Júri Presidente: Luis Guilherme Picado Santos

1. EXPLORING THE PROSPECT OF OPERATING LOW COST AND LEGACY CARRIERS FROM THE SAME MAIN AIRPORT TERMINAL – A service quality perspectiveMaster Thesis – nikhilmenon (ctis) Júri Presidente: Luis Guilherme Picado Santos Orientador: Maria do Rosário Mauricio Ribeiro Macário Vogal: Vasco Domingos Moreira Lopes Miranda dos Reis

2. INTRODUCTORY NOTE AND OBJECTIVES • Boom in the aviation industry –> deregulation in the 70s –> LCC revolution (Southwest followed by Ryanair & easyJet) • LCCs –> business model thriving on cost advantage –> operations from smaller airports (time and cost advantage) –> time and cost advantage (customer and producer) with obvious impact on service quality. • Objective: to explore the prospect of operating low cost carriers and the legacy carriers out of the same main airport terminal, from a service quality point of view.

3. DATA COLLECTION AND METHODOLOGY • Passenger questionnaire survey: service attributes selected for the study focussing on the aspect of defining service quality in airport terminals (extensive litt review) • Target group of the survey – all passengers who use air as a mode of transportation with special reference to low cost airline customers. • Task: The target group’s opinions on the service attributes to be entered in two broad parameters – Importance & Performance. • Range of scale: multi – point likert scale (1-4) • Importance: Least Important (1) to Most Important (4) • Performance: Bad Performance (1) to High Performance (4)

4. DATA COLLECTION AND METHODOLOGY • 2 methodologies applied for the dissertation • Importance Performance Analysis (IPA) • The 4 Q’s method • IPA – Martilla & James (1977) – used to measure customer satisfaction levels in a variety of segments. • Dissertation Perspective – assessing customer’s perception of the contribution of each service quality attribute in defining quality in an airport terminal. • Results Interpretation – represented on three approaches to get the maximum coverage into the results obtained – Scale Centered, Data Centered and Median Centered.

5. DATA COLLECTION AND METHODOLOGY • The 4 Q’s method - QUATTRO team (EC, OGM, 1998a, p99) – development of a European standard configuring of quality factors in an urban mobility system. • Dissertation Perspective – to develop a service quality level matrix for addressing the aspect of quality in airport terminals. • Methodology • Assessing customer perceptions of quality in an airport terminal (IPA) • Assessing quality gaps (satisfaction gap scores) that exist from customers’ perspective ( The 4 Q’s method) • Service Quality Level Matrix – matrix of all possible scenarios. • Synergy – Conflict Analysis

6. RESULTS & DISCUSSIONS • Importance Performance Analysis (IPA) • Analyzing the importance and performance of each service attribute by means of the mean scores obtained on them through the questionnaire survey – 154 respondents – sample adequate. • Gives a clear picture on the customer perception on service quality in an airport terminal. • Most Imp – Availability of transport modes for commute from the terminal. • Least Imp – Accessibility to retail and concessions. • Highest Performing – Thermal Comfort and Visual Impact • Lowest Performing – Level of Congestion.

7. RESULTS & DISCUSSIONS - IPA • IPA (SCALE-CENTERED APPROACH) • Plotting each of the attributes into the IPA grid using the coordinates, the initial IPA grid was formed and depicted above in Figure. • For this grid, scale mean was used as the importance (Y) and performance (X) axes intersection point in accordance with the original IPA framework developed by (Martilla & James 1977).

8. RESULTS & DISCUSSIONS - IPA • IPA (DATA-CENTERED APPROACH) • The second IPA grid was formed using data means as the intersection point of the X (performance) and Y (importance) axes. • Data means used were the average of the mean scores of attribute importance and attribute performance. • Evident that the use of the data-centered approach will yield more distinctive results as compared to the scale-centered approach.

9. RESULTS & DISCUSSIONS - IPA • IPA (MEDIAN – CENTRED APPROACH) • The third IPA grid was formed using the median value of the mean score of attribute importance and performance respectively as the intersection- point of the X (performance) and Y (importance) axes.

10. RESULTS & DISCUSSIONS - IPA • Some observations from the IPA results • Transition from Quad B to Quad A • Big change from “Keep Up the Good Work” to “Concentrate Here” • Service Factor 2 (Time taken to do check – in) and Service factor 1 (Availability of transport modes for commute from the terminal) swing in this manner. • Transition from Quad B to Quad C • Shift from “Keep Up the Good Work” to “Low Priority” • Service Factor 4 (Number of working check – in counters) swings in this manner but this is less than A –> B & C –> D. • Transition from Quad D to Quad C • Shift from “Possible Overkill ” to “Low Priority” • Service Factor 11 (Availability of trolleys) , Service Factor 12 (Accessibility to retail and concessions) and Service Factor 8 (Thermal Comfort) swing in this manner but this is less than A –> B & C –> D. • Transition from Quad A to Quad D • Biggest shift from “Concentrate Here” to “Possible Overkill” – opposing effect • Usually a situation that should never arise if done with good level of precision in sample sizes and also good quality responses. No service factors doing this shift.

11. RESULTS & DISCUSSIONS - IPA

12. RESULTS & DISCUSSIONS - IPA • ADEQUACY OF THE SAMPLE SIZE • Confidence Interval = 95% • Degree of variability = 0.5 • Population Size, N = 100,000 • Level of Precision, e = 0.05 – 0.1, adopted value = 0.09 • Optimal number of samples required, • But sample size of the questionnaire survey = 154 (> 123). • Sample adequate. • Corrections: 40% for non response bias. (Israel 1992) Therefore, the sample size for the questionnaire survey would be 154 + 0.4*154 = 216 (>123)

13. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • Main aim: Establishing quality criteria that will aid in setting up a service quality level matrix for defining quality in airport terminals. • Various approaches that addressed service quality studied • IPA • SERVQUAL • SQI • The 4 Q’s Method • The 4 Q’s method chosen over the other methods: • Overall outlook into the aspect of defining service quality by addressing both customer and producer perspectives • Other approaches utilized in airlines/ airports before; using the 4Q’s method –> novelty and expansion of horizons in the knowledge base.

14. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • THE 4 Q’S METHOD • Main task: establishment of quality criteria – service quality level matrix –> defining quality in airport terminals. • Customer perspective –> Evaluation of satisfaction gap scores = Expected Quality (QE) – Perceived Quality (QP) • One major anomaly –> different ranges of mean value scores evaluated (IPA) • Solution – harmonization of scores. • Value functions & value scores –> least significant attribute gets a value score of 0 & the most significant attribute gets a score of 100.

15. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • Analysis of customer needs & further trends • satisfied by the IPA conducted earlier which gave an insight into the needs and wants of the customers as against what they perceive. • Establishing quality criteria –> Expected Quality (QE) – mapped on is synonymous with the Importance criteria of IPA (value scores) – assumption. • most studies addressing service quality take an expectation – perception criteria into consideration.

16. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • ASSESSMENT OF CUSTOMER SATISFACTION • Availability of transport modes for commute from the terminal • Dissatisfaction over the choices available for commute. • Dissatisfaction over costs • Dissatisfaction over frequencies • Time to do check – in • Dissatisfaction over efficiency of counter staff • Dissatisfaction over number of working counters • Dissatisfaction over queue management system • Level of Congestion (Crowding) • Dissatisfaction over space available • Dissatisfaction over design & visual aspects of terminal

17. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • ASSESSMENT OF CUSTOMER SATISFACTION • Number of working check – in counters • Dissatisfaction over the efficiency of check – in staff • Walking distances inside the terminal • Dissatisfaction over the space allocation • Dissatisfaction over the terminal design and visual aspects. • Accessibility to food and beverages • Satisfaction over the availability of F&B – special significance to LCC pax • Thermal Comfort • Satisfaction over ambient temperature inside terminal – very limited effect in defining quality

18. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • ASSESSMENT OF CUSTOMER SATISFACTION • Seat Availability inside the terminal • Satisfaction over the large number of seats available • Satisfaction over the presence of retail and concessions negating the requirement of seating for long hours • Visual Impact of the terminal • Satisfaction over the visual impact – little role to play in defining quality. • Availability of choices in food & retail • Satisfaction over availability of choices as the distances involved are less than legacy flights.

19. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • ASSESSMENT OF CUSTOMER SATISFACTION • Availability of Trolleys • Satisfaction over availability of trolleys since most pax (business or short visit) flying low cost do not carry a lot of baggage –> surplus supply for less demand. • Accessibility to retail and concessions • Satisfaction over the availability of retail and concession – LCC pax expectations are very low –> any presence of retail satisfies LCC pax.

20. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • Setting up Minimum Performance Thresholds – Service quality level matrix

21. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • SYNERGY CONFLICT ANALYSIS • Main task: Grading each service attribute against the possible impact that it creates on the research question. • whether the objective of the dissertation can be realized (Synergy) or not (Conflict), keeping in mind the current service attribute. • Availability of transport modes for commute from the terminal • Some secondary airports – one mode of transport to the city (cabs). Even when >1, services don’t suit pax always (greater waiting times and costs) –> SYNERGY • Time to do check – in • Main airports – more counters – less time. • Main airports – more baggage – more time. • SYNERGY or CONFLICT depending on the policies of the airport.

22. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • SYNERGY CONFLICT ANALYSIS • Level of Congestion (Crowding) • Always going to be a conflict when more passengers are involved –> More Congestion –> CONFLICT • Number of working check – in counters • Secondary airports – less counters – less baggage – less time. • Main airports – more counters – more baggage – more time. • SYNERGY or CONFLICT depending on the policies of the airport. • Walking distances inside the terminal • Difficult to assess preferences – higher walking distances is preferred if compensated with ample F&B, R&C – main airports – not friendly for old pax –> SYNERGY

23. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • SYNERGY CONFLICT ANALYSIS • Accessibility to food and beverages • Secondary airports – one license granted for F&B – space constraints; Main airports – more options for pax –> SYNERGY • Thermal Comfort • 23 deg – No real effect in changing the quality aspect –> SYNERGY • Seat Availability inside the terminal • Secondary airports – 1:25; Main airports – almost 1:1 –> SYNERGY • Visual Impact of the terminal • No real effect in changing the service quality – augurs well for the LCC pax –> SYNERGY

24. RESULTS & DISCUSSIONS – THE 4 Q’s METHOD • SYNERGY CONFLICT ANALYSIS • Availability of choices in food and retail • Secondary airports – usually less licenses granted for F&B, R&C – less choices – move benefits LCC pax –> SYNERGY • Availability of trolleys • LCC pax – usually have lesser baggage – so demand is met by the supply – move has no real effects on quality of service –> SYNERGY • Accessibility to retail and concessions • Secondary airports – one license granted for R&C – space constraints; Main airports – more options for pax –> SYNERGY

25. CONCLUSIONS & FURTHER RESEARCH • Objective – Exploring the prospect of operating low cost and legacy carriers from the same main airport terminal from a service quality point of view. • Data collection – pax questionnaire survey – 154 respondents (sample adequate) • Methodologies used to examine these aspects introduced ( IPA & The 4 Q’s method) • Results were analysed for IPA – passenger questionnaire survey – service attributes which play a key role identified – IPA interpretations (grids) represented by 3 approaches. • Quality criteria establishment – various approaches that address service quality were studied – The 4 Q’s method selected – satisfaction gaps ascertained – service quality level matrix established – synergy conflict analysis to address the objective. • Further research – Extension of the study to address producers’ perspectives as well – more clarity; In depth surveys – personal level addressing all stakeholders – eliminates risk of non response.

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