lookalikeness), grouping (new data) and, seeking for patterns and relationships. Table 4.2 Sample of Interview Record and Data Coding

Table 4.2 showed interview record and data coding by S01 (Good Smile), S01 (Good Service), S03 (Good Language and Information), S04 (Service Free Snack) and S05 (Service Free Magazine). From table 4.2, Nok Air is put 1 of S01, S04 and S05, and 2 of S02 while Thai AirAsia is put 1 of S03, S02 and S05.

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5. RESULTS 5.1 DEMOGRAPHIC PROFILE The target group is Thai passengers who experienced in flight Nok Airlines and Thai AirAsia routing service Bangkok-Chiang Rai, involved; 4 private company employees, 3 public section employees, 3 undergraduate students and 2 business owners. 5.2 DESCRIPTIVE The findings expressed that the sampling group more perceived the satisfaction on Nok Airlines was more stratified than Thai AirAsia in Service (16 codes), Management (10 codes) and Trendy (6 codes) while passenger more satisfied in Activeness (10 codes) and Responsibility (6 codes) by Thai AirAsia than Nok Airlines as shown in table 5.2. Table 5.2 Number of Coding on SMART of Nok Air and Thai AirAsia SMART Airline Number of Coding on Service

Management

Activeness

Responsibility

Trendy

Nok Air

16

Thai AirAsia

7

Nok Air

10

Thai AirAsia

6

Nok Air

8

Thai AirAsia

10

Nok Air

2

Thai AirAsia

6

Nok Air

6

Thai AirAsia

3

The services of Nok Air was more satisfied than Thai AirAsia, provided by flight attendants and ground staff, included smiling, information providing, wording manners, in-flight and ground assisting, and ticketing check-in process while the respondents more satisfied Thai AirAsia than Nok Air in information giving by phone of ground staff and good English language using by flight crew. The passengers perceived that Nok Air should provide variety of free of charge snack and magazine while Thai AirAsia should adjust the speed announcement during in-flight safety demonstration. Nok Air’s management was more satisfied by respondents than Thai AirAsia, involved professional in-flight staff, in-flight equipment management and in-flight working process while the passengers more satisfied Thai AirAsia’s management than Nok Air in overall ground management and ground equipment management. The st

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8 sampling group perceived that Nok Air provided good sized seat but Thai AirAsia’s seats were quite narrow. The passengers also perceived that Nok Air did not provide checking-in kiosk at Chiang Rai airport while Thai AirAsia provided checking-in kiosk but passengers also need someone to give information about using. Trendy of uniform (crew and ground), aircraft and safety feeling by Nok Air was more satisfied by sampling group than Thai AirAsia while the sampling group more satisfied the trendy of ground equipment by Thai AirAsia than Nok Air. The passengers perceived Thai AirAsia crews in jeans uniform are not formal and appropriate for service industry while some broken uniform (out-thread shirttail) of Nok Air crews wasn’t good looking for passengers. Thai AirAsia staff activeness was expressed by passengers’ satisfaction over Nok Air, included fast and on time of passengers’ need responsible by air crews, active assisting and fast responsible in passengers’ need by ground staff while the sampling group was more satisfied the activeness as service mind by crews and ground staff of Nok Air than Thai AirAsia. A passenger perceived that a flight crew of Thai AirAsia was very active in service in case passenger had illness; she followed and checked the symptom while some ground staff was not active in a case passenger’s luggage missing and question handling by confusing foreign passenger about the direction to departure gate. The responsiveness by Thai AirAsia staff was presented by passengers’ satisfaction over Nok Air, included overall of passenger responsibility by crews, confident in pilot and overall responsibility by ground staff. The passengers perceived that they concerned with delay flight by Nok Air many times while a passenger’s luggage was lost by Thai AirAsia. 6. DISCUSSION Regarding the study of Gour (2009), passengers indicated overall satisfaction with the four dimensions of service quality examined the study (tangibles, schedule, ground staff, and flight staff). In this regard it was interesting to note that the dimension of schedule had the lowest mean rating (significantly different from the other dimension). It’s similar to the findings by this study that passengers didn’t mention anything about flight schedule. Otherwise, they focused on intangible (service mind), tangible (equipment), ground staff and fight staff. The research of Kalthom, Noor and Kamariah (2007) presents, results of the study indicate that the most significant factor in Malaysian customers’ perception of service quality is Empathy, Tangibles and Assurance. In addition, the respondents indicated that the airlines surveyed performed better than expected on the Responsiveness dimension of service quality that represented by Thai AirAsia in a result of this studying - fast and on time of passengers’ need responsible by air crews, active assisting and fast responsible in passengers’ need by ground staff. Also, the study of Kim and Lee (2010) found that the significant dimensions of customer satisfaction are tangibles and responsiveness.

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Regarding the study of Baker (2013), the lowcost carrier is the no-frills service that these carriers provide passengers. Instead of providing passengers with a menu of product choices priced with a range, the lowcost carriers offer a single type of product, coach service. This type of service has become very attractive to travelers. Lowcost carriers do not provide meals on flights, which results in a savings of $5 to $10 per coach passenger. It is difference point with the findings by this research that passengers need variety of snack and magazine. The sampling group in this study more satisfied in services by Nok Air than Thai AirAsia that is different from the findings of Thanathipworanan (2012), showed the passengers’ positive attitude on service was expressed by Thai AirAsia, followed by Orient Thai and Nok Air. Regarding the findings in this study represses passengers more satisfied services of Nok Air than Thai AirAsia, is supported by the study of Esriyanont (2005) that presented the passengers who are different in gender have different satisfaction toward Nok Air services, passenger who are different in age not different satisfaction toward services by Nok Air, Orient Thai and Thai AirAsia, passengers who are not different satisfaction toward services by Nok Air and Orient Thai, passengers who are not different in satisfaction on services by Nok Air Orient Thai and passengers who are different in income have different satisfaction on services by Nok Air, Orient Thai and Thai AirAsia 7. IMPLICATIONS The passengers did not mention anything about flight schedule service in this study; it might assume that the lowcost carriers’ manager can provide the appropriate flight schedule to their passengers. Thai passengers still need free of charge snack or variety of in-flight food and beverage that implies they might not understand the concept of lowcost carriers’ service about one type of product providing (not provide many choices of product) and not provide free of charge thing in lowcost carrier that it is general even in lowcost flight. 8. LIMITATIONS AND SUGGESTIONS Thai passengers suggested Thai AirAsia should provide more free of charge food and beverage, weekly magazine and baggage weight allowance while Nok Airlines should provide diversity of free of charge on-board food and update flight attendant’s uniform to more trendy. SMART of Nok Air might be added more the effective of activeness and responsibility to passengers while SMART of Thai AirAsia may add more the effective of service, management and trendy. 9. CONCLUSION The perception of 12 Thai passengers, who had experienced during 2012 to 2014 in flight Bangkok-Chiang Rai by Nok Air and Thai AirAsia, more satisfied on service, management and trendy of Nok Air than Thai AirAsia while they more satisfied Thai AirAsia’s activeness and responsibility than by Nok Air. These two lowcost carriers still provide their SMART for passengers but they can add more effective of each.

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10. REFERENCES Baker, A. M. D. (2013), Service quality and customer satisfaction in the airline industry: a comparison between legacy airlines and low-cost airlines. American Journal of Tourism Research, 2(1), 67-77 Buaraphan, K. (2011). Qualitative data analysis. (2nd Eds.), Qualitative Research, pp. 123-146 Esriyanont, N. (2005). Satisfaction Passengers Toward Services of Low Cost Airlines, Published master’s thesis, Phranakorn Rajabhat University, Bangkok, Thailand. Kalthom, A., Noor, H. A. M. & Kamariah, M. N. (2007). Measuring the service quality of airline services in Malaysia. Journal of Economics and Management, 15(1), 1-29. Kim, K. Y. & Lee, R. H. (2010). Customer satisfaction using low cost carriers. Tourism Management, 32 (2011), 235-243. Gour, C. S. (2009). Service quality, satisfaction, and behavioural intentions a study of low-cost airline carriers in Thailand. Managing Service Quality, 19(3), 350-372. Ringle, M. C., Sarstedt, M. & Zimmermann, L. (2011). Customer satisfaction with commercial airlines: the role of perceived safety and purpose of travel. Journal of Marketing Theory and Practice, 19(14), 459-472. Samintarapunya, S. (2008). An Opinion Study of Passengers Towards the Services of Low Cost Airlines at Chiang Rai International Airport, Published master’s thesis, Chiang Rai Rajabhat University, Chiang Rai, Thailand. Thanathipworanan, P. (2012). A Comparative Study of Satisfaction Toward Service Quality of the Low-cost Airlines Case Study of Air Asia Airlines and Nok Air Airlines, Published master’s thesis, Yala Rajabhat University, Yala, Thailand.

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