This report will demonstrate the importance of Loyalty Management in the competitive environment of the airline industry and will show that a successful approach to Loyalty Management consists of three different, interlinked aspects. These three ′pillars′ are Customer Service, Frequent Flyer Programs, and Complaint Management; their interdependence will be analysed in depth, with special attention given to the perceived importance of Frequent Flyer Programs.
Findings show that customers do indeed perceive these issues as vital with regards to their loyalty towards a particular airline. It was found that Customer Service can be regarded as the foundation for Loyalty Management; it can help an airline to gain competitive advantage by setting it apart from its competitors. Frequent Flyer Programs, if implemented and run properly, can provide the customer with added value. As such, they compliment Customer Service and can help to increase overall loyalty. Additionally, Complaint Management was found to be gaining importance among airlines. The number of complaints was shown to be rising gradually, stressing the growing significance of efficient Complaint Management and its strong after-effect on customer loyalty.
Table of Contents
1. INTRODUCTION
1.1. AIM AND OBJECTIVES OF THE REPORT
1.2. TERMINOLOGY
1.3. BACKGROUND INFORMATION: LOYALTY MANAGEMENT
1.3.1. DEFINITIONS
1.3.2. TRADITIONAL MARKETING AND LOYALTY MANAGEMENT
1.3.3. IMPORTANCE OF LOYALTY MANAGEMENT
1.4. CHARACTERISTICS OF THE AIRLINE MARKET
1.4.1. AIRLINE INDUSTRY ANALYSIS - STEEPLE
1.4.1.1. Social
1.4.1.2. Technological
1.4.1.3. Economical
1.4.1.4. Environmental
1.4.1.5. Political
1.4.1.6. Legal
1.4.1.7. Ethical
1.4.2. CONSOLIDATION IN PRACTICE: BRITISH AIRWAYS
1.4.2.1. British Airways and KLM
1.4.2.2. British Airways and American Airlines
1.4.3. THE CURRENT AIRLINE SITUATION
2. LITERATURE REVIEW
2.1. CUSTOMER SERVICE
2.1.1. BACKGROUND INFORMATION
2.1.1.1. Singapore Airlines
2.1.2. REVELATION OF DISSATISFACTION
2.1.3. EMPLOYEES
2.1.4. COMMUNICATION
2.1.5. THE CUSTOMER
2.1.5.1. Customer Requirements
2.1.6. SERVICE QUALITY
2.1.6.1. Quality and Retaining Customers
2.1.7. ORIENTATION OF COMPANY
2.1.8. CONCLUSION CUSTOMER SERVICE
2.2. FREQUENT FLYERPROGRAMS
2.2.1. BACKGROUND INFORMATION
2.2.1.1. Statistics Frequent Flyer Programs
2.2.2. CRITICAL SUCCESS FACTORS FFPS
2.2.2.1. General Considerations
2.2.2.2. Whom to Target: Share of Customer
2.2.2.3. Program Structure
2.2.3. HARMONISATION BETWEEN FREQUENT FLYER PROGRAMS
2.2.4. CONCLUSION FREQUENT FLYER PROGRAMS
2.3. COMPLAINT MANAGEMENT
2.3.1. BACKGROUND INFORMATION
2.3.2. COMPUTER-AIDED COMPLAINT MANAGEMENT
2.3.3. HELP FROM THE INTERNET
2.3.4. STATISTICS COMPLAINT HANDLING
2.3.5. COMPENSATION
2.3.6. CONCLUSION COMPLAINT MANAGEMENT
2.4. CHAPTER CONCLUSION
3. METHODOLOGY
3.1. SECONDARY RESEARCH
3.1.1. LIBRARIES
3.1.1.1. Local Libraries
3.1.1.2. Interlibrary Loan
3.1.1.3. UK Libraries Plus
3.1.1.4. British Library
3.1.1.5. Online Catalogues
3.1.2. ELECTRONIC DATABASES
3.1.3. NEWSPAPERS AND PERIODICALS
3.1.4. INTERNET
3.1.5. SEARCH TERMS LITERATURE REVIEW
3.2. METHODOLOGY - PRIMARY RESEARCH
3.2.1. DIARIES AND OBSERVATIONS
3.2.2. EXPERT INTERVIEWS
3.3. QUESTIONNAIRE
3.3.1. PURPOSE OF QUESTIONNAIRE
3.3.2. QUESTIONNAIRE DESIGN
3.4. CHAPTER CONCLUSION
4. FINDINGS AND INTERPRETATION
4.1. DISTRIBUTION AND RESPONSE RATE
4.2. DEMOGRAPHICS OF RESPONDENTS
4.3. QUESTION ONE - NUMBER OF FLIGHTS IN LAST TWELVE MONTHS
4.4. QUESTION TWO - FACTORS INFLUENCING PURCHASE DECISIONS
4.5. QUESTION THREE - LOYALTY TO FAVOURITE AIRLINE
4.6. QUESTION FOUR - MAIN REASON FOR LOYALTY TO FAVOURITE AIRLINE
4.7. QUESTION FIVE - FREQUENT FLYER PROGRAM PARTICIPATION
4.8. QUESTION SIX - MAIN REASON FOR PARTICIPATION IN FFP
4.9. QUESTION SEVEN - COMMUNICATION WITH FFP
4.10. QUESTION EIGHT - MEASURE OF USEFULNESS OF FFP
4.11. QUESTION NINE - INFLUENCE OF FFP ON AIRLINE CHOICE
4.12. QUESTION TEN - PERCEPTION OF CUSTOMER SERVICE
4.13. QUESTION ELEVEN - PERCEPTION OF OVERALL QUALITY
4.14. QUESTION TWELVE - IMPORTANCE OF FLIGHT TIMES AND ROUTINGS
4.15. QUESTION THIRTEEN - ATTITUDE TOWARDS LODGING COMPLAINTS
4.16. QUESTION FOURTEEN - SATISFACTION WITH RESOLVED COMPLAINTS
4.17. QUESTION FIFTEEN - COMPLAINT RESOLUTION AND INFLUENCE ON LOYALTY
4.18. QUESTION SIXTEEN - COMPLAINT RESOLUTION AND FUTURE BEHAVIOUR
4.19. CHAPTER CONCLUSION
5. CONCLUSION
5.1. CONCLUSION OF CHAPTER FINDINGS
5.2. CONCLUSION AIM AND OBJECTIVES
5.3. OVERALL CONCLUSION
Objectives and Research Focus
This report investigates the significance of Loyalty Management within the highly competitive airline industry, proposing that long-term customer loyalty is maintained through three primary pillars: exceptional customer service, structured frequent flyer programs, and efficient complaint management.
- The interdependence of customer service, loyalty programs, and complaint management.
- The foundational role of service quality in establishing competitive differentiation.
- The effectiveness of Frequent Flyer Programs (FFPs) in driving customer retention and repeat purchase behavior.
- The increasing strategic necessity of robust complaint resolution processes to restore consumer confidence and loyalty.
- Analysis of primary data gathered through passenger surveys regarding airline choice factors.
Excerpt from the Book
1. Introduction
The airline industry is a unique and thoroughly fascinating industry. Growing numbers of passengers, fuelled by increased mobility, reduced barriers to travel, and the entrance of new companies into the market, have increased the glamour, impact, and reach of this industry even further in recent years. British Airways’ Chief Executive Officer called the industry the ‘flywheel for the engine of the world’s industry’ (Chan 2000). In terms of numbers, the whole industry was worth US$1,000 billion in 1998, employed over 22 million people, and transports over 1,25 billion passengers each year (Chan 2000), with passenger numbers steadily increasing.
In this light, Loyalty Management is becoming an ever more important issue for most major companies, including commercial airlines. Customers often have often a free choice where their custom will go to, making it harder and more expensive for companies to attract new customers and to retain existing ones. This is especially true for the highly competitive field of internationally operating airlines. Airlines around the world are studying, evaluating, implementing, or improving different loyalty strategies aimed at cultivating strong relationships with their customers.
Airline customers are very much like customers of other industries. They make an initial purchase - for whatever reason - with a particular airline. The customer tries to validate his or her choice by judging the airline through certain criteria, possibly overall Service Quality. For subsequent purchases, the customer becomes more critical and reacts stronger to service failures. If performance proves satisfactory however, he or she might eventually move to a point where they become advocates for the airline.
Summary of Chapters
1. INTRODUCTION: Provides an overview of the airline industry's growth and establishes the conceptual framework of Loyalty Management as a three-pillar strategy.
2. LITERATURE REVIEW: Examines the theoretical foundations of Customer Service, Frequent Flyer Programs, and Complaint Management as core components of sustainable loyalty.
3. METHODOLOGY: Details the research strategy, including secondary literature review and the primary survey design used to collect empirical data.
4. FINDINGS AND INTERPRETATION: Presents and analyzes the data obtained from the questionnaires, highlighting customer perceptions regarding loyalty drivers and service satisfaction.
5. CONCLUSION: Synthesizes the research findings, confirming the interdependence of the identified pillars and offering insights for future loyalty management strategies.
Keywords
Loyalty Management, Airline Industry, Customer Service, Frequent Flyer Programs, FFP, Complaint Management, Service Quality, Customer Retention, Relationship Marketing, Customer Satisfaction, Airline Alliances, Market Competition, Consumer Loyalty, Advocacy, Brand Loyalty.
Frequently Asked Questions
What is the primary focus of this report?
This report explores the importance of "Loyalty Management" as a vital strategic tool for modern airlines operating in highly competitive markets.
Which key areas are identified as the pillars of airline loyalty?
The research identifies three interlinked pillars: superior Customer Service, effective Frequent Flyer Programs (FFPs), and professional Complaint Management.
What is the main objective of the research?
The study aims to demonstrate that long-term customer loyalty is not built on a single factor but requires a balanced, combined approach across all three identified pillars.
How was the primary research conducted?
The author utilized a structured questionnaire distributed to airline passengers to gather quantitative data regarding their loyalty behaviors and perceptions.
What does the main body of the work cover?
The main body reviews existing literature on loyalty marketing, analyzes the competitive characteristics of the airline market, and provides an interpretation of the primary survey results.
What are the characterizing keywords of this study?
Key concepts include Loyalty Management, Frequent Flyer Programs (FFP), Customer Service, Complaint Resolution, Airline Alliances, and Customer Retention.
How do customer complaints influence long-term loyalty?
The findings indicate that while complaints often arise from service failures, an efficient, fast, and generous resolution can significantly restore confidence and, in many cases, increase customer loyalty compared to the state before the complaint.
Why do customers often continue to fly with an airline even if they are dissatisfied?
The survey reveals that factors like price, convenience, and participation in Frequent Flyer Programs frequently outweigh single instances of dissatisfaction, keeping customers tied to an airline despite performance issues.
- Quote paper
- Ben Beiske (Author), 2002, Loyalty management in the airline industry, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/4474
