Poor ground service agent attitude at Vietjet aviation joint stock company

List of figures  Figure 1.1: Business model  Figure 1.2: Vietnam aviation market size in annual passengers 2011 to 2016  Figure 1.3: Vietjet business performance 2017  Figure 1.4: Vi

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 1.1: Business model

 Figure 1.2: Vietnam aviation market size in annual passengers 2011 to 2016

 Figure 1.3: Vietjet business performance 2017

 Figure 1.4: Vietnam aviation growth

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

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

 Figure 3.3: Vietjet Customer’s complaints 2018

 Figure 3.4: Vietnam air transportation market share 2018

 Figure 3.5: Comparison image comparison between VNA and Vietjet

 Figure 3.6: Price comparison of four Vietnam aviation companies

 Figure 3.7: Bamboo transportation term and regulation

 Figure 3.8: Vietjet transportation term and regulation

 Figure 3.9: Phases of the Air- Travel Experience

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

 Figure 3.11: Initial symptom and potential problems map

 Figure 3.12: Initial symptom and main problem map

 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 3.1: Vietjet KPI performance 2018

 Table 3.2: Service quality rate by services provided

 Table 3.3: Reasons customers choose Vietjet

 Table 3.4: Summary passenger’s interview

 Table 3.5: Comparison of satisfaction rate 2017- 2018

 Table 3.6: Rate of staff attitude satisfaction- 2018

 Table 3.7: Task accomplishment evaluation – 2018

 Table 3.8: Inflight service quality rate

 Table 3.9: Ground staff evaluation report 2018

 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

 Table 5.4: Action plan of training program

Abbreviation

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 KPI achievement failure and low service quality rate year by year Though the internal data combined with in depth interviews, the thesis has defined three potential problems, which are high competition, visa restrictions and customer dissatisfaction In the issue of dissatisfaction, there are three elements contributing to that are uncomfortable air travel experiences, ground staff attitude and poor of in- flight services By the method of collecting data, literature supported and interviews, the thesis finds out main problem leading to customer dissatisfaction and KPI achievement failure is unprofessional ground service agent’s attitude

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

CHAPTER 1: COMPANY BACKGROUND 1.1 History

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

to provide safe flights with excellent service quality in domestic and Asian region Vietjet spent four years on good preparation in resources, systems and finance to ensure sustainable development when joining to Vietnam aviation industry In 2018, Vietjet has met the air travelling demand of millions passenger, contributing to the growth of Vietnam aviation and tourism industries and the economic development as well After 6 years taking off, Vietjet has established itself in aviation market with a large portion of market 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 network which covers the whole Vietnam regions and the global Vietjet does not lonely provide aviation services but also consumers product based on e-commerce platform Become a

favorite and trust airline, which receives credibility from customers

1.3 Mission

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 exceeding expectation services with friendly smiles and professionalism

1.4 Product and service

Vietjet makes continuous efforts to cut down cost and unnecessary expenses on tickets prices to make air means of transportation more affordable for the majority of customers Vietjet focuses more on product research and diversify its segmentation as well as to make services more outstanding Vietjet operates on low cost strategy with some 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 flying with 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 procedure shorten and cut waiting time for passengers

Vietjet has launched “Sky-shop” services for further interesting and comfortable travel experiences for customers With “Sky-shop” service, passengers can taste hot delicious 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

1.5 Business development strategies

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

Besides expanding market, Vietjet maintains strong brand health to enhance reputation and credibility with stakeholders including passengers, partners, which helps to nurture sustainable development for firm Continue to research and develop customized services and products on e-commerce platforms, enhance cost management and deploy high tech, cost savings application for operation

1.6 Target customer

Vietnam’s local carrier Vietjet is helping to stimulate the traveling demand of customers 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 more free time and do not depend much on schedule’s change Completely new customer segmentation: customers are using the services of other means of transport like trains, automobiles with the remarkable utility of aviation services 30 percentages of Vietjet customers who first go on air Vietjet helps Vietnamese customers can approach to fast and modern air transportation with reasonable price, for more experience and comfort to fly with Vietjet

1.7 Market share

Vietjet has driven a large portion in significantly growth, especially in domestic market In 2018, Vietjet has outperformed other carriers, maintain its leading position in domestic 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 22 percentage compared to this period last year In international market, Vietjet continues to expand 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

1.8 Business performance

The Vietnam aviation market expected to grow in 2020, in the context as prediction that the economy can achieve highest GDP development The Vietnamese government create suitable environment and promote tourism as a key economic sector, which attract millions 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 carrier and 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 considerable achievement 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 the strategy wants to become leader carrier in domestic market and favorite airlines in region Vietjet has explored destination in 39 domestic routes and expand international fight network to 66 destinations in international region Airlines have signed agreement for new 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 by 17.4 percent in last decade, driven by a growth in domestic and international tourists as well as the development of low cost carrier models Between 2018 and 2020, passenger transportation volume is expected to increase by more 16 percent Currently, Vietnam has five 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 of Bamboo Airways To gain the stable development and advantage competitiveness in such global dynamic industry, Vietjet should put a significant emphasis on service quality, improving customer satisfaction to retain the reputation and high revenue According to Adler (1), passenger satisfaction is one of the most important factors in the aviation industry, which contributes to firm’s success in competitive market Providing good

service quality to passengers and understand the customers’ need has been significant in enhancing airline business survival and success (41) In the current context, focusing on passengers’ 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 billion dong, gains 85% complete rate compare to the target, specifically, transportation revenue gains 85%, ancillary completes 91% and revenue from cargo is modest figure with 57%

Table 3.1: Vietjet KPI performance 2018

Unit: Billion dong

Ancillary revenue of Vietjet includes income from non-ticket fee Added services are offered such as check-in priority, boarding priority, hot meals, pre-ordered beverages, and much 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-shop continued to improve its services Apart from hot meals and typical Vietjet souvenirs, many seasonal products purchased onboard by passengers, for example, summertime products, wintertime products, Tet (Lunar New Year) holiday products, and more Duty-

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- value service 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 transport cargo 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 carrier focuses on developing passenger transportation to become the outstanding airlines leading

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

 Service quality rate decreases:

According to Customer satisfaction report that Customer Service Department collected, 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 all decreases

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

Table 3.2: Service quality rate by services provided

Source: Company data- Service quality level report in 2018

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

Source: Vietjet Customer Service Department Vietjet divides Service quality in four main sections including booking service, Airport service, On- board service and In- flight service Four main sections described as main stages to complete the air travel experience of passengers from the beginning doing check 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 of booking service gains 70.1% Indeed, the satisfaction rate of waiting time for answering the call only gets 55.7% Initiative in meeting customers’ demand is 65.3%

Booking services Airport services On-Board services In-flight Merchandise

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 being waited 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, in- flight announcement and flight attendants All of them gain over 70% satisfaction rate, which proved the improvement in better service and manner

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 the reason why in flight merchandise considered as important factor affecting to service quality In- flight merchandise divided in two main services includes food and drinks service (sold both domestic and international routes) and Duty free merchandise (international routes)

 Passenger’s complaints 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 from passengers LCC offers tickets which have been reduced fixed costs, to be the most profitable airlines in aviation industry However, excessive cost reducing can affect to service quality negatively in some circumstances, which leads to customers seek better value services in others (15) Therefore, competing on price only cannot make to the success for airlines especially low cost carriers In the near future, all passenger carriers must consider developing strategies and providing outstanding services to gain sustainable competitive advantage

In the general developing context of Vietnam aviation industry 2018, including opportunities as well as challenges; beside significant achievements, Vietjet had to deal with many cases concerning to passenger’s complaints that seriously affects to airline reputation Many of canceled and delay flights, negative comments about service quality and 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 box and 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

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

2.3 Potential problems

In the observable symptoms of the failure in KPI achievement, based on organizational data and focus interview, the research also examines several underlying subjective 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 attract tourists, However, visa application approval for travelling in three countries is quite difficult Many customers have to cancel booking due to the late or failing in visa application

- One of the noticeable subjective reasons that passenger transportation activities and ancillary service don’t gain target due to a large of customers quit to use Vietjet service Vietjet makes report and finds out the percentage customers continued 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 other airlines 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 and ancillary 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, VNA known 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 service quality (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 with affordable price during past 6 years but the new entrant- Bamboo Airways- the airline runs a hybrid business model Therefore, Bamboo Airways ticket prices also combine of two models If VNA has won the high- end customer segmentation with full outstanding services, Bamboo Airways has other competitive advantage They focus on niche market,

short hauls with local destinations that VNA and Vietjet ignore It works within the basement of good ecosystem by FLC Group, combined a chain of accommodation services 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- customer segment Bamboo Airways offers three seat classes including Bamboo Eco, Bamboo Plus and 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 offers attractive price, lower than both of Vietjet and VNA (vary from 9% to 61% depend on occasion)

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 airline entrepreneur Firstly, the impact of low cost carriers creates more transporting selection for traveler Low cost carriers and high- speed rail also are on competition in short distance transport market Dynamic competition between airlines will weed out less effective firm, competition will become more hash with price orientation and service quality Service Quality is becoming increasingly important to air travelers and the airline industry (5); (34); (46); (52) Service Quality can have a significant effect on establishing customer 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- in procedure and finish itinerary Besides, staff attitude still has significant role in customer satisfaction With service industry, staff plays an important key to serving and providing product to customer, staff represents airlines to convey value to customer Inappropriate and impolite manner cause bad impression in value perception and customer satisfaction Besides core product is transportation, ancillary service still contributes to success of LCC, customer evaluate satisfaction in all serviced provided and add- value service is not excepted

2.3.2 Visa barriers

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

In the specific context of Vietjet, according to Mr Son- Commercial Director, he shared 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 in last minutes due to visa failure Some of the reasons leading to visa restriction have impacted 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 higher customer satisfaction (48), (55) If customers evaluate high experienced service quality, they have tendency to access service encounter as satisfaction The consequence of service quality and satisfaction to customer loyalty is significant to firm operation Customers satisfied with offered services will bring to positive impact such as word of mouth, brand intention and purchase behavior (27), (13) In contrast, the low in service quality causes customer dissatisfaction, customers increase complaints and reclaim Similar to the air transportation industry, offering the good services meeting their requirements is key factor to achieve sustainable competitive advantage Cronin et al (27) and Fornell (30) mentioned about the relationship between customer of LCC service quality, customer satisfaction and re- purchase behavior In terms of aviation industry, repurchase behavior and intention related to flying with airlines on their next trips The delivery 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 can recommend to acquaintances, relatives High customer satisfaction seems to create more business opportunities and improve competitive advantage in global market

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

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

Source: Customer service survey 2018

In order to figure out the root causes of failure in KPI achievement, to find out the customer satisfaction rate The researcher conducts depth interview with a group of four passengers, who have flown with Vietjet Two of them experienced in domestic flights and the others got international flights Besides, the interviewees were invited to do survey based on Customer satisfaction survey issued by Customer Services Department The short questionnaires are divided into four main criteria including seat comfort, staff attitude, inflight service and value for money The scale is 5 - stars for maximum and the over rate is scale of 10 based as standard of Skytrax- the Global benchmark of airlines and airports excellence Through depth interview of four representatives, the research finds out 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”

“Unexplained delay that turned into over 5

hours without any explanation or apology Staff are uninterested and disrespectful Poor in- flights service, hot- meal is no fresh.”

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.”

Overall rate: 3/10

 Seat comfort: 3/5

 Staff attitude: 1/5

 Inflight service: 2/5

 Value for money: 2/5

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

Vietjet also conducted survey with 125 respondents on domestic flights (Ho Chi Minh 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 previous year

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

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 air travel experience The literature mentions that each stage contributing to air travel experience 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 of flights One flight is considered on- time performance if arriving early or up to fifteen minutes later than schedule (11), (14), (29) On-Time performance is known as a measurement of a firm's reliability (16); (14); (15) On-Time Performance was also identified as an important factor to consumers’ evaluation of airline quality during the Skytrax study in Chapter Seven (51) Airline that offers on- time performance gets better service quality rate in passenger’s evaluation In contrast, frequency in untimely service providing like waiting for service, delayed or cancelled flights will make customer frustrated 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 delayed flight 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 of Vietnam, 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 9 percentage year-on-year However, there are 20,566 were delayed and 434 were canceled among that The traditional airlines- Vietnam Airlines outperformed the aviation competition with highest on time rate Providing total of 64, 221 flights, only 6,840 delayed and 140 canceled due to weather condition The second low cost carrier in Vietnam market is Jetstar Pacific They launched 18,439 flights 3,577 flights behind the schedule and 102 cancelled services flights among that “Leading” in the delayed rate is Vietjet Air In the half of 2018, Vietjet offered 60,362 flights, in which 10, 325 delayed and 66 flights canceled

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, 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 Second, delayed flights come from bad weather condition, which are unavoidable risks Third, technical issues are one of the reason causing 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 also proved the important of staff role in evaluation of service quality and customer satisfaction Weiner has defined staff behavior as any activities of employees direct toward affecting service quality, negative behavior of employees believed to be one of the core factors leading to decrease service quality and below customer satisfaction As definition by Mckinney (42), employee attitude referred the way in which employees respond to specific circumstances in the workplace Sharma (33) also mentioned that if staff perform appropriate and professional manner, customer will perceive high service quality that organization offers However, why does staff attitude plays an important role

for customer evaluate their satisfaction to air transportation services Weiner (53) has divided a service provided organization and goods provided organization by the intangibility of service as contrary with the tangibility characteristics of goods When the firm provides services, customer has tendency to evaluate quality based on service’s providers 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 Cuong- Customer Service Director mentioned about complaints received from customer’s feedback and findings from mystery shoppers with the reasons related to manner and serving attitude of ground service agents

- 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 chosen strictly 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 in procedures 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 points benchmark that Vietjet regulates Ground staff attitude affects thoughts while his/her behavior affects actions

Table 3.6: Rate of staff attitude satisfaction- 2018

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 is performed by be nice when communicating with customers such as welcoming, smiling and voice Manners are proficient action and quick making decision

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

Table 3.7: Task accomplishment evaluation - 2018

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 with passengers like forgetting to say hello or thank you, no smile to welcoming guests About checking weight of baggage, they have to obey to airlines policy, some customer refuse to cooperate and staff does not have good skill to persuade or explain, which lead to conflicts between staff and customers

All of the above reference have illustrated that poor staff attitude will cause low service quality rate This is main problem leading to low customer satisfaction at Vietjet It is serious issue that airlines need to invest more time to find out and resolve in order to improve 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 air travel experience is in- flight phase The core airline experience changed rapidly due to the appearance of market liberalization In the early days, air travel designed to meet a limited number of passenger’s demand However, the development of long hauls creates more requirements to serve food and drinks and other in- flight entertainments (46) The explosion of LLC model with in – flight retailing be known as significant activities to supplement for income excluding ticket price Besides food and drinks selling, LLC also provided duty free shopping on-board However, due to the introduction of duty free shops at airports, there has been an impact on in flight duty free sales (29) In flight duty free has some limitation in product ranking and display, so creating less tactile experience for passengers than airport’s retail stores

When passengers spend more time for airborne, the quality of in- flight service deserves more consideration by carriers In- flight meals, beverage and duty free shopping have 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 in- flight service has not been improved through years All criteria evaluation gains under 70%, which has not met the average satisfaction rate in passenger’s perception

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, cabin crew said that this selection is out of order This situation continued to repeat to second choice 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 in top –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 Nang and Noi Bai airports Due to high demand of some flights, stocks will be out of order sooner, which causes shortage of hot meals in late flights Vietjet cannot increase quantity due to limit space in aircraft Ms Huong also mentioned the lack of in-flight entertainments on Vietjet flights Currently, Vietjet does not offer on- board entertainments for passengers like traditional carriers, which causes disadvantages compared to competitors and inability to adapt passenger’s demand

2.4 Initial symptoms and potential problems

Figure 3.11: Initial symptom and potential problems map

2.5 Main problem validation

The depth interviews conducted with the management, has explained that competition, 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) but still have advantage in middle and low customer segmentation with reasonable prices VNA is aiming to 4 star airlines with traditional model, providing excellent and luxury flight service to customer Whereas, Vietjet focuses on a large of limited- budget customer, which is suitable to income level of Vietnamese The appearance of Bamboo Airways in the market does not really create challenges to well- established airlines like VNA or Vietjet Bamboo Airways still takes time for setting up all activities The initial establishment 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 the other hand, the low customer satisfaction is considered alarming cause Main root cause is coming from decrease service quality rate, which negatively impact on customer satisfaction, and the behavior will explode to complaints, leaving airlines and choosing others 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,

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 not considerable Technical reliability of Vietjet gains 99.64%, the highest figure ranked in top airlines in Asia Therefore, timeliness factor is subjective reasons that Vietjet needs to improve with close cooperation with Airbus manufacturers

In term of the potential problem of in- flight service emanates from cost savings strategy The Vietjet fleet of aircraft has seat configuration from 180 to 220-230 seats and the 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 low cost model, most of the target customer is price- sensitive and leisure travelers, making in- 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, increasing 4% per year Therefore, poor of in- flight service is not really a significant problem that can deeply affect to the KPI achievement

The most serious issue Vietjet need to focus is improving ground services agent behavior Mr Cuong- Head of Customer Services Department shares some concern about customer 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.”

Ground service agents play as a representative of airlines, who provide services

and have direct interaction with customers Frontline staff are known as main contact between organization and customers According to the Service-Profit-Chain (1997)

by Hesket, Sasser & Schlesinger, key leading to customer satisfaction is employee good performance He mentioned the service profit chain set up the close relationship between employee performance, their satisfaction, employee productivity, customer satisfaction and company’s profitability However, in the current context of Vietjet, most of the ground staff have unprofessional performances, which leads to ineffective value of services conveyed to customers of

to bad work performance

compliant

Partly complaint

Not compliant CKS01 Attitude Be nice when communicate with

ring…) as VJC's regulation CKS07

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 employee attitude and work performance, so that concentrating the significance of service quality to enterprise’s achievement (54) In research on airlines’ services, frontline staff and customer attitudes about service quality were highly connected (14)

It can be concluded that the main problem that has impact on low Vietjet customer satisfaction is Unprofessional attitude of Vietjet ’s ground service staff working at airports

Figure 3.12: Initial symptom and main problem map 2.6 Problem consequence

The successful management of staff is so important for organizations providing service 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, the behaviors and attitudes of staff who directly provide services towards customers are important for the positive or negative feedback by customers, which contributes to customer satisfaction and purchase intention in future (12) Consequently, staff attitudes have impact on organization business effectiveness In aviation industry, ground service agents are known as front line staff to provide ground services activities in the whole air travel experience of customers The level of concern and civility between ground service staff and passengers is highly significant, such as listening and understanding, courtesy and friendliness (6) In addition, low service staff turnover helps to reduce hiring and recruiting new ones, increasing the efficient performance of organization

CHAPTER 3: CAUSES OF PROBLEM 3.1 Potential causes

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

3.1.1 Stress on work

The negative consequences of stress on work attitude of employee has been examined in literature such as absenteeism, tardiness and reduce productivity (45) These three behaviors are known as basic indicators of worker’s overall job satisfaction and be related 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 impolitely and unprofessional attitude towards passengers Ms Van- the interviewee did not acknowledge that she was lack of enthusiasm and energetic spirit when communicating with 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 ground service 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