Jogoo Luchmun, Shikha (2018) Competitiveness of domestic airlines in Australia: the effect of experience quality, brand image and perceived value on behavioural intentions. Other Degree thesis, Victoria University.

Abstract

Air travel has contributed significantly to economic growth, tourism, world trade and international investment over the years. In addition, airlines have played an important part in bringing families together, growing friendships, allowing businesses to go over and across borders and transport goods in a timely manner. The landmark changes in the economic environment have led to ever-stronger competition in the airline industry. Low-cost carriers (LCCs) have entered the market and established themselves by penetrating significant parts of that market. This has led to dramatic changes in the competitive landscape and, in this new setting, it is imperative to take a market-oriented approach. However, little research has been conducted on factors associated with achieving competitiveness in full service carriers (FSCs) and low cost carriers (LCCs), particularly in the context of Australian domestic airlines. The aims of this study therefore were to gain a better understanding of passenger travel preferences, travel patterns and the demographic characteristics of FSC and LCC passengers in Australia, and the impacts of their experience quality, brand image and perceived values on behavioural intention. Comparisons were made between the two groups of airlines (FSCs and LCCs) in regard to these aspects. In addition, this study examined the factors influencing passengers’ behavioural intention, as perceived by both airline management and passengers in the context of Australia’s domestic airline industry. A research framework was developed based on an extensive and critical review of the relevant literature. This conceptual framework aimed to investigate the relationships between key constructs. In order to test the conceptual framework, a mixed methods approach involving a sequential design was used, comprised of a qualitative (Part 1) and a quantitative study (Part 2). Part 1 included semi-structured interviews with eight informants to seek deeper insights into airline management perceptions of the factors contributing positively to airline passengers’ future behaviour. Part 2 involved a questionnaire-based survey of 316 passengers who had travelled domestically within Australia in the previous 12 months. This was designed to examine and compare the extent to which the factors of experience quality, brand image and perceived value had an impact on the behavioural intention of FSC and LCC customers. The findings from the qualitative stage identified cost/price, products, innovation, technology, service and brand image as the main factors that airline management considered important in terms of getting future patronage from customers. Findings from the quantitative stage showed that there were statistically significant differences in passengers’ demographics between the two groups (FSCs and LCCs) on their travel preferences and travel choices. It was also found that there were statistically significant differences of experience quality, brand image and perceived value between FSC and LCC passengers. The findings also indicated that experience quality, brand image and perceived value had a positive effect on customers’ behavioural intentions for both FSCs and LCCs. Based on the findings, suggestions for refined strategies have been made. It is recommended that airline marketers focus on achieving the goals that make customers purchase, by being distinctive. In addition, in order to ensure that consumers keep buying a particular brand, airlines need to stand out from their competitors so that buyers can easily identify them. The next strategy recommendation for airline marketers is to adopt a passenger-centric approach, putting passengers at the centre of future solutions, so that their evolving needs, desires, and values are used to guide enhancements to existing core service/product functionality. It is also advised that offering low fares only is not sufficient, low cost needs to be augmented by good service levels. Lastly, it was recommended that airlines keep in mind what made them successful in the first place (service for FSCs and low fares for a LCCs) and that they continue building on this in the long-term. FSC customers voiced their willingness to repurchase and recommend airlines for the following reasons: peace of mind, positive experiences, sharing experiences with others, trust, safety, helpful staff, a smooth check in process, good image, and peer influence. LCC customers were willing to repurchase and recommend airlines to others based on such factors as: enjoyment, relaxation, sharing experiences with others, a colourful logo, kind and knowledgeable staff, a smooth check in process, and value for money. Several limitations were identified and acknowledged in this study. The data collected from an online platform for Part 2 may not represent the vast geographical region of Australia. The interviews were conducted only with the managers of Jetstar/Qantas and their views may not represent the management of other airlines. Further research could be conducted with more representative data using random stratified sampling techniques for the survey, and input from Virgin and Tiger management. A longitudinal research design could be conducted to verify behavioural intentions against actual future behaviours.

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