Customer Satisfaction in Commercial Aviation: Cost-Effective Strategies

Introduction

Customer satisfaction is not a mysterious or complicated issue, but it has emerged as an important concern among air travelers in recent years. In his essay "Legal Turbulence: The Courts's Misconstrual of the Airline Deregulation Act's Preemption Clause and the Effect on Passengers' Rights," Rosenthal (2002) advises that in early 2001, following two years of increasingly vehement dissatisfaction, the public's opinion of the commercial aviation industry reached a historic low point. In response, the U.S. Congress conducted a series of hearings and threatened to approve a robust passenger rights bill despite industry lobbying efforts. However, on September 11, terrorists used airplanes to attack the World Trade Center and the Pentagon, and the debate in Congress shifted entirely to issues of airport security and a wide range of safety concerns. Congress also acted to indemnify the airline industry from civil liability for personal and property damages resulting from the violence, and approved legislation to assist the airline industry — devastated by the attacks — with a comprehensive package of financial compensation and loan guarantees (Rosenthal, 2002).

This comprehensive package was contained in the Air Transportation System Stabilization Act (also called the "Airline Bailout Act"), designed to provide financial relief to the commercial aviation industry after the September 11 terrorist attacks (Wallace, 2001, p. 15). This legislation was clearly needed. "It can't be stated strongly enough that the magnitude of the problem we face as an industry is absolutely staggering," American Airlines Chairman Donald Carty advised the U.S. Senate Commerce, Science and Transportation Committee. The airline industry lost a record $9 billion in 2002 (Ramstack, 2003). At the time, Carty requested that the federal government pay for the additional security costs incurred by the aviation industry since the September 11 attacks and reduce taxes that then comprised approximately 26% of the cost of a typical economy-class airline ticket. By sharp contrast, taxes accounted for only 7% of an average airline fare in 1972 (Ramstack, 2003). Carty reported that American Airlines, the nation's largest air carrier, was implementing about $2 billion in cost-saving measures that involved laying off more than 27,000 employees since the September 11 attacks. He pointed out that "Labor is our company's single greatest expense and, with the exception of taxes, our fastest-growing expense" (Ramstack, 2003, p. 8). Notwithstanding these enormous expenses, the research clearly shows that investment in a carrier's employees is one of the best ways to improve customer satisfaction, as discussed further below.

More than four years after the terrorist attacks, airlines had managed to substantially alter their business plans and reduce flights in an effort to reorganize profitably. However, the general lack of satisfaction among airline passengers with the quality of service had once again emerged as a serious problem. According to Petrick (2002), from a marketing perspective, it makes good business sense to achieve the highest customer satisfaction possible, since the construct of perceived value has long been recognized as one of the most important measures for gaining a competitive edge. It has also been maintained that this perception of value represents the most important indicator of a consumer's intention to continue doing business with one provider over another. "Yet, in regards to leisure and tourism services," Petrick notes, "repurchase intentions and consumer loyalty are often predicted solely by measures of consumer satisfaction and/or service quality" (p. 119).

In this regard, Woodruff (1997) points out that "if consumer satisfaction measurement is not backed up with in-depth learning about customer value and related problems that underlie their evaluations, it may not provide enough of the customer's voice to guide managers where to respond" (p. 139). In addition, simply because a consumer is currently "satisfied" with a product or service does not necessarily mean the product or service represents significant value. It is entirely possible that a consumer who is very satisfied with a product or service may still consider it a poor value if the costs of obtaining it are perceived as inordinately excessive. By contrast, a consumer who is only moderately satisfied with a product or service may believe it to have substantive value if they perceive good utility received for the price paid (Petrick, 2002).

Taken together, these considerations represent both a challenge and an opportunity for commercial aviation providers today. Notwithstanding the inherent security issues involved, the extent to which a company achieves a high level of customer satisfaction while balancing the need to remain profitable will likely determine the extent to which that airline emerges as an industry leader in the future. This paper seeks to identify those aspects of commercial aviation that are perceived as contributing to consumers' sense of value and satisfaction.

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