Customer satisfaction on in flight services of vietnam airlines

Based on results of the analyses, the study showed the effects of service criteria on passenger’s perceptions of in-flight services and offered some suggestions to enhance customer satis

In partial fulfillment of the requirements for the degree of

Masters of Business Administration

Advisor: Dr Chien-Chung Lin Co-advisor: Dr Vo Phuoc Tan Graduate Student: Tran Sy Ngach

December, 2010

ACKNOWLEDGMENTS

First of all, I would like to thank Dr Chien Chung Lin of the Graduate Institute of Business and Management of Meiho Institute of Technology, Taiwan (MIT Taiwan), who not only gave me much valuable and timely instructions but also encouragement during my preparation of this research

I would also like to thank Dr Vo Phuoc Tan, the Head of the Post Graduate Department

of Ho Chi Minh City University of Industry, Vietnam, for his advice to complete the thesis

Beside my own efforts together valuable advice of the advisors, I also receive great help and encouragement from my family, my friends, and my colleagues so finally, I would like to extend a special thankfulness to all of them, especially Ms Do Thi Thanh Huyen, for their support during my course and survey

Customer Satisfaction on In-flight Services of

Vietnam Airlines ABSTRACT

Customer satisfaction is a measure of how products and services supplied by a company meet or surpass customer expectation Managers strongly believe that customer satisfaction is seen as a key differentiator, which has become a key element of business strategies in a competitive marketplace where businesses compete for customers Marketers are also aware that measuring customer satisfaction provides an indication of how successful the organization is at providing products or services to the marketplace The aim of this study was to explore the perception of Vietnam Airlines passengers to the in-flight services provided by the airline The model used to examine customer satisfaction on service quality is the SERQUAL modal, developed by Parasuraman, Zeithaml, and Berry together the five-point scale of SERVPEX, proposed by Robledo (2001) To achieve the purpose of the study, a survey was used involving 450 Vietnam Airlines passengers in four domestic and international flights The results of the survey exposed the current perception of Vietnam Airlines’s passengers on the quality of in-flight services Based on results of the analyses, the study showed the effects of service criteria on passenger’s perceptions of in-flight services and offered some suggestions to enhance customer satisfaction with perceived in-flight service quality for Vietnam Airlines

Keywords: Service Quality, Customer Satisfaction, In-flight Services, SERVQUAL,

SERVPEX, Viet Nam Airlines

Customer Satisfaction on In-flight Services of

Vietnam Airlines

Contents

ACKNOWLEDGMENTS I ABSTRACT II Contents III Tables V Figures VII

Chapter1 Introduction 1

1.1 Motivation 1

1.2 Purpose 5

1.3 Research Scope and Limitations 6

1.4 Definition of Terms 6

1.4.1 Service quality 6

1.4.2 In-flight service 6

1.4.3 SERVQUAL 7

1.4.4 SERVPEX 7

Chapter 2 Literature Review 8

2.1 Service Quality 8

2.2 In-flight Services 15

2.3 Customer Satisfaction 22

2.4 The Relationship between Service Quality and Customer Satisfaction 23

Chapter 3 Research Methodology 27

3.1 Research Process 27

3.2 Research Framework 28

3.3 Research Methodology 29

3.4 Population and Sampling 29

3.4.1 Population 29

3.4.2 Sampling 30

3.5 Questionnaire Design 30

3.5.1 Classification questions 30

3.5.2 Main questions 31

3.6 Reliability and Validity 34

3.6.1 Reliability 34

3.6.2 Construct validity 34

3.7 Data Collection 34

3.8 Data Analysis 35

Chapter 4 Research Results and Analysis 36

4.1 Descriptive Statistics 36

4.1.1 Characteristics of the respondents 36

4.1.2 Measurement results of research variables 38

4.2 Reliability 41

4.3 Inferential Statistics 43

4.3.1 Regression analysis 43

4.3.2 Independent sample T-test 47

4.3.2 One way ANOVA 50

Chapter 5 Conclusions, Recommendations and Implication 59

5.1 Conclusions 59

5.1.1 How Vietnam airlines’ passengers perceive the in-flight services 59

5.1.2 How factors influence on the customer satisfaction of in-flight sevices 59

5.1.3 How passengers with different genders perceive the in-flight services 59

5.1.4 How passengers with different ages perceive the in-flight services 59

5.1.5 How passengers with different occupations perceive the in-flight services 60

5.1.6 How passengers with different frequency of air travel perceive the in-flight services 60

5.1.7 How passengers with different types of ticket perceive the in-flight services 60

5.1.8 How passengers with different nationalities perceive the in-flight services 60

5.2 Recommendations 61

5.3 Implication 62

References 63

Appendix I 66

Tables

Table 2-1 Asian – Pacific Airlines Ranking by Skytrax 16

Table 2-2 Summary of the Research Questions and Hypotheses 26

Table 3-1 Variables of the Study 31

Table 3-2 The Sub-instrument of Tangibility 32

Table 3-3 The Sub-instrument of Reliability 32

Table 3-4 The Sub-instrument of Responsiveness 32

Table 3-5 The Sub-instrument of Assurance 33

Table 3-6 The Sub-instrument of Empathy 33

Table 4-1 Respondents’ Demographics 37

Table 4-2 Descriptive Statistics of Thirty Measured Items 39

Table 4-3 Means and Standard Deviations of Tangibility 40

Table 4-4 Means and Standard Deviations of Reliability 40

Table 4-5 Means and Standard Deviations of Responsiveness 40

Table 4-6 Means and Standard Deviations of Assurance 41

Table 4-7 Means and Standard Deviations of Empathy 41

Table 4-8 Cronbach’s Alpha of Five Constructs and the “Overall In-flight Services” Item 42

Table 4-9 Cronbach’s Alpha of Total- item Statistics 42

Table 4-10 Regression Analysis for Tangibility Variable Predicting Passenger Satisfaction 43

Table 4-11 Regression Analysis for Reliability Variable Predicting Passenger Satisfaction 44 Table 4-12 Regression Analysis for Responsiveness Variable Predicting Passenger Satisfaction 45

Table 4-13 Regression Analysis for Assurance Variable Predicting Passenger Satisfaction 45 Table 4-14 Regression Analysis for Empathy Variable Predicting Customer Satisfaction 46

Table 4-15 Regression Analysis for Five Variables Of Service Quality Predicting Customer Satisfaction 47

Table 4-16 Group Statistics of Gender 48

Table 4-17 Independent Samples Test for Gender 48

Table 4-18 Group Statistics of Ticket Types 49

Table 4-19 Independent Samples Test for Ticket Types 50

Table 4-20 ANOVA of the Factor of Occupations Against the In-flight Services 51

Table 4-21 Post Hoc for Multiple Comparisons for Ages 52

Table 4-22 ANOVA of the Occupation Factor Against the In-flight Services 53

Table 4-23 Post Hoc for Multiple Comparisons for Occupations 54

Table 4-24 One Way Anova for Frequency of Air Travelling 55

Table 4-25 Multiple Comparisons for Frequency of Air Travelling 56

Table 4.26 One Way Anova for Nationalities 57

Table 4-27 Summary of Means and Std Deviation of Five In-flight Service Factors 58

Table 4-28 Hypothesis Test Summary 58

Figures

Figure 1-1 The Number of Passengers Served by VNA and Its Growth Rate 2

Figure 1-2 Vietnam Airlines Routes Map 3

Figure 1-3 Survey’s Results of VNA Flights (Types of Flight) 4

Figure 1-4 Survey’s Results of VNA Flights (TYpes of Seat) 4

Figure 2-1 Modal of Service Quality – The Gaps Modal 12

Figure 2-2 Process of Service Delivery in Airline Industry 17

Figure 2-3 Skytrax’ Result Report of Flight Attendants Grade C of VNA from 2007 – 2009 20

Figure 2-4 Skytrax’ Ranking Flight Attendants Grade C of VNA from 2007 – 2009 20

Figure 2-5 Skytrax’ Result Report of Flight Attendants Grade Y of VNA from 2007 – 2009 21

Figure 2-6 Skytrax’ Ranking Flight Attendants Grade Y of VNA from 2007 – 2009 21

Figure 2-7 Passengers’ Feedback on Customer Services 24

Figure 3-1 The Flowchart of Research Process 28

Figure 3-2 The Research Framework 29

Figure 4-1 Chart of Respondents’ Nationalities 37

Customer Satisfaction on In-flight

Services of Vietnam Airlines Chapter1 Introduction

1.1 Motivation

The year of 2009 is the critically challenging year to every business, economic crisis with its fluctuation has greatly influenced on their operation Many airlines came up against difficulties with losses However, Vietnam Airlines successfully came over the hard time to earn profits with 18.6% of revenue growth and improved its service quality, satisfied better and better the passengers’ needs (VNA’s Annual report, 2009) According

to Skytrax ranking, Vietnam Airlines has significantly improved the position in relation to other airlines Vietnam Airlines exceeded 118 airlines including famous airlines such as Aeroflot, KLM, American Airlines in the shortlist of 167 airlines It was 18 levels higher than 2008 In the South East Asia and Pacific, where located the most world leading airlines, Vietnam Airlines was in 25th in top of 45, which increased 3 levels in compare with the year of 2008 (VNA’s Annual report, 2009)

Since December 2006, Vietnam Airlines was admitted to IATA and granted a certificate of recognizing and accepting the conformity with operational safety audit (IOSA) by this organization This acceptance indicated the continous effort of Vietnam Airlines in assuring its operational safety criteria and has asserted the level of service quality of Vietnam Airlines It is the fundamentals for Vietnam Airlines to gain contracts

of cooperation with other airlines It is also the essential condition for Vietnam Airlines to

be 10th member of SkyTeam, an airline alliance with its 385 million annual passengers

In the period of 2003 and 2009, the average growth of the flights was 10 pecent Vietnam Airlines assured absolutely safe and aviation security to passengers The airline met requirements of safety, quality of Vietnam and international standards In transportating passengers, the growth rate of Vietnam Airlines was 15.1% every year from

2003 to 2009, exceeding the target figure by 2% In which the international section increased by 11% Figure 1-1 showed the increase of passenger number of Vietnam Airline and its growth rate In 2009, Vietnam Airlines served 9,348,955 passengers, two times higher than 2003 The estimated total number of passengers severed by Vietnam Airlines in

2010 is 12.3 million passengers, an increase of 33.7% on last year, occupying

approximately 58.6% of the market share in Viet Nam (VNA annual report, 2010)

Figure 1-1 The Number of Passengers Served by VNA and Its Growth Rate

(Source: VNA Annual Report, 2010)

At the end of 2009, Vietnam Airlines owned 66 international routes from Ha Noi and Ho Chi Minh City to 43 destinations in foreign countries including 24 direct routes The domestic routes of Vietnam Airlines develop quickly, adopted a “hub and spoke” structure with 31 routes to 20 local destinations from homebases are Noi Bai, Tan Son Nhat, and Da Nang airports

Figure 1-2 shows routes established by Vietnam Airlines until 2010 Becoming a full member of the SkyTeam since 10th June, 2010, Vietnam Airlines can enlarge its destinations for passengers with higher service quality Vietnam Airlines’ passengers can fly to 898 airports in 169 countries and are served in 420 lounges worldwide

Figure 1-2 Vietnam Airlines Routes Map (Source: VNA’s Report of 3rd Quarter of 2010)

Skytrax report’s results evaluated highly service criteria of Vietnam Airlines in

2009 All the criteria of service were higher than the average level (two stars) which ranged from three stars to four stars It showed that Vietnam airlines’ services have been improved than previous years Some criteria were equal to big airlines in the world As a result, Vietnam Airlines was ranked in group of three-star airlines together with 130 competitive airlines such as Aeroflot, Air Asia, KLM, American Airlines, Tiger Airways, Garuda Indonesia

In order to satisfy passengers’ needs and improve service quality, Vietnam Airlines regularly audits its operation In 2010, there were three external audits and many internal audits in all sections of the airline Every quarter, Vietnam Airlines conducts its assessment of service quality through passenger surveys (VNA annual report, 2009) The main services of the surveys are (1) booking by telephone, (2) booking at the ticket office, (3) Flight attendants, (4) Check-in at the airport, (5) boarding procedures, (6) plane facilities, (7) on-board announcement, (8) on-board meals, (9) On-board drink, (10) newspapers and in-flight enteraiment, (11) Golden lotus program The service quality is assessed with the scale of score 7 (VNA quarterly report, 2009 and 2010) These services are considered as a chain of services to guarantee the overall quality of services offered

by Vietnam Airlines to its passengers

The three surveys carried out for the three first quarters of 2010 indicated that the service quality kept constant in most sections However, on-board services were not very stable and not much impoved as expected The results were showned in Figures 1.3 and 1.4 below The service quality in domestic flights of the third quarter of 2010 increased 0.05 compared to the second quarter of 2009, and 0.06 compared with the corresponding quarter of 2009 Wheras it decreased in international flights (-0.03 on the last quarter and -0.04 on the quarter three of 2009) (VNA quarterly report, 2101)

Figure 1-3 Survey’s Results of VNA Flights (Types of Flight) (Source: VNA 3rd Quarter Report of 2010)

Figure 1-4 Survey’s Results of VNA Flights (TYpes of Seat)

(Source: VNA 3 rd Quarter Report of 2010)

1.2 Purpose

With the objective claimed by the airline in the period of 2010-2015 that Vietnam Airlines will be an Asian considerable airline of four-star service quality with the third position in 2015 and the second airline in 2020 in large scale in the region, Vietnam Airlines needs ever-developing its service quality Although the assessment of Vietnam Airlines by Skytrax was positive and the position of Vietnam Airlines has been improved year after year, Vietnam Airlines’ service quality is till much lower than some main competitors in the region such as Thai Airways (ranked 10th) and Malaysia Airlines (ranked 9th) Moreover, the results of surveys in 2010 are needed to consider carefully, particularly, in-flight services to assure service quality constant and continously improved

To keep the quality of in-flight services stable and more increased, Vietnam Airlines does not only conduct surveys regularly based on its criteria to rank the services but also need to examine its customer satisfaction of in-flight services to find out the gaps between services that the passenger receive from the airline and their expectation Exploring customer satisfaction of Vietnam Airlines on-board service quality is also the main purpose of this study

To gain the purpose, this study aimed to following objectives: (1) finding out passengers’perceptions on Vietnam Airlines in-flight services; (2) detecting the pros and cons of Vietnam Airlines in-flight services; (3) proposing recommendations to improve the Vietnam Airlines in-flight services

Besides the main objectives, the study attempted to find out differences in perceiving the in-flight service quality of its passengers with different genders, ages, occupation, frequence of air travel, ticket types, and nationalities This is also necessary for Vietnam Airlines to know the differences so that it can offer better in-flight services to each different types of passenger

The research satisfied the objectives by answering these questions:

(1) How do Vietnam Airlines passengers perceive the in-flight services?

(2) How do factors of service quality influence on the in-flight services?

(3) How do passengers with different genders perceive the in-flight services? (4) How do passengers with different ages perceive the in-flight services? (5) How do passengers with different occupations perceive the in-flight services?

(6) How do passengers with different frequency of air travelling perceive the in-flight services?

(7) How do passengers with different types of ticket perceive the in-flight services?

(8) How do passengers with different nationalities perceive the in-flight services?

1.3 Research Scope and Limitations

Vietnam Airlines Corporation is a multi-function corporation operating in air transportation including passengers and cargo carrying; transportation services; restaurants; hotels; free-duty stores; food processing; petrol trading; export and import agent; aviation recruitment and traing; construction, etc This research focused on air transportation for passengers In a process of passenger carrying, passengers experience many different services at different sections from the ground to the on-board, which are offered by an airline In this study, the researcher aimed to the surveying customer satisfaction of on-board services of Vietnam Airlines

1.4 Definition of Terms

1.4.1 Service quality

Service quality is the outcome of an evaluation process of consumers’ comparison

In this process, the consumers compare their expectations about a certain service with the actual service in their perception that they have received, and the result is the perceived quality of service (Gronroos, 1984)

1.4.2 In-flight service

In-flight services are those aiming to improve safety, quality and effectiveness of in-flight services for the benefit of member airlines, partners and passengers (International Air Transport Association)

cost-1.4.3 SERVQUAL

SERVQUAL is a 22-item instrument developed by Panasuraman et al (1985) It is used to measure customer’s expectation and performance of the five RATER (reliability, assurance, tangibility, empathy, responsiveness) dimensions

1.4.4 SERVPEX

SERVPEX, developed by Robledo (2001), proposed an alternative scale to measure service quality with a single scale incorporated expectations and perceptions from “Much worse than expected” to “Much better than expected”

Chapter 2 Literature Review

This chapter provided fundamental literature for the study It aimed to the examining customer satisfaction of in-flight services of Vietnam Airlines This part refers

to theory of (1) service quality; (2) in-flight services; (3) customer satisfaction

2.1 Service Quality

Gronroos (1984) claimed that perceived service quality is the outcome of an evaluation process of consumer’s comparison between his/her expectations about a certain service with the actual service he, in his perception, has received, and the result is the perceived quality of service This is a field that “few academic researchers have attempted to define and model because of the difficulties involved in delimiting and measuring the construction” Parasuraman et al (1985) To establish a framework for measuring service quality, Parasuraman et al (1985) conducted an exploratory qualitative research They proposed a model called “the gaps model” as follows:

Gap 1 (Consumer Expectation – Management Perception Gap): The

difference between consumer expectations and management perceptions of consumer

expectations It means management must perceive correctly consumer expectation

Gap 2 (Management Perception – Service Quality Specification Gap): the

difference between management perceptions of consumer expectations and actual consumer expectations This requires management to translate correctly the service policy

into rules and guidelines for employees

Gap 3 (Service Quality specification – service delivery Gap): the difference

between service quality specifications and actual service delivery This gap means that employees must correctly translate rules and guidelines into action

Gap 4 (Service Delivery – External Communications Gap): the difference

between service delivery and what is communicated about service to consumers It means promises made to customers must match the actual service delivery

Gap 5 (Consumer expectations - Perceived Service Quality): this gap shows

that consumers compare the service they received with what they expected about the service quality

Parasuraman et al., (1985) came to the following conclusions:

- Gap 1 will have an impact on the consumer’s evaluation of service quality

- Gap 2 will affect service quality from the consumer’s point of view

- Gap 3 will affect service quality from consumer’s standpoint

- Gap 4 will affect service quality from a consumer’s standpoint

- Gap 5 is a function of the other four gaps: i.e Gap 5 = f (gaps 1, 2, 3, 4) which indicates that service quality perceived by the consumer depends on the GAP5 which, in turn, depends on the nature of the gaps associated with the design, marketing, and delivery of services (Parasuraman et al., 1985; Zeithaml, Berry, and Parasuraman, 1988)

- Consumers typically evaluate service quality based on their experience

- A consumer’s perception of service quality depends on the difference between the expected services (ES) and perceived services (PS):

(a) When ES>PS, perceived quality is less than satisfactory and will tend toward totally unacceptable quality;

(b) When ES=PS, perceived quality is satisfactory;

(c) When ES<PS, perceived quality is more than satisfactory and will tend toward ideal quality

Parasuraman et al (1985) identified ten components of service quality:

(1) Reliability;

(2) Responsiveness;

(3) Competence;

(4) Access;

Reliability: Ability to perform the promised service dependably and

accurately

Assurance: Knowledge and courtesy of employees and their ability to

inspire trust and confidence

Tangibles: Physical facilities, equipment, and appearance of personnel

Empathy: Caring, individualized attention the firm provides its

customers

Responsiveness: Willingness to help customers and provide prompt service Parasuraman et al (1985) proposed these gaps to measure using the SERVQUAL instrument, which provides a technology for measuring and managing service quality The instrument has been further developed and promoted through a series of publications: Parasuraman et al 1986, 1988; 1990; 1991a; 1991b; 1993; 1994; Zeithaml et al 1990; 1991; 1992; 1993 (as cited in Buttle, 1995)

In these criteria, Parasuraman et al (1985) proved that reliability is the most critical dimension, assurance is the second important one, and empathy is the least important dimension However, SERVQUAL needs to be considered cultural factors, not all dimensions of the instruments are weighted equally across countries (Parasuraman, et al., 1988 as cited in Foi, 2007)

According to Zeithaml et al (1993), word of mouth, external communication, personal needs, and past experiences are key factors influencing customers’ expectation These key factors together with the five RATER dimensions form the service quality gaps

as in Figure 2-1

This modal has been applied in many areas of services Dino Foi (2007) listed a wide range of applications of this modal such as architectural services (Baker & Lamb, 1993), car servicing (Bouman & Van der Wiele, 1992), tire retailing and dental services (Carman, 1990), travel and tourism (Fick & Ritchie, 1991), higher education (Ford, Joseph & Joseph, 1999; Ham, 2003; McElwee & Redman, 1993), accounting firms (Freeman & Dart, 1993), hospitality (Johns, 1993), business-to-business channel partners (Kong & Mayo, 1993), business schools (Rigotti & Pitt, 1992), hotels (Saleh & Ryan, 1991), recreational services (Taylor, Sharland, Cronin, & Bullard, 1993) and its use by marketing scholars and industry marketers is well noted throughout the years (Brown, Churchil, & Peter,1993) Besides, Midland and Abbey National banks have adopted this modal in application (Buttle, 1995)

Although SERVQUAL has been used popularly and widely, this modal has been subjected to a number of theoretical and operational criticisms (Buttle, 1995) Buttle

GAP 4Marketer

GAP 5

GAP 2 Consumer

(1995) summarized criticisms of theory and operation done by Cronin and Taylor (1992; 1994); Lacobucci et al (1994); Andersson (1992); Babakus and Boller (1992); Churchill and Surprenant (1982); Oliver (1980); Teas (1993a; 1993b; 1994) as follows:

(1) Theoretical

- Paradigmatic objections: SERVQUAL is based on a disconfirmation paradigm rather than an attitudinal paradigm; and SERVQUAL fails to draw on establish economic, statistical and psychological theory

- Gaps modal: there is little evidence that customers assess service quality in term of P (perceptions) – E (Expectations) gaps

- Process orientation: SERVQUAL focus on the process of service delivery, not

on the outcomes of service encounter

- Dimensionality: SERVQUAL’s five dimensions are not universals; the number of dimensions comprising SQ is contextualized, items do not always load on to the factors which one would a priori expect; and there is a high degree of intercorelation between the five RATER dimensions

- Polarity: the reserved polarity of items in the scale cause respondent error

- Scale points: the seven-point Likert scale is flawed

- Two administrations: two administrations of the instrument cause boredom and confusion

- Variance extracted: the over SERVQUAL score accounts for disappointing proportion of items variances

Cronin and Taylor (1992) tested four industries including banking, pest control, dry cleaning, and fast food with a performance-based measure of service quality – SERVPERF They argued that the SERVPERF exposes more of the variance in an overall measure of service quality than SERVQUAL SERVPERF composed of 22 perceptions of items in the SERVQUAL scale so it eliminated any considerations of expectations

However, Chang and Lim (2002) conducted a comparative study of relevance of SERVQUAL and SERVPERF scales to airline industry They found that SERVQUAL is more appropriate for airline service than industry than SERVPERF Besides, Robledo (2001) indicated that the SERVPERF was not an efficient measurement scale, in terms of validity and reliability Several papers mainly measure performance of airlines, using SERVQUAL instruments such as Gourdin & Kloppenborg 1991; Ostrowski, O’Brien & Goordon 1993; Young Cunningham & Moonkyu 1994; Bejou & Palmer 1998; Gustafsson, Ekdahl & Edvardsson 1999; Sultan & Simpson 2000; Chang et all 2002; Tsaur, Cheng & Yena 2002; Gilbert & Wong 2003; Alter 2003; Kozak, Karatepe & Avci 2003; Boland, Morrison & O’Neil 2003; Natalisa & Subroto 2003; Scheraga 2004; Truitt

& Haynes 1994; Heracleous, Wirtz & Johnston 2004; Bel 2005; Ling et al 2005; Gursoy, Chen, & Kim 2005; Knibb 2005; Rhoades & Waguespack 2005; Anitsal & Paige 2006; Hunter 2006; Pham 2006; Pham & Simpson 2006; Park, Robertson & Wu 2005, 2006; Sima, Knohb & Shetty 2006; Venkatesh & Nagundkar 2006; Chitnis 2007; Pakdil & Aydin 2007; Lioua & Tzeng 2007 (Khan and Dutt, nd) In their study, Khan and Dutt (nd) use SERVQUAL as the primary tool to measure the quality of service rendered along five dimensions: reliability, assurance, tangibilities, empathy and responsiveness (RATER) for civil aviation industry in India The instrument was viewed as a basic “skeleton” that requires modification to fit airline industry (Sultan et al., 2000; Gilbert et al., 2003; Park

et al., 2006 as cited in Khan, Dutt, Bansal)

Moreover, in 2001, Robledo (2001) claimed that the SERVPERF was not an efficient measurement scale, in term of validity and reliability To modify the

measurement of service quality, Robledo (2001) proposed SERVPEX, an alternative scale

to measure service quality He developed a single scale incorporated expectations and perceptions from “Much worse than expected” to “Much better than expected” Robledo (2001) conducted empirical studies and compared with other measurement scales He successfully proved that SERVPEX was superior, to both the SERVQUAL and SERVPERF, in terms of validity and reliability Ling, Lin, and Lu (2005) adopted SERVQUAL and SERVPEX scale for their study to measure the perceived service quality of the airlines

Hence, the researcher decided to combine the theory of SERVQUAL, including five dimensions of reliability, assurance, tangibility, empathy, and responsiveness, as the base for the research model and the SERVPEX, proved more appropriate to the airline industry, to measure the in-flight service quality of Vietnam Airlines

2.2 In-flight Services

Doganis (2006 as cited in Khan et al, nd) claimed that the airline industry is inherently unstable It is highly competitive, where all airlines are comparable fares and matching frequent flyer programs, in such a scenario, service quality is a significant driver of passenger satisfaction, loyalty, and choice of airline ( Sultan et al 2000; Chang

et al 2002, Gilbert et al 2003; Rust et al 2006 as cited in Khan et al, nd)

Being a unique member of Skyteam in Southeast Asia since 10th June 2010, service quality of Vietnam Airlines in general is increasing (VNA annual report, 2009) Its grade has been improved from 57th, 67th, and 62nd in 2006, 2007, and 2008 respectively to 49th in 167 airlines in 2009 in Asia-Pacific region, ranked by Skytrax, the world's leading survey organization for all types of Qualitative studies, across the airline and airport industries (VNA annual report, 2006, 2007, 2008, 2009) Table 2-1 below showed the improvement of Vietnam Airlines in relation to others airlines, ranked by Skytrax

Table 2-1 Asian – Pacific Airlines Ranking by Skytrax

(Source: VNA Annual Report, 2009)

In-flight service stage is a stage of the process in which an airline delivers its

services to passengers as in Figure 2-2 This study focused on the whole time from the

time that passengers are on board and get off the plane For most of passengers, in-flight

period is the longest time except for delayed flights This is also the period, which airlines

need to offer as many individual services for passengers to enhance the quality of

customer service in general In-flight services are those provided passengers by a plane

According to IATA (International Air Transport Association), in-flight services aim to

improve safety, quality and cost-effectiveness of in-flight services for the benefit of

member airlines, partners and passengers

Figure 2-2 Process of Service Delivery in Airline Industry

(Source: VNA Internal Report 2000)

Areas of expertise defined by AITA are

Pre-boarding security check

Boarding and seating

In-flight service

Arrival, Baggage retrieval

- Economy class seating

- Business class seating

- First class seating

- Condition of seats, carpets, cabin etc

- Portion size/ meal quantities

- IFE screening format

- Choice of movies/short feature

- Language options/ choice in IFE

- Audio Programmes

- Reading materials (newspapers/airline magazine)

In-flight services do not involve on-board products or plane facilities, the quality in-flight services are depended much on cabin staff Cabin staff services identified by Skytrax (2009) are:

- Assistance during boarding

- Friendliness of staff

- Service attentiveness

- Staff language skills

- Efficiency serving meals

- Cabin presence/availability through flight

- PA announcements

- Problem solving skills

- Staff attitudes

- Grooming and presentation

In airline industry, Ling et al (2005) proposed the contents of five dimension of SERVQUAL as follows:

Tangibles: Physical facilities, equipment, appearance of personnel

Reliabilities: Ability to perform service dependably and accurately

Responsiveness: Willingness to help customers and provide promt service

Assurance: Knowledge and courtesy, ability to inspire trust and confidence Empathy: Caring, individual attention

Becoming a member of Skyteam is an important progress This enables Vietnam Airlines to reach the same level of international service quality In 2010, there have been

3 external audits made by AOC (Aircraft Operator Certificate), IOSA (AITA Operational Safety Audit), and GHS (Globally Harmonized System) and 133 internal audits for customer services in Vietnam Airlines in the three last years (VNA annual report 2007,

2008, 2009, and 2010) Because in-flight services are services provided passengers by a plane, thus any factors involving to services provided to passengers in an aircraft are considered in measuring customer satisfaction on quality of in-flight service According

to standards of AQS (Aviation Quality Services), the approach for checking and evaluating service quality primarily focuses on human factor, safety, and communication These three factors in in-flight services consist of knowledge, attitude, appearance and communication of pilots, flight attendants crew, safety and quality of facilities on board, in-flight entertainment, and refreshment

To ensure the in-flight safety from human factors, every Vietnam Airlines pilot must have a pilot license of CAAV (The Civil Aviation Administration of Vietnam) to take part in a serious series of flying training courses and some other training courses before official operating an airplane (VNA annual report, 2006) As for the flight attendants, there are six Skytrax’s criteria for flight attendants, who often communicate with passengers on board: the general effectiveness service process; equality of flight attendants; linguistic ability; sincere and patient attitude; courteous staff; and external communication (VNA annual report, 2010) Figures 2-3 and 2-4 showed results of service quality of VNA’s flight attendants evaluated by Skytrax in the last three years (VNA annual report, 2007, 2008, and 2009)

G eneral evaluation

G eneral evaluation

Figure 2-4 Skytrax’ Ranking Flight Attendants Grade C of VNA from 2007 – 2009

(Source: VNA Annual Report, 2010)

G eneral evaluation

G eneral evaluation

2009

Figure 2-6 Skytrax’ Ranking Flight Attendants Grade Y of VNA from 2007 – 2009

(Source: VNA Annual Report, 2010)

The results showed that the quality of customer service performed by flight attendances of Vietnam Airlines was increased year after year However, the increase in the service quality of grade Y, which is for passenger with business tickets, was lower than grade C’s, which is for passengers with economic tickets

Another factor relevant to in-flight service quality is catering The safety of the passengers, pilots, and crew are primarily important (ICQA, version 2010) so ICQA (AITA Catering Quality Assurance Program) requires food served passengers, pilots, and crew to meet “food processing safety standard” in order to deliver them a “safe” food product These standards of food safety are based on: the principles of Hazard Analysis Critical Control Point (HACCP) approach to food safety; Standards Operating Procedures

for in-flight food providers; International Flight Catering Association (IFCA) and International Inflight Food Service Association (IFSA), World Food Safety Guidelines; and the food quality assurance and auditing expertise of Medina Quality Assurance Services

In-flight services involve much entertainment, referring to the entertainment available to aircraft passengers during a flight (wikipedia) It consists of audio entertainment, encoding standards, video entertainment including in-flight movies and personal televisions, in-flight games, moving map system In recent years, in-flight entertainment has been expanded to include in-flight connectivity—services such as Internet browsing, text messaging, cell phone usage (where permitted) and emailing

In this study, measuring quality of in-flight services is to identify how passengers perceive Vietnam Airlines’ in-flight services they receive in comparison with their expectations about the flight staff’s performance, in-flight catering, plane facilities, and in-flight entertainment that an airline provides their customers during the flight These in-flight services were examined under five dimensions of tangibility, reliability, responsiveness, assurance, and empathy which developed by Panasuraman et al (1985)

2.3 Customer Satisfaction

Customer satisfaction was defined as the perceived discrepancy between prior expectation and actual performance (Tse & Wilton; Oliver, cited in Foi, 2007) Vavra (1997) asserted that satisfaction is a customer’s emotional response to his or her evaluation of the perceived discrepancy between his or her prior experience with expectations of the product and organization and the actual experienced performance as perceived after interacting with the organization and consuming the product Kotler (2000) stated that customer satisfaction is consumer’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance or outcome, in relation to their expectation Suh & Ji (2006) stated that consumer satisfaction may be seen to

represent the influence of past experience, because it is an overall evaluation of personal

consumption experience

Respect to the benefits of customer satisfaction, Vavra (1997) claimed that customer satisfaction is the leading criterion for determining the quality that is actually delivered to customers through the product/service and by the accompanying servicing According to Vavra, customers satisfaction will influence customers’ future reactions toward an organization; readiness to repurchase, willingness to recommend, willingness

to pay “the company” price without haggling or seeking a lower-cost provider Szymanski and Henard (cited in Foi, 2007) found that while on one side, expectations, disconfirmation, performance, affect, and equity where antecedents to satisfaction, the consequences of customer satisfactions are complaining behavior, word of mouth, and repurchase intentions

Although there are many arguments about customer satisfaction, it is generally viewed as being a function of consumer (Foi, 2007) Rust & Oliver (cited in Foi, 2007) suggested that measurement of the satisfaction construct should be related to whether a consumer feels that a product provides positive utility

Because customer satisfaction is the positive gap between expected quality and perceived quality, customer satisfaction on in-flight services depends on how the customers perceived the in-flight services they receive and what level of in-flight services they expect from the airline It means that if perceived in-flight services are lower than expected in-flight services, the passenger is totally dissatisfied In case of the perceived services are equal to ones that the passenger expects, the passenger is satisfied And, conversaly, if the perceived services are higher to ones that the passenger expects, the passenger is totally satisfied with the in-flight services (Parasuraman et al., 1985; Zeithaml, Berry, and Parasuraman, 1988) Thus, perceived quality must be perceived by customers (Keller, 1998)

2.4 The Relationship between Service Quality and Customer Satisfaction

Perceived quality is the “perceived ability of a product to provide satisfaction

‘relative’ to the available alternatives” (Monroe & Krishnan, cited in Le, 2009) Zeithaml (1988) stated that perceived quality is a competitive necessity and many companies have used customer-driven quality as an effective strategic weapon They create customer satisfaction and value by consistently and profitably meeting customer’s needs and preferences for quality Customer satisfaction was also defined as the perceived discrepancy between prior expectation and actual performance Olson and Dover (cited in Gupta and Steward, 1996) and Oliver (1980) claimed that expectations have been defined

as beliefs or predictions about a product's (brand's) attributes Cadotte, Woodruff, and Jenkins, (1987); Tsc and Wilton, (1988) ( cited in Gupta and Steward, 1996) defined perceived performance in terms of a composite of attributes or benefits received or in terms of an overall measure of perceived performance Perceived performance directly

(Churchill and Suprenant (1982); Tse and Wilton (1988); and Fomell (1992), cited in Gupta and Steward, 1996)

The relationship between customer satisfaction and perceived quality has been examined in many studies Gupta and Steward (1996); Parasuraman et al (cited in Foi, 2007); Zeithaml (2000); and Foi (2007) proved that perceived quality has a positive and effect on customer satisfaction Recently, Gallarza and Saura (2006), Green and Boshoff (2002), and Terblanche (2006) (cited in Foi, 2007) confirmed a clear pattern in which satisfaction is the behavioral consequence of quality Babakus, Emin, Bienstock, Carol C, Van Scotter, James R, (2004) stated that improving the quality of goods and services will increase customer satisfaction and loyalty

In the period from 2005 to 2010, the flight attendant crew of VNA served 271,066 commercial flights, 688 VIP flights, and 5,228,664 safe hours of special flights Reports from the customer services department of VNA showed that the number of passengers’ complaints decreased whereas the number of passengers’ praise of flight attendants crew

in 2008 and 2009 increased as in figure 2-7

Figure 2-7 Passengers’ Feedback on Customer Services

(Source: VNA Annual Report, 2009)

Although there was progress in in-flight service in 2009 (523 letters of praise), there were still many complaints in-flight services (228 cases) (VNA annual report of 2009) Moreover, to retain as a member of AITA and Skyteam as well as to increase competitive ability, Vietnam Airlines has to improve continuously its service quality in general and in-flight services in particular to raise the customer satisfaction

In-flight

As stated in the introduction, this study aimed to explore customer satisfaction of Vietnam Airlines’ on-board services Unlike surveys performed by Vietnam Airlines, which often rank the quality of total services, which passengers received both on the ground and on-board sections of the airline, this study attempted to measure the customer satisfaction of Vietnam Airlines on the in-flight services, evaluate the influences of five dimensions (tangility, reliability, responsiveness, assurance, and empathy) on Vietnam Airlines’ passenger satisfaction of these services Besides, Kotler et al (2001) stated that there are many factors influencing consumer behaviour such as psychological, personal, cultural, social factors, besides, factors of marketing programs, environmental influences, and buyer’s responses are also needed to consider so it is important for the airline to define the effects from these elements From this necessity, the study also identified differences in perceiving in-flight services among different passengers with different gender, ages, occupation, frequency of air travelling, ticket types, and nationalities, which may lead to different customers’ satisfaction

From the purpose and the research questions of the study, the reaseacher proposed eleven hypotheses The research questions and hypotheses of the study were presented in the Table 2-2 as follows:

To answer the research question: “How do factors influence on the in-flight services?” there were five hypotheses named H1, H2, H3, H4, H5:

H 1: Tangibility has a positive effect on the passenger satisfaction of Vietnam Airlines’ flight services.

in-H 2: Reliability has a positive effect on the passenger satisfaction of Vietnam Airlines’ flight services.

in-H 3: Responsiveness has a positive effect on the passenger satisfaction of Vietnam Airlines’ in-flight services.

H 4: Assurance has a positive effect on the passenger satisfaction of Vietnam Airlines’ flight services.

in-H 5: Empathy has a positive effect on the passenger satisfaction of Vietnam Airlines’ flight services.

in-H 6: There is no significant difference in perceiving in-flight services between males and females was used to answer the question: “How do passengers with different genders

perceive the in-flight services?”

H 7 : Passengers with different ages perceive equally in-flight services was used to answer

H 8 : Passengers with different occupations perceive equally in-flight services was used to

answer the question: “How do passengers with different occupations perceive the flight services?”

in-H 9: Passengers with different frequency of travel perceive equally in-flight service was

used to answer the question: “How do passengers with different frequency of air travelling perceive the in-flight services?”

H 10 : There is no significant difference in perceiving in-flight services between pasengers with different types of ticket was used to answer the question: “How do passengers

with different types of ticket perceive the in-flight services?”

H 11 : Passengers with different nationalities perceive equally in-flight services was used to

answer the question: “How do passengers with different nationalities perceive the flight services?”

in-Table 2-2 Summary of the Research Questions and Hypotheses

1 How do Vietnam Airlines passengers perceive the in-flight services?

2 How do factors of service quality influence on the in-flight services? H1, H2, H3, H4, H5

3 How do passengers with different genders perceive the in-flight services? H6

4 How do passengers with different ages perceive the in-flight services? H7

5 How do passengers with different occupations perceive the in-flight

Chapter 3 Research Methodology

This part presented the methodology of the study including eight parts Part (1) was the research process, displaying steps of the study Part (2) was the research framework, modeling the main theories used to obtain the research purpose Part (3) was the research methodology, referring to survey Part (4) was the sampling design, which presented the way of designing sample with size and subjects Part (5) was the questions design, showing how questions designed for the survey Part (6) was the validity and reliability, displaying how to assure the validity and reliability of the instrument Part (7) was the data collection: showing the way of collecting quantitative data Part (8) was the data analysis, which presented methods of statistical analysis for the research

3.1 Research Process

From the Vietnam Airlines’ goal to become one of the leading airline companies in the Southeast of Asia, improving customer satisfaction is one of the key factors to achieve its goal and enhance the competitive advantages However, Vietnam Airlines cannot improve its customer satisfaction if the business does not know exactly how the passengers feel about its services, in general, and in-flight services, in particular This fact leads to a need of surveying customer satisfaction of Vietnam Airlines about in-flight services The purpose of this study derived from this necessity After defining the purpose of the study, the researcher reviewed the relevant literature on customer services and satisfaction to propose a theory framework for the research From the research framework, the study identified the research method The questionnaire for the survey was developed based on the literature reviews with consultancy of experienced managers of Vietnam Airlines’ customer service Department To evaluate measurement on validity and reliability for the questionnaire, the pre-test was conducted Next, the data collection from the survey with self-administrative questionnaires was performed Analyzing quantitative data to answer the research questions was the next step Finally, the conclusions and suggestions were proposed Figure 3.1 below showned the process of the study

Defining managerial dilemma

Defining research motivation

Defining research purposes

Review of relevant literature

Designing research framework

Designing questions: pre-test, refining with expert’s consultancy

Survey

Data collection

Data analysis and interpretation

Conclusion and suggestion

Figure 3-2 The Research Framework

3.3 Research Methodology

Quantitative research was used to conduct the study The objective of quantitative research is to develop and employ mathematical models, theories and/or hypotheses pertaining to natural phenomena (Kuhn, 1961) In business research, quantitative methodologies usually measure consumer behaviors, knowledge, opinions, or attitudes (Cooper & Schindler, 2006) In this study, the quantitative research was conducted by a face-to-face survey in two domestic flights: a short distance flight and a long distance flight and on two international flights of short and long-distance flights

3.4 Population and Sampling

3.4.1 Population

As mentioned above, the subjects of this study were Vietnamese and foreign passengers, who have experienced in-flight services of Vietnam Airlines Like all surveys taken by Vietnam Airlines, the age of the participants is from 18 onwards They can be female and male and in all kinds of occupation To survey domestic passengers, the applicants must be readable and comprehensive Vietnamese to answer