Poor ground service agent attitude at vietjet aviation joint stock company

List of figures  Figure 3.1: Vietjet overall service quality rate 2017- 2018  Figure 3.2: Service quality rate by services provided 2017- 2018  Figure 3.4: Vietnam air transportation

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Nguyen Thi Thuy Trang

POOR GROUND SERVICE AGENT ATTITUDE AT VIETJET AVIATION

JOINT STOCK COMPANY

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Nguyen Thi Thuy Trang

POOR GROUND SERVICE AGENT ATTITUDE AT VIETJET AVIATION

JOINT STOCK COMPANY

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: LE THI THANH XUAN

Ho Chi Minh City – Year 2019

Table of contents

Table of contents i

List of figures iii

List of tables iii

Abbreviation iv

EXECUTIVE SUMMARY 1

CHAPTER 1: COMPANY BACKGROUND 2

1.1 History 2

1.2 Vision 3

1.3 Mission 3

1.4 Product and service 3

1.5 Business development strategies 4

1.6 Target customer 4

1.7 Market share 4

1.8 Business performance 5

CHAPTER 2: PROBLEM IDENTIFICATION 7

2.1.Problem context 7

2.2.Symptom analysis 8

2.3 Potential problems 12

2.3.1 High competition 13

2.3.2.Visa barriers 18

2.3.3.Service quality and customer satisfaction 19

2.3.4.Uncomfortable air travel experiences 22

2.3.5.Ground staff’s attitude 24

2.3.6.Poor of inflight services 27

2.4 Initial symptoms and potential problems 28

2.5 Main problem validation 29

2.6 Problem consequence 33

CHAPTER 3: CAUSES OF PROBLEM 34

3.1 Potential causes 34

3.1.1 Stress on work 34

3.1.2 Training 35

3.1.3 Motivation and promotion 36

3.2 Main cause validation 37

CHAPTER 4: SOLUTION 43

4.1 Literature review 43

4.1.1 Content of training 43

4.1.2 The delivery methods of training 43

4.1.3 Training sources 44

4.2 Alternative solution 1 44

4.3 Alternative solution 2 46

4.4 Alternative solution 3 48

4.5 Selected solution 50

CHAPTER 5: ACTION PLAN 53

CHAPTER 6: CONCLUSION 58

CHAPTER 7: SUPPORTING INFORMATION 59

7.1.Methodology 59

7.2.Information of in- depth interviews conducted 59

7.2.1.In- depth interview – section 1 59

7.2.2.In- depth interview - section 2 61

7.2.3.In- depth interview - section 3 70

REFERENCE 74

APPENDICES 78

List of figures

 Figure 3.1: Vietjet overall service quality rate 2017- 2018

 Figure 3.2: Service quality rate by services provided 2017- 2018

 Figure 3.4: Vietnam air transportation market share 2018

 Figure 3.8: Vietjet transportation term and regulation

 Figure 3.10: Total of delayed flight first half of 2018

 Figure 4.1: Initial causes and effect map

 Figure 4.2: The general process of initial training for ground staff in Vietjet

 Figure 4.3: Final causes and effect map

List of tables

 Table 3.2: Service quality rate by services provided

 Table 3.6: Rate of staff attitude satisfaction- 2018

 Table 3.8: Inflight service quality rate

 Table 5.1: The costs of private course of training ground service agents and recurrent

training

 Table 5.2: Cost of outsourcing initial training course and recurrent program

 Table 5.3: The costs of consulting specialists and recurrent training

1 CAAV Civil Aviation Administration of Vietnam

8 Vietjet Vietjet Aviation Joint Stock Company

The purpose of this research is to explore the causes of poor of customer service attitude

of Vietjet ground service agents This problem is searched through the symptoms of KPIachievement failure and low service quality rate year by year Though the internal datacombined with in depth interviews, the thesis has defined three potential problems, whichare high competition, visa restrictions and customer dissatisfaction In the issue ofdissatisfaction, there are three elements contributing to that are uncomfortable air travelexperiences, ground staff attitude and poor of in- flight services By the method ofcollecting data, literature supported and interviews, the thesis finds out main problemleading to customer dissatisfaction and KPI achievement failure is unprofessional groundservice agent’s attitude

The findings of this thesis reveal that main cause of staff attitude problem is the poor ofinitial training and recurrent program for ground service agents working at airports In thecurrent of Vietjet context, the most suitable solution suggested is outsourcing consultantsinstructing initial training course and conduct e- learning system for existing staffperiodically The findings are investigated in details accompanied with recommendationand detailed implementation plan for board of management consider with an aim toincrease level of service quality rate, they also are known as foundation for customersatisfaction and enhance passenger transportation revenue for airline

CHAPTER 1: COMPANY BACKGROUND

Established on 23rd July, 2007, Vietjet Aviation Joint Stock Company (Vietjet)operates on low cost model transportation to offer travelling services that wouldaccommodate demands of Vietnamese and international passengers Vietjet always aims

to provide safe flights with excellent service quality in domestic and Asian region Vietjetspent four years on good preparation in resources, systems and finance to ensuresustainable development when joining to Vietnam aviation industry In 2018, Vietjet hasmet the air travelling demand of millions passenger, contributing to the growth ofVietnam aviation and tourism industries and the economic development as well After 6years taking off, Vietjet has established itself in aviation market with a large portion ofmarket share; achieved significant milestones in the journey of sky conquering

Figure 1.1: Business model- Source: Vietjet annual report 2017

1.2 Vision

Vietjet always aim to be a multi-national aviation group with the various networkwhich covers the whole Vietnam regions and the global Vietjet does not lonely provideaviation services but also consumers product based on e-commerce platform Become afavorite and trust airline, which receives credibility from customers

To operate and develop domestic, regional and international flight network

To create breakthrough in aviation services

To make flying a popular means of transport in Vietnam and in the world

To bring joyfulness, customer satisfaction by providing luxurious and exceedingexpectation services with friendly smiles and professionalism

Vietjet makes continuous efforts to cut down cost and unnecessary expenses ontickets prices to make air means of transportation more affordable for the majority ofcustomers Vietjet focuses more on product research and diversify its segmentation aswell as to make services more outstanding Vietjet operates on low cost strategy withsome changes to hybrid model Besides its standard low-cost economy ticket price (Eco),Vietjet has launched luxury services for premium objectives called “Sky-boss” ticket.Using Sky-boss services, passengers can have special privilege like changing flight time

no fee of charge, free check-in baggage, using VIP lounge, entitled to use priority check

in and boarding to aircraft, in- flight complimentary food and beverage

Operating on low cost strategy, Vietjet also offers additional services called

“Ancillary” which an aim to improve passenger’s experience and comfort when flyingwith Vietjet Vietjet has introduced kiosk check-in system in three international airports,web check-in and mobile check-in to release pressure in high seasons, make procedureshorten and cut waiting time for passengers

Vietjet has launched “Sky-shop” services for further interesting and comfortabletravel experiences for customers With “Sky-shop” service, passengers can taste hotdelicious meals bringing unique culture of regions and countries flying to The carrier also

provides in- flight shopping call “Duty free merchandise” with small souvenir, perfume, cosmetic and jewelry.

In 2020- 2025, Vietjet continues to expand domestic and international routes: launchnew routes connecting global airports and optimize frequency to local routes, especiallyprior to North Asia, Northwest Asia, ASEAN market

Besides expanding market, Vietjet maintains strong brand health to enhancereputation and credibility with stakeholders including passengers, partners, which helps tonurture sustainable development for firm Continue to research and develop customizedservices and products on e-commerce platforms, enhance cost management and deployhigh tech, cost savings application for operation

Vietnam’s local carrier Vietjet is helping to stimulate the traveling demand ofcustomers Vietjet establishes itself with new generation airline with low cost strategy.Segmentation that Vietjet aims at is limited- travel budget customer, who cannot be able

to afford for high fare Most of Vietjet’s passengers are price-sensitive, who have morefree time and do not depend much on schedule’s change Completely new customersegmentation: customers are using the services of other means of transport like trains,automobiles with the remarkable utility of aviation services 30 percentages of Vietjetcustomers who first go on air Vietjet helps Vietnamese customers can approach to fastand modern air transportation with reasonable price, for more experience and comfort tofly with Vietjet

Vietjet has driven a large portion in significantly growth, especially in domesticmarket In 2018, Vietjet has outperformed other carriers, maintain its leading position indomestic air transportation with 45 percentages in market share During first 9 months of

2018, Vietjet has conducted the total number of 89,690 flights, increase approximately 22percentage compared to this period last year In international market, Vietjet continues toexpand flight network with strategy to develop brand name in global market Vietjet has

increase flights to Northeast Asian, South Korea, Taiwan, Hong Kong and China- the region with highest average revenue coming from charter flights.

Figure 1.2: Vietnam aviation market size in annual passengers (millions) 2011 to 2016- Source: CAPA

The Vietnam aviation market expected to grow in 2020, in the context as predictionthat the economy can achieve highest GDP development The Vietnamese governmentcreate suitable environment and promote tourism as a key economic sector, which attractmillions of foreign tourists to Vietnam With the expanding fleet of aircrafts (64 aircrafts)and the increase in international routes, Vietjet is on the way to be a multi-national carrierand high competitive advantage

Figure 1.3: Vietjet business performance 2017- Source: Vietjet Annual report 2017

In 2018, Vietjet has sustainable growth and continues to get considerableachievement The carrier has conducted of safe flights and met the travel demand of over

23 million of passengers with high technical reliability 99.64 percentage Vietjet with thestrategy wants to become leader carrier in domestic market and favorite airlines in region.Vietjet has explored destination in 39 domestic routes and expand international fightnetwork to 66 destinations in international region Airlines have signed agreement fornew routes to India, Japan and Cambodia

CHAPTER 2: PROBLEM IDENTIFICATION 2.1 Problem context

Vietnam is one of the rapid growing aviation industries over the world, increases by17.4 percent in last decade, driven by a growth in domestic and international tourists aswell as the development of low cost carrier models Between 2018 and 2020, passengertransportation volume is expected to increase by more 16 percent Currently, Vietnam hasfive aviation companies, including Vietnam Airlines (VNA), Vietjet Air, Jetstar Pacific,Vietnam Air Services Company (VASCO) and Bamboo Airways- FLC Group

Figure 1.4: Vietnam aviation growth 2011- 2017– Source: CAPA

The competition in aviation market becomes higher when there is an appearance ofBamboo Airways To gain the stable development and advantage competitiveness in suchglobal dynamic industry, Vietjet should put a significant emphasis on service quality,improving customer satisfaction to retain the reputation and high revenue According toAdler (1), passenger satisfaction is one of the most important factors in the aviationindustry, which contributes to firm’s success in competitive market Providing good

service quality to passengers and understand the customers’ need has been significant inenhancing airline business survival and success (41) In the current context, focusing onpassengers’ satisfaction can lead to better service quality.

2.2 Symptom analysis

 KPI achievement failure

Despite the development in fleet of aircrafts and the expanding in operation routes,Vietjet does not get the revenue compared to KPI target Total revenue gets 30,951 billiondong, gains 85% complete rate compare to the target, specifically, transportation revenuegains 85%, ancillary completes 91% and revenue from cargo is modest figure with 57%

Table 3.1: Vietjet KPI performance 2018

Unit: Billion dong

Actual 2018 KPI 2018 Compare Actual to KPI

Ancillary revenue of Vietjet includes income from non-ticket fee Added services areoffered such as check-in priority, boarding priority, hot meals, pre-ordered beverages, andmuch more, were made available Besides, Vietjet also provides travel insurance products

to minimize travel risks adjusted and sold to passengers via www.vietjetair.com.Customers can choose insurance service combined with booking itinerary Sky-shopcontinued to improve its services Apart from hot meals and typical Vietjet souvenirs,many seasonal products purchased onboard by passengers, for example, summertimeproducts, wintertime products, Tet (Lunar New Year) holiday products, and more Duty-

Overall service quality rate

free products proved popular on Vietjet’s international flights; a wide-range of cosmetics,perfumes, alcohols, cigarettes, and more, sold at reasonable prices All added- valueservice contributes to revenue besides ticket pride, actually, ancillary revenue gains 91%complement, decreases 698 billion compared to KPI target

Beside passenger transportation, Vietjet also utilizes space in aircraft to transportcargo Cargo revenue accounts for 3% in total revenue structure In 2018, actual revenue

of cargo only gains 57% complement According to Vietjet’s business strategy, the carrierfocuses on developing passenger transportation to become the outstanding airlines leading

in the market, the cargo revenue is known as the supplement value contributing to thetotal revenue In the context of research, the research focuses on the passengertransportation activities and ancillary service

 Service quality rate decreases:

According to Customer satisfaction report that Customer Service Departmentcollected, Overall service quality rate in 2018 only gets 68.6%, decreasing by 4.5%compared with 2017 (73.1%) Indeed, Service quality rate by services provided alldecreases

Figure 3.1: Vietjet overall service quality rate 2017- 2018- Source: Vietjet Customer

Service Department

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Service quality rate by services provided

20172018 72.8%74.5%75.7% 75.80%

70.10%70.90%

64.8%

60.00%

Booking servicesAirport servicesOn-Board services In-flight Merchandise

Table 3.2: Service quality rate by services provided

Source: Company data- Service quality level report in 2018

Service quality rate by services provided 2017 2018 2018 /2017

Figure 3.2: Service quality rate by services provided 2017-

2018-Source: Vietjet Customer Service DepartmentVietjet divides Service quality in four main sections including booking service,Airport service, On- board service and In- flight service Four main sections described asmain stages to complete the air travel experience of passengers from the beginning doingcheck in procedure to receiving luggage at arrival terminal

Booking service evaluated in three main booking channels that Vietjet offers There

are Vietjet website, Call center 1900-1886 and Ticketing agency The overall rate ofbooking service gains 70.1% Indeed, the satisfaction rate of waiting time for answeringthe call only gets 55.7% Initiative in meeting customers’ demand is 65.3%

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The airport service described at three main stages including at check- in counter, at

departure gate and at arrival terminal Most of the customer expresses depression in beingwaited for check- in (65.7%) and receiving luggage (67.8%)

In 2018, On - board service has been improved with slightly increase in Service

quality rate This service evaluated based on three criteria such as cabin’s cleanliness, flight announcement and flight attendants All of them gain over 70% satisfaction rate,which proved the improvement in better service and manner

in-LCC models complete revenue pie with the contribution of Ancillary service,

additional fee that customers pay for added- values service except ticket price That is thereason why in flight merchandise considered as important factor affecting to servicequality In- flight merchandise divided in two main services includes food and drinksservice (sold both domestic and international routes) and Duty free merchandise(international routes)

 Passenger’ s compl aint s increase

While most of traditional carriers struggle with many challenges in modern air travel,the low cost carriers (LCC) conduct novel strategies and gain positive support frompassengers LCC offers tickets which have been reduced fixed costs, to be the mostprofitable airlines in aviation industry However, excessive cost reducing can affect toservice quality negatively in some circumstances, which leads to customers seek bettervalue services in others (15) Therefore, competing on price only cannot make to thesuccess for airlines especially low cost carriers In the near future, all passenger carriersmust consider developing strategies and providing outstanding services to gainsustainable competitive advantage

In the general developing context of Vietnam aviation industry 2018, includingopportunities as well as challenges; beside significant achievements, Vietjet had to dealwith many cases concerning to passenger’s complaints that seriously affects to airlinereputation Many of canceled and delay flights, negative comments about service qualityand ground services staff attitude are clues to indicate the below performance expectation

In 2018, Customer service department of Vietjet received more than 14,392 negative

feedbacks, complaints from customers in some channels through weekly survey, mail boxand call center 1900-1886 This figure evaluated that significantly increases by 11.78%compared to 2017 (12,875 complaints).

Figure 3.3: Vietjet Customer’s complaints 2018- Source: Customer Service report

2018The percentage of delayed and cancelled flights accounts for the highest level, 32%customer feedback about the delayed flights occurred frequently Besides, customerscomplain payment channel failures, most customers deal with payment twice becauseVietjet controls fake transaction through online booking system Staff attitude alsoreceives negative response from customer, most of feedback cases coming from Groundoperation staff attitude 36% complaints from offered service like in flight merchandise,check in and hand luggage procedure, which has not met the customer satisfaction

In the observable symptoms of the failure in KPI achievement, based onorganizational data and focus interview, the research also examines several underlyingsubjective and objective reasons causing the KPI achievement failure

- In the relation to objective reasons, one of the challenges of Vietjet performance is

the increasing high competition from other airlines in Vietnam aviation industry The visa element is one of the barriers for airline activities Currently, Vietjet has

flight operation to Japan, Korea and Taiwan They are three destination attracttourists, However, visa application approval for travelling in three countries isquite difficult Many customers have to cancel booking due to the late or failing invisa application.

- One of the noticeable subjective reasons that passenger transportation activitiesand ancillary service don’t gain target due to a large of customers quit to useVietjet service Vietjet makes report and finds out the percentage customerscontinued to fly with Vietjet in 2018 gets 91.8% decreases by 2.7% compared with

2017 (94.5%) The satisfaction level of comparison between Vietjet and otherairlines is lower evaluation Specifically, the percentage of evaluation service

quality Vietnam Airlines better than Vietjet is 66.7% Customer’s satisfaction is

low, which leads to KPI achievement failure in transportation revenue andancillary revenue

2.3.1 High competition

According to Mr Son- Commercial Director, he mentioned high competition is one

of the challenges leading to failure in target KPI achievement Mr Son shared that:

“Competition in the fast growing air transportation has increased as more entrants join the market The appearance of FLC Group- Bamboo Airways has become the Vietnam fifth’s airline Besides, VNA and Jetstar Airways also have competitive strategies like offering low price tickets combining attractive promotions Vietnam aviation market has become more dynamic and competitive when there is an entrance of sixth airlines as Air Asia- the largest low cost carrier in Asia Air Asia has launched operation and predicted to be the fierce rival of Vietjet.”

Figure 3.4: Vietnam air transportation market share 2018- Source: CAPA 2018

As mentioned in the above figure, the market shares of Vietjet in 2018 gained 44.8%,the largest domestic airline incapacity However, while Vietjet is price- oriented, VNAknown as the favorite airline with high quality branding, trustful and excellent services.According to the survey of CAAV 2018, VNA has more competitive advantage in servicequality (46%) compared to Vietjet (23%)

Figure 3.5: Comparison image comparison between VNA and Vietjet

In the competitive market of air transportation, Vietjet is well- established withaffordable price during past 6 years but the new entrant- Bamboo Airways- the airlineruns a hybrid business model Therefore, Bamboo Airways ticket prices also combine oftwo models If VNA has won the high- end customer segmentation with full outstandingservices, Bamboo Airways has other competitive advantage They focus on niche market,

short hauls with local destinations that VNA and Vietjet ignore It works within thebasement of good ecosystem by FLC Group, combined a chain of accommodationservices such as resorts and hotels.

Figure 3.6: Price comparison of four Vietnam aviation companies- Dec

2018-Source: CAPA

Bamboo Airways becomes the fierce competitor of Vietjet in the middle- customersegment Bamboo Airways offers three seat classes including Bamboo Eco, Bamboo Plusand Bamboo Business The ticket price of Bamboo business class quite equals with Sky-boss class of Vietjet and is lower than VNA approximately 13% Bamboo Eco offersattractive price, lower than both of Vietjet and VNA (vary from 9% to 61% depend onoccasion)

Figure 3.7: Bamboo transportation term and regulation- Source: Bamboo Airways website

Figure 3.8: Vietjet transportation term and regulation- Source: Vietjet Air website

According to Yang and Zhang (56), Adler and Liebert (1), and Jiang and Zhang (37),There are some common reasons leading to failure in KPI achievement for airlineentrepreneur Firstly, the impact of low cost carriers creates more transporting selectionfor traveler Low cost carriers and high- speed rail also are on competition in shortdistance transport market Dynamic competition between airlines will weed out lesseffective firm, competition will become more hash with price orientation and servicequality Service Quality is becoming increasingly important to air travelers and the airlineindustry (5); (34); (46); (52) Service Quality can have a significant effect on establishingcustomer loyalty within the industry (4) The literature suggests that each facet of the air-travel experiences can have an effect on customer's perception of Service Quality (47).Air travel experiences combine full service from booking ticket, doing check- inprocedure and finish itinerary Besides, staff attitude still has significant role in customersatisfaction With service industry, staff plays an important key to serving and providingproduct to customer, staff represents airlines to convey value to customer Inappropriateand impolite manner cause bad impression in value perception and customer satisfaction.Besides core product is transportation, ancillary service still contributes to success ofLCC, customer evaluate satisfaction in all serviced provided and add- value service is notexcepted.

2.3.2 Visa barriers

Tourist has played important role global industry, with arrivals reaching 10 billionnumbers in 2017 However, barriers for travelling still exist (5) Many countries over theworld use visa restrictions as a technique to prevent unwelcome entry of travelers.Travelers must follow the procedure to submit visa They submit application to theConsular head quarter of their intended to travel Travelers asked for fees, long waitingtimes Some cases may deal with deny with or without comments or reasons There aresome matters such as politic, economic and security use to lie behind restrictions ofpeople at country borders

In the specific context of Vietjet, according to Mr Son- Commercial Director, heshared some concerns about visa restriction “In 2018, Vietjet launch new international

routes to attractive destination such as Tokyo, Osaka (Japan), Seoul, Taichung, Tainan,Taipei (Taiwan) These routes are considered as attractive tourists in region However, we

do not really get more profit from these routes Most of customers cancelled booking inlast minutes due to visa failure Some of the reasons leading to visa restriction haveimpacted on decreasing transportation revenue

- No stable job and no social insurance, health insurance

- Do not provide documents according to Embassy requirements

- Information in visa file or words during the interview is not enough to convince or create insufficient confidence for the consulate.

2.3.3 Service quality and customer satisfaction

Many researchers mentioned that the high level of service quality rate leads to highercustomer satisfaction (48), (55) If customers evaluate high experienced service quality,they have tendency to access service encounter as satisfaction The consequence ofservice quality and satisfaction to customer loyalty is significant to firm operation.Customers satisfied with offered services will bring to positive impact such as word ofmouth, brand intention and purchase behavior (27), (13) In contrast, the low in servicequality causes customer dissatisfaction, customers increase complaints and reclaim.Similar to the air transportation industry, offering the good services meeting theirrequirements is key factor to achieve sustainable competitive advantage Cronin et al (27)and Fornell (30) mentioned about the relationship between customer of LCC servicequality, customer satisfaction and re- purchase behavior In terms of aviation industry,repurchase behavior and intention related to flying with airlines on their next trips Thedelivery of high service quality evaluated as the reason leading to positive word of mouth,decreasing complaints, reluctant to switch off, willing to re- use service and canrecommend to acquaintances, relatives High customer satisfaction seems to create morebusiness opportunities and improve competitive advantage in global market

According to survey implemented by Customer Service department, measuring aboutthe reasons of choosing Vietjet Most of customers mentioned the reason is reasonable

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Source: Customer service survey 2018

ticket prices However, the number of passengers has flown and satisfied with Vietjet only gained 32% in 2018 (decrease by 4.8% compared to 2017)

Table 3.3: Reasons customers choose Vietjet- 2018

Has flown and satisfied with Vietjet 36.8% 32.0%

In order to figure out the root causes of failure in KPI achievement, to find out thecustomer satisfaction rate The researcher conducts depth interview with a group of fourpassengers, who have flown with Vietjet Two of them experienced in domestic flightsand the others got international flights Besides, the interviewees were invited to dosurvey based on Customer satisfaction survey issued by Customer Services Department.The short questionnaires are divided into four main criteria including seat comfort, staffattitude, inflight service and value for money The scale is 5 - stars for maximum and theover rate is scale of 10 based as standard of Skytrax- the Global benchmark of airlines andairports excellence Through depth interview of four representatives, the research findsout more experience values of customers after services

Table 3.4: Summary passenger’s interview

Mrs Mai

Route: Nha Trang to

Ho Chi Minh

City-Dec 2018

“Vietjet has the worst service I have ever seen in

my life Flight cancelled and delayed without

prior notice I have another international connecting flight, not sure whether I can catch

my next flight Carry-on baggage 7kg but my one was 8kg I had to buy 15kg check in for 1kg extra.”

clear message A very long long wait for

security too as there were tons of flights delayed due to thunderstorms in Bangkok”

Ms Neal

Route: Bangkok to

Phuket- Jan 2019

“Unexplained delay that turned into over 5

hours without any explanation or apology Staff

are uninterested and disrespectful Poor flights service, hot- meal is no fresh.”

Ms Thu Han

Route: Ho Chi Minh

City to Dong Hoi

Province- Feb 2019

“Vietjet treated me and my friend impolitely.

They said they will keep my luggage and my family can come to take it back But after 1 hour, my family did not receive any support, they said that they don't have responsibility to keep my luggage and get nothing from the Dept

kept my luggage I did call Vietjet’s call center

many times, send mails on that day but nothing (they asked me to contact many Department but

no support Nothing apparent, poor service and

unprofessional and irresponsible.”

Through the interview with four representative passengers, Vietjet is dealing withlow customer satisfaction with decreasing service quality rate This issue causes negativereflect in customer’s perception and re purchase intention Due to common reasons likedelayed flights, unprofessional performance, staff’s attitude and poor in-flight service,which leads to problem that customer express dissatisfaction with offered Vietjet’sservices

Vietjet also conducted survey with 125 respondents on domestic flights (Ho ChiMinh City to Ha Noi) at the same timeline on the December According to findings,75.7% customers satisfy with Vietjet service, decrease by 6.5% compared to previousyear

Table 3.5: Comparison of satisfaction rate 2017- 2018- Source: Customer Service department

Passenger continued flying with Vietjet 113 12 96 29

Percentage 90.4% 9.6% 77% 23%

2.3.4 Uncomfortable air travel experiences

According to Chen FY (22), organization can increase attention in the service quality

by creating superior experiences for customer Airlines are not except for this,stakeholders begin to pay attention more to customer experience (35) by enhancing airtravel experience The literature mentions that each stage contributing to air travelexperience has an impact on overall perception of passenger about service quality (47).Luggage handling, boarding and check in procedure are three main stages in journey

Figure 3.9: Phases of the Air- Travel Experience- Source: Park JW

In this section, on-time performance evaluated as main indicator for service quality,which is known as a component of delayed flights expressed as a percentage of total offlights One flight is considered on- time performance if arriving early or up to fifteenminutes later than schedule (11), (14), (29) On-Time performance is known as ameasurement of a firm's reliability (16); (14); (15) On-Time Performance was alsoidentified as an important factor to consumers’ evaluation of airline quality during theSkytrax study in Chapter Seven (51) Airline that offers on- time performance gets betterservice quality rate in passenger’s evaluation In contrast, frequency in untimely serviceproviding like waiting for service, delayed or cancelled flights will make customerfrustrated and have negative feelings after purchase behaviors

Researcher conducts interview with Mr Truong Viet Cuong- Customer Service

Director, he shared some point of view concerning to decrease service quality “Customer

Service Department usually receives feedbacks and comments of customers in various channels Most of the bad service evaluation come from the increasing rate of delayed and cancel flights changing in flight schedule that affects to air travel itinerary of passengers Besides, with the high increase in travelling demand, airports usually are in jam, especially in high season, customers have to queue in long line and wait for check in procedure Customers have tendency to express uncomfortable feeling when waiting and being stuck in long queuing”

In the point of view of customer, Vietjet’s customers usually deal with delayedflight Mrs Mary express frustration after her Vietjet return flights Ho Chi Minh City to

Phu Quoc “During a recent tour of Vietnam we had the misfortune be booked on this

airline Both internal flights delayed by one hour each We received a message from our travel agent advising us that one of our flights was being moved forward by almost 2 hours so we had to cut short our day tour so we could be” (Mrs Mary, Australia, Feb,

2019)

Figure 3.10: Total of delayed flight first half of 2018 - Source: Zing newspaper

According to report of Transportation Department- Civil Aviation Authority ofVietnam, the number of delayed and cancelled flights has increased significantly in first 6 months 2018 in three operating airlines Vietnam Airlines, Vietjet Air and Jetstar Pacific

operate more than 150,000 flights in the first six months of 2018, increases over 9percentage year-on-year However, there are 20,566 were delayed and 434 were canceledamong that The traditional airlines- Vietnam Airlines outperformed the aviationcompetition with highest on time rate Providing total of 64, 221 flights, only 6,840delayed and 140 canceled due to weather condition The second low cost carrier inVietnam market is Jetstar Pacific They launched 18,439 flights 3,577 flights behind theschedule and 102 cancelled services flights among that “Leading” in the delayed rate isVietjet Air In the half of 2018, Vietjet offered 60,362 flights, in which 10, 325 delayedand 66 flights canceled.

According to Mr Son- Commercial Department, delayed and cancelled flights comefrom many subjective and objective reasons In 2018, Vietjet signed contract to buyingnew fleet of aircraft A320/A321 from Airbus manufacturer However, late new aircraftdelivery schedule (3 months late) causes lack of seat capacity, late in new routeslaunching, which leads to decrease in revenue and operation efficiency Shortage ofaircraft causes in schedule change, challenging in setting up roster and one flight is lateleading to continuous later flights Second, delayed flights come from bad weathercondition, which are unavoidable risks Third, technical issues are one of the reasoncausing delayed flight, but not considerable Technical reliability of Vietjet gains 99.64%,the highest figure ranked in top airlines in Asia

2.3.5 Ground staff’s attitude

Staff attitude or staff behavior is a field studied by many researchers and they alsoproved the important of staff role in evaluation of service quality and customersatisfaction Weiner has defined staff behavior as any activities of employees directtoward affecting service quality, negative behavior of employees believed to be one of thecore factors leading to decrease service quality and below customer satisfaction Asdefinition by Mckinney (42), employee attitude referred the way in which employeesrespond to specific circumstances in the workplace Sharma (33) also mentioned that ifstaff perform appropriate and professional manner, customer will perceive high servicequality that organization offers However, why does staff attitude plays an important role

for customer evaluate their satisfaction to air transportation services Weiner (53) hasdivided a service provided organization and goods provided organization by theintangibility of service as contrary with the tangibility characteristics of goods When thefirm provides services, customer has tendency to evaluate quality based on service’sproviders They are frontline staff- the person directly communicates with customer.

The research finds out some reason concerning to staff behavior factor which leads

to low customer satisfaction via depth interview with problem’s owners Mr Customer Service Director mentioned about complaints received from customer’sfeedback and findings from mystery shoppers with the reasons related to manner andserving attitude of ground service agents

Cuong Unprofessional manners and unfriendly words

- Irresponsible feedback and instructions

- Unwilling to support with customers’ problems

Mystery shoppers are team including over 200 people who have been chosenstrictly by Internal Audit Department They are trained as standard in two weeks and have

to do test All mystery shoppers are instructed by standard video including check inprocedures and must be competent before evaluating ground staff as form issued by

Vietjet (see evaluation form in appendices) Based on the findings of mystery shoppers,

the rate of three criteria evaluating staff only get below 4 points in total 5 pointsbenchmark that Vietjet regulates Ground staff attitude affects thoughts while his/herbehavior affects actions

Table 3.6: Rate of staff attitude satisfaction- 2018

Attitude (be nice when communicating with customers) 2.5 3

Manners (proficient action and quick making- decision) 3.8 3.6

Style (professional, no private talking, no using mobile

phone, no eating at counter)

Attitude is the position of the body or way of carrying oneself; posture, the feeling expressed toward others while manner is mode of action; way of performing or effecting

anything; method; style; form; and fashion In Vietjet evaluation report, attitude isperformed by be nice when communicating with customers such as welcoming, smilingand voice Manners are proficient action and quick making decision.

In specific, ground operation staff divided in two main group- working at airportincluding check- in staff and representative Adhering to standard is not well -accomplished

Table 3.7: Task accomplishment evaluation - 2018

Check- in staff VJC representatives

When asking one of the staff working at Tan Son Nhat Airport, Vietjet departure terminal,

Ms Ngan admitted that sometimes she made mistakes like inconsiderate attitude withpassengers like forgetting to say hello or thank you, no smile to welcoming guests Aboutchecking weight of baggage, they have to obey to airlines policy, some customer refuse tocooperate and staff does not have good skill to persuade or explain, which lead toconflicts between staff and customers

All of the above reference have illustrated that poor staff attitude will cause low servicequality rate This is main problem leading to low customer satisfaction at Vietjet It isserious issue that airlines need to invest more time to find out and resolve in order toimprove brand reputation and service quality

2.3.6 Poor of inflight services

Continue to the experience at the airport, passengers enter the next phase of the airtravel experience is in- flight phase The core airline experience changed rapidly due tothe appearance of market liberalization In the early days, air travel designed to meet alimited number of passenger’s demand However, the development of long hauls createsmore requirements to serve food and drinks and other in- flight entertainments (46) Theexplosion of LLC model with in – flight retailing be known as significant activities tosupplement for income excluding ticket price Besides food and drinks selling, LLC alsoprovided duty free shopping on-board However, due to the introduction of duty freeshops at airports, there has been an impact on in flight duty free sales (29) In flight dutyfree has some limitation in product ranking and display, so creating less tactile experiencefor passengers than airport’s retail stores

When passengers spend more time for airborne, the quality of in- flight servicedeserves more consideration by carriers In- flight meals, beverage and duty free shoppinghave become to be part of the total service (38), (39), (10), (40) and be one of the criteria

in the service quality evaluation

According to survey by Customer Service Department, the service quality rate of flight service has not been improved through years All criteria evaluation gains under70%, which has not met the average satisfaction rate in passenger’s perception

in-Table 3.8: Inflight service quality rate- Source: Customer service department

2018 1 st half of 2018 2017

Conducting interview with Mrs Mai- passenger have experienced in Vietjet flights.She mentioned about the dissatisfaction when she ordered one meal in the menu, cabincrew said that this selection is out of order This situation continued to repeat to secondchoice She felt the disruptive service offering of in-flight services that Vietjet provides.The shortage of quantity combined with meals flavor has not been updated frequently

According to Ms Huong- In- flight service managers, she mentioned some limitation intop –up hot-meal for flights every day All Vietjet flights will be uploaded hot meal, in-flight goods in the trolley at the first flights in three main base Tan Son Nhat, Da Nangand Noi Bai airports Due to high demand of some flights, stocks will be out of ordersooner, which causes shortage of hot meals in late flights Vietjet cannot increase quantitydue to limit space in aircraft Ms Huong also mentioned the lack of in-flightentertainments on Vietjet flights Currently, Vietjet does not offer on- boardentertainments for passengers like traditional carriers, which causes disadvantagescompared to competitors and inability to adapt passenger’s demand.

Figure 3.11: Initial symptom and potential problems map

2.5 Main problem validation

The depth interviews conducted with the management, has explained thatcompetition, visa barriers are temporary

Mr Son- Commercial Director shared some view about competition among airlines

“In any industry, competition is unavoidable and aviation is not excepted Currently, Vietnam has 4 main operating airlines including VNA, Jetstar, Vietjet and Bamboo Airways While VNA focuses on traditional model to provide high price, high quality product, Vietjet is pursuing low cost with the best price tickets, which is suitable to most

of Vietnamese travelers’ income”.

Particularly, in the specific characteristics like airlines, the competition is supposed

to be the unavoidable risks Vietjet competes directly with Vietnam Airlines (VNA) butstill have advantage in middle and low customer segmentation with reasonable prices.VNA is aiming to 4 star airlines with traditional model, providing excellent and luxuryflight service to customer Whereas, Vietjet focuses on a large of limited- budgetcustomer, which is suitable to income level of Vietnamese The appearance of BambooAirways in the market does not really create challenges to well- established airlines likeVNA or Vietjet Bamboo Airways still takes time for setting up all activities The initialestablishment needs time for customers get familiar, try out and use their service.Therefore, some systematic factors such as competition or visa cannot be avoided On theother hand, the low customer satisfaction is considered alarming cause Main root cause iscoming from decrease service quality rate, which negatively impact on customersatisfaction, and the behavior will explode to complaints, leaving airlines and choosingothers for using services (2), (18); (20); (26); (49)

In customer’ s unsatisfactory issue, according to Mr Son- Commercial

Department, “Delayed and cancelled flights come from many subjective and

objective reasons In 2018, Vietjet signed contract to buying new fleet of aircraft A320/A321 from Airbus manufacturer However, late new aircraft delivery schedule (3 months late) causes lack of seat capacity, late in new routes launching,

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which leads to decrease in revenue and operation efficiency Shortage of aircraft causes in schedule change, challenging in setting up roster and one flight is late leading to continuous later flights”.

Delayed flights come from bad weather condition, which are unavoidable risks.Thirdly, technical issues are one of the reason causing delayed flight, but notconsiderable Technical reliability of Vietjet gains 99.64%, the highest figure ranked intop airlines in Asia Therefore, timeliness factor is subjective reasons that Vietjet needs toimprove with close cooperation with Airbus manufacturers

In term of the potential problem of in- flight service emanates from cost savingsstrategy The Vietjet fleet of aircraft has seat configuration from 180 to 220-230 seats andthe designs are in tune with the low cost airline business model “A strong focus on cost”

is business strategy that Vietjet pursuits for a long time Because some specific with lowcost model, most of the target customer is price- sensitive and leisure travelers, makingin- flight entertainments various and convenient will spend Vietjet a large of investment,whereas ineffective respond from passengers in short routes, point to point network In-flight income is one of the component of Ancillary revenue, it contributes to nearly 23%

in total revenue of Vietjet During 3 years, Ancillary service has stable growth, increasing4% per year Therefore, poor of in- flight service is not really a significant problem thatcan deeply affect to the KPI achievement

The most serious issue Vietjet need to focus is improving ground services agentbehavior Mr Cuong- Head of Customer Services Department shares some concern aboutcustomer dissatisfaction toward ground staff attitude

“Ground staff play important role in conveying services to customers However, skills to deal with unexpected cases, persuasion of Vietjet ground service agent is not good The percentage of passengers have flown and satisfied with Vietjet in 2018 gets 32%, lower 13% compared to the previous year Customer Services usually receives many complaint letter, most of which are concerned with dissatisfaction with staff behavior.”

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Ground service agents play as a representative of airlines, who provide servicesand have direct interaction with customers Frontline staff are known as main contactbetween organization and customers According to the Service-Profit-Chain (1997)

by Hesket, Sasser & Schlesinger, key leading to customer satisfaction is employeegood performance He mentioned the service profit chain set up the closerelationship between employee performance, their satisfaction, employeeproductivity, customer satisfaction and company’s profitability However, in thecurrent context of Vietjet, most of the ground staff have unprofessionalperformances, which leads to ineffective value of services conveyed to customers ofairline:

- Firstly, representatives and check in staff have unprofessional manner in words,welcoming and attitude

- Secondly, customers complain about no fully support from staff, they have nopersuasive explanation in charging fee regulation at the airports

- Ground staff have inconsiderate instruction with passengers take flights at the firsttime

According to report recorded by mystery shoppers team of Vietjet, they haveobservation and test out check in staff at airports to make findings concerning servingquality The percentage of staff take full compliant is below average (50%), which leads

to bad work performance

Items Criteria Description compliantFull complaintPartly compliantNot

CKS01 Attitude Be nice when communicate with

Release arbitrarily passenger who

go with improperly hand luggage

or oversize baggage without fee

Table 3.9: Ground staff evaluation report 2018- Source: Customer services Department

Mr Cuong mentioned the concern with ground staff attitude has exist for a long time but employees do not acknowledge comprehensively all the serious consequences themselves

If this issue cannot be improved, which continues to decrease service quality rate and make customers dissatisfy, have negative impression and choose alternative choices from other airlines This leads to passenger transportation revenue decrease Therefore, the board of management should know and find solutions for this problem, which affects to overall customer satisfaction

Many recent researches have referred customer satisfaction as a correlate of employeeattitude and work performance, so that concentrating the significance of service quality toenterprise’s achievement (54) In research on airlines’ services, frontline staff andcustomer attitudes about service quality were highly connected (14)

It can be concluded that the main problem that has impact on low Vietjet customersatisfaction is Unprofessional attitude of Vietjet ’s ground service staff working atairports

Figure 3.12: Initial symptom and main problem map

The successful management of staff is so important for organizations providingservice Front line staff plays important role in linking organization with its customer (7)and customers make evaluation of delivered service quality by these staff Therefore, thebehaviors and attitudes of staff who directly provide services towards customers areimportant for the positive or negative feedback by customers, which contributes tocustomer satisfaction and purchase intention in future (12) Consequently, staff attitudeshave impact on organization business effectiveness In aviation industry, ground serviceagents are known as front line staff to provide ground services activities in the whole airtravel experience of customers The level of concern and civility between ground servicestaff and passengers is highly significant, such as listening and understanding, courtesyand friendliness (6) In addition, low service staff turnover helps to reduce hiring andrecruiting new ones, increasing the efficient performance of organization

CHAPTER 3: CAUSES OF PROBLEM

Many researchers studied about the impact of employee behavior in service qualityrate and overall customer satisfaction They referred some reasons leading to negativeattitude of employee show in their work, there are stress on work, training policy andmotivation technique

3.1.1 Stress on work

The negative consequences of stress on work attitude of employee has beenexamined in literature such as absenteeism, tardiness and reduce productivity (45) Thesethree behaviors are known as basic indicators of worker’s overall job satisfaction and berelated to performance of staff (50)

Through the interview with Ms Van, the representative was asked for her point of view

on the complaints of passengers that Vietjet ground service staff were behaving impolitelyand unprofessional attitude towards passengers Ms Van- the interviewee did notacknowledge that she was lack of enthusiasm and energetic spirit when communicatingwith passengers

“I think that it is hard to be happy all day, especially when we have to work on shift Morning shift starts on 3:30 am or late shift end up till 2:00 pm One working shift lasts for 8 hours with high frequency of passengers We deal with stressful status when communicating with unsympathetic customers, who always raise many challenging requirements” Said by Ms Van

When having discussion with Mrs Hong- manager about negative behaviors of groundservice agents, she shared some comments:

“Working in airport environment is quite challenging, indeed married female staff.

Working on shifts, having no fix time for family taking care, pressure environment with a various group of customers are difficult challenges Many staff cannot