RESEARCH PROJECT BMBR 5103 KEY FACTORS INFLUENCING CUSTOMER SATISFACTION OF JETSTAR PACIFIC AIRLINE IN CASE OF DELAYED OR CANCELED FLIGHTS STUDENT’S FULL NAME : LE MINH THANG STUDENT ID : CGS00018503 INTAKE : SEPTEMBER 2014 ADVISOR’S NAME AND TITLE : ASSOC PROF DR PHAN DINH NGUYEN DECEMBER 2015 Advisor’s assessment Advisor’s signature Table of Contents INTRODUCTION 1 Background Purpose of research .3 Scope of research Research Statement .3 Question of research Data collection Research Structure CHAPTER I: LITERATURE REVIEW 1.1 Overview of passengers’ service in case of delay or cancellation .6 1.2 Overview of quality of air service in case of delays or cancellations 1.3 Research Model and Research Methodology 18 CHAPTER II: ANALYZING SERVICE QUALITY OF AIR SERVICE IN CASE OF DELAYS OR CANCELLATIONS OF FLIGHTS OF JETSTAR PACIFIC AIRLINE…………………………… 23 2.1 Introduction of Jetstar Pacific Airline (JPA) 23 2.1.1 History and Development .23 2.1.2 Business Performance .24 2.1.3 Organization 25 2.1.4 Resources 25 2.1.5 Business Activities from 2011-2015 .26 2.2 Review on delayed and cancelled flights of JPA 26 2.2.1 Review on recent delays and cancellations .26 2.2.2 Review on service quality of air service in case of delays and cancellations 27 2.2.3 Evaluation of service quality of air service in case of delays or cancellations .29 2.3 Evaluating air service quality in case of delays and cancellations by using questionnaires 32 2.3.1 Sample .32 2.3.2 Initial analysis 32 2.3.4 Summary of research outcome 39 2.3.5 Conclusion of research 39 CHAPTER III: SOLUTIONS TO CUSTOMER SATISFACTION IN CASE OF DELAYED OR CANCELLED FLIGHTS OFJETSTAR PACIFIC AIRLINE…………………………………………43 3.1 Some solutions aims to enhance customer satisfaction in case of delayed or cancelled flights of Jetstar Pacific Airline 43 3.2 Recommendations 47 CONCLUSION 48 REFERRENCES 49 APPENDIX 50 BUSINESS RESEARCH METHODS 2015 INTRODUCTION Background Globalization brings both opportunities and challenges to developing countries especially for Vietnam Vietnam is promoting its economics effectively in all sectors, it is now focusing much on air transport sector and gaining some positive results Vietnam aviation market is entering an extensive competition in the context of establishment of new airlines as well as the penetration of foreign rivals It is predicted that Vietnam would become the world’s fastest growing airlines market Together with the development of the nation, Vietnam aviation sector also accomplish some encouraging results, its innovation process is underway continuously, upgrade equipments with an aim to enhance customer services and launch new air routes, greatly contribute to state budget In 2013, Vietnam aviation market reaped impressive success (up 16.7% in terms of passengers and 19.6% in terms of cargo against 2012) Simultaneously, cooperation with other countries has contributed to the success of Vietnam aviation sector in general and Jetstar Pacific Airline in particular Moreover, open policy has created favorable conditions for Vietnamese business to freely develop, but it also made huge challenges for domestic airlines with fiercer competition, higher demand of passengers and strictly follow to international regulations and terms Under this situation, to perform all above commitments, Vietnamese airlines are forced to invest more in human resources, facilities, applications of Page BUSINESS RESEARCH METHODS 2015 advancements of technologies, international regulations…to manage and enhance customer services, it has to change management philosophy in terms of air service to serve passengers, bringing high quality services to passengers in the coming time However, the growing need of air transport would require the improvement of service quality, and the top priority is customer satisfaction Meanwhile, the problems on cancelled and delayed flights always attract much attention from passengers and airline companies, is has a direct impact on prestige, competitive capability of airlines Therefore, it is important for the air services providers to take drastic measures to control, avoid or reduce the rate of cancelled and delayed flights in order to prevent loss, satisfy customers and retain customer loyalty As per Jetstar Pacific Airline- one of the best budget airline in Vietnam- it has developed strongly and attract much attention and sentiment from passengers The issue on cancelled and delayed flights has been controlled and gotten some positive outcomes Consequently, to find out more about this research, I would like to conduct a research on “Key factors influencing customer satisfaction of Jetstar Pacific Airline in case of delayed or cancelled flights” Page BUSINESS RESEARCH METHODS 2015 Purpose of research To build and evaluate factors affecting to customers satisfaction when cancelled or delayed flights occur, figure out the connection between service quality and customers satisfaction via criteria to find out strengths as well as weaknesses of customer services Propose some solutions in order to enhance customer service in case of cancelled or delayed flights From that, JPA could regulate its strategy to be in accordance with set target Scope of research The research is conducted at Operation Center of JPA at Tan Son Nhat International Airport with some service elements which affects passengers’ satisfaction when delayed or cancelled flights take place Research Statement JPA is becoming Vietnam’s leading budget airline To retain the first position, JPA should focus on improving customer satisfaction and services In the coming time, JPA targets these following objectives: - Serve the best quality service for passengers in term of pre-flight and on-board services - Promptly deal with complaints from air travelers - Reduce the cancelled and delayed flight rate Question of research To become successful, JPA need to answer these following questions: i) How to increase the service quality to compete with other rivals? ii) How to handle with customers feedbacks? iii) What to be done with the rate of cancelled and delayed flights? Page BUSINESS RESEARCH METHODS 2015 Data collection a) Primary data: The primary data is collected by gathering questionnaires The address of online questionnaires was sent to respondents with the help of employees in Tan Son Nhat airport and employees at the head office of JPA The survey was also posted in online forums Furthermore, “person to person” relationship is utilized to distribute online questionnaires and to gain as many respondents as possible i) Contacting to employees at Tan Son Nhat airport to get JPA customer’s ii) information such as their email address and Facebook Contacting the head office of JPA to deliver questionnaires to customers iii) Entering forums where Vietnamese share their experience after their flights Visiting Facebook of Vietnamese and posting online questionnaires iv) Utilizing relationship ‘’person to person’’ to send questionnaires to gain as many respondents as possible b) Secondary Data: The secondary data was selected from various literary sources in the field of marketing and internet resources such as articles, newspapers, online stories Research Structure This research is divided into chapters: Chapter I : Literature Review Page BUSINESS RESEARCH METHODS 2015 Chapter II : Analyzing passengers’ service quality of JPA when delayed or cancelled flights occur Chapter III : Measures to enhance to service quality of JPA Page BUSINESS RESEARCH METHODS 2015 CHAPTER I: LITERATURE REVIEW 1.1 Overview of passengers’ service in case of delay or cancellation 1.1.1.Service and air service a) Service Nowadays, service becomes a major research factor for different sectors, from economics to culture, law, administrative to management science There are many definitions about service In general, service is a activity to satisfy the needs of people The main characteristic of service is not tangible like cargo or freight but it directly serves the need of society b) Air service  Definition of air service Air service comprises all activities with an aim to satisfy the need of passengers during air transport service utilization process of an airline  Components of air services Air service is divided into types: Ground services and On-Board Services However, this research only focuses on Ground Service Ground service includes:  Check-in service: includes welcoming passengers at airports, performing check-in procedures for passengers and luggage service  Airport service: is defined from the time passengers complete check-in procedures and wait for boarding Airport service includes: assisting passengers at border gate police, customs service, security, inform passengers the boarding time, giving assistance and hotel accommodations in case of delay or cancellation Moreover, it also comprises supply of waiting seats, free meals, shopping, telephone and free internet access Page BUSINESS RESEARCH METHODS 2015 APPENDIX 5: DISCRIPTIVE STATICTICS OF VARIABLES famale Valid male Total GENDER Frequenc Percent y 93 46.5 107 53.5 200 100.0 Valid Percent 46.5 53.5 100.0 Cumulative Percent 46.5 100.0 AGE Frequency Percent under 20 from 21 to 40 Valid from 41 to 60 Total high school vocational school Valid college/universit y postgraduate Total Valid Percent Cumulative Percent 1.0 1.0 1.0 195 97.5 97.5 98.5 1.5 1.5 100.0 200 100.0 100.0 EDUCATION Frequenc Percent y 1.0 Valid Cumulative Percent Percent 1.0 1.0 1.0 1.0 2.0 181 90.5 90.5 92.5 15 200 7.5 100.0 7.5 100.0 100.0 Page 65 BUSINESS RESEARCH METHODS 2015 FACILITY N FAC1 FAC2 FAC3 FAC4 FAC5 FAC6 Valid N (listwise) 200 200 200 200 200 200 Minimum Maximum 1 1 1 5 5 5 Mean 3.35 3.33 3.32 2.70 2.82 2.84 Std Deviation 1.096 1.047 1.049 1.081 1.013 1.000 200 COMPETENCY N COM1 COM2 COM3 COM4 COM5 COM6 Valid N (listwise) 200 200 200 200 200 200 1 1 1 5 5 5 Mean 3.08 2.80 2.77 2.81 2.80 2.81 Std Deviation 1.109 887 917 989 1.072 1.072 200 N ATT1 ATT2 ATT3 ATT4 ATT5 Minimum Maximum 200 200 200 200 200 ATTITUDE Minimu Maximu m m 5 5 Mean 2.73 2.88 2.90 2.81 2.85 Std Deviation 1.022 1.002 977 970 1.103 Page 66 BUSINESS RESEARCH METHODS 2015 Valid N (listwise) 200 N POL1 POL2 POL3 POL4 Valid N (listwise) SAS1 SAS2 SAS3 Valid N (listwise) 200 200 200 200 POLICY Minimu Maximu m m 5 5 Mean 2.85 2.93 2.82 2.93 Std Deviation 971 966 921 945 200 SATISFACTION N Minimu Maximu m m 200 200 200 Mean 2.94 2.93 3.28 Std Deviation 1.028 1.008 1.007 200 Page 67 BUSINESS RESEARCH METHODS 2015 APPENDIX 6: CRONBACH’S ANALYSIS 1) FACILITY Reliability Statistics Cronbach's N of Items Alpha 845 Item-Total Statistics Scale Mean Scale Corrected Cronbach's if Item Variance if Item-Total Alpha if Item Deleted Item Deleted Correlation Deleted FAC1 17.95 11.419 661 812 FAC2 17.94 11.569 659 813 FAC3 18.34 11.773 637 817 FAC4 18.23 12.366 541 835 FAC5 18.65 12.120 592 826 FAC6 18.34 12.043 663 813 Page 68 BUSINESS RESEARCH METHODS 2015 2) COMPETENCY Reliability Statistics Cronbach's N of Items Alpha 837 Item-Total Statistics Scale Mean Scale Variance if Item if Item Deleted Deleted Corrected Cronbach's Item-Total Alpha if Item Correlation Deleted COM1 16.99 9.186 672 799 COM2 16.79 9.641 590 815 COM3 17.19 9.260 606 812 COM4 17.01 9.703 559 821 COM5 16.88 9.071 700 793 COM6 17.08 9.169 559 823 3) ATTITUDE Reliability Statistics Cronbach's N of Items Alpha 813 Item-Total Statistics Scale Mean if Scale Variance Corrected Cronbach's Item Deleted Item-Total Alpha if Item Correlation Deleted if Item Deleted Page 69 BUSINESS RESEARCH METHODS 2015 ATT1 13.66 6.497 624 772 ATT2 13.71 6.368 645 766 ATT3 13.31 5.974 642 765 ATT4 13.30 6.060 587 783 ATT5 13.70 6.553 527 799 4) POLICY Reliability Statistics Cronbach's N of Alpha Items 777 Item-Total Statistics Scale Mean Scale Corrected Cronbach's if Item Variance if Item-Total Alpha if Item Deleted Item Deleted Correlation Deleted POL1 10.03 3.773 638 692 POL2 9.44 4.639 575 729 POL3 9.92 4.762 535 746 POL4 9.91 3.922 596 717 Page 70 BUSINESS RESEARCH METHODS 2015 5) SATISFACTION Reliability Statistics Cronbach's N of Items Alpha 804 Item-Total Statistics Scale Mean if Scale Corrected Cronbach's Item Deleted Variance if Item-Total Alpha if Item Item Deleted Correlation Deleted SAS1 7.51 2.040 641 745 SAS2 7.09 1.968 625 759 SAS3 7.36 1.677 696 686 Page 71 BUSINESS RESEARCH METHODS 2015 APPENDIX 7: EXPLORATORY FACTOR ANALYSIS (EFA) 1st Test: KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy .891 Approx Chi-Square 2296.650 Bartlett's Test of Sphericity Df 210 Sig .000 Total Variance Explained Com Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings pone nt Total % of Cumulat Variance ive % Total % of Cumulat Varianc ive % Total e % of Cumulat Varianc ive % e 8.910 42.429 42.429 8.910 42.429 42.429 3.742 17.817 17.817 1.698 8.085 50.513 1.698 8.085 50.513 3.352 15.960 33.776 1.353 6.445 56.958 1.353 6.445 56.958 3.348 15.941 49.718 1.162 5.533 62.491 1.162 5.533 62.491 2.682 12.773 62.491 912 4.344 66.835 822 3.916 70.751 729 3.473 74.224 690 3.285 77.509 649 3.090 80.599 10 521 2.481 83.080 11 491 2.336 85.416 12 443 2.107 87.524 13 419 1.997 89.521 14 405 1.928 91.449 15 345 1.641 93.090 16 336 1.599 94.689 17 289 1.376 96.065 18 258 1.227 97.292 19 239 1.138 98.430 20 195 927 99.357 Page 72 BUSINESS RESEARCH METHODS 2015 21 135 643 100.000 Rotated Component Matrix Component COM2 769 169 003 110 COM1 764 -.030 268 232 COM5 630 261 510 144 COM4 617 103 261 153 COM3 606 278 123 190 ATT5 508 503 -.057 284 FAC5 470 374 390 180 FAC6 452 452 425 202 ATT1 152 766 043 231 ATT2 203 710 220 144 ATT3 144 640 435 176 ATT4 057 568 500 106 COM6 371 464 298 377 FAC1 242 128 820 067 FAC2 256 423 675 -.163 FAC3 071 -.029 663 467 FAC4 173 330 600 282 POL1 274 145 073 764 POL2 034 287 163 722 POL3 327 119 062 656 POL4 413 330 236 510 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Page 73 BUSINESS RESEARCH METHODS 2015 a Rotation converged in iterations Page 74 BUSINESS RESEARCH METHODS 2015 2nd test KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling 869 Adequacy Approx Chi-Square Bartlett's Test of Sphericity 1780.799 df 153 Sig .000 Total Variance Explained Com Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings pone nt Total % of Cumulativ Varian e% Total ce % of Cumulat Varianc ive % Total e % of Cumulati Varianc ve % e 7.318 40.658 40.658 7.318 40.658 40.658 3.211 17.837 17.837 1.687 9.374 50.032 1.687 9.374 50.032 3.032 16.846 34.683 1.331 7.396 57.428 1.331 7.396 57.428 2.769 15.381 50.065 1.155 6.418 63.846 1.155 6.418 63.846 2.481 13.781 63.846 820 4.553 68.399 770 4.279 72.678 692 3.845 76.523 674 3.746 80.269 579 3.218 83.487 10 471 2.614 86.101 11 429 2.383 88.484 12 417 2.316 90.800 13 368 2.046 92.846 14 319 1.773 94.620 15 302 1.679 96.298 16 280 1.555 97.853 17 243 1.349 99.203 18 144 797 100.000 Page 75 BUSINESS RESEARCH METHODS 2015 Rotated Component Matrix Component COM1 780 278 -.014 225 COM2 762 016 161 117 COM3 628 141 274 169 COM4 618 267 105 155 COM5 616 519 241 158 FAC1 239 828 116 073 FAC2 241 686 390 -.155 FAC3 077 658 -.026 468 FAC4 176 613 308 277 ATT1 165 065 773 225 ATT2 200 233 715 154 ATT3 150 457 633 172 ATT4 066 514 581 112 ATT5 520 -.044 523 280 POL1 272 067 152 772 POL2 030 164 276 727 POL3 320 064 097 658 POL4 413 248 330 510 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations Page 76 BUSINESS RESEARCH METHODS 2015 APPENDIX 8: CORRELATION ANALYSIS MATRIX Correlations FAC COM ATT Pearson 646** 621** Correlation FAC Sig (2-tailed) 000 000 N 200 200 200 Pearson 646** 632** Correlation COM Sig (2-tailed) 000 000 N 200 200 200 Pearson 621** 632** Correlation ATT Sig (2-tailed) 000 000 N 200 200 200 Pearson 465** 626** 588** Correlation POL Sig (2-tailed) 000 000 000 N 200 200 200 ** Correlation is significant at the 0.01 level (2-tailed) POL 465** 000 200 626** 000 200 588** 000 200 200 APPENDIX 9: REGRESSION ANALYSIS Variables Entered/Removeda Mode Variables Variables Method l Entered Removed POL, FAC, Enter COM, ATT a Dependent Variable: HL b All requested variables entered Page 77 BUSINESS RESEARCH METHODS 2015 Mode l R Model Summaryb R Adjust Std Change Statistics DurbinSquare ed R Error of R F df df2 Sig F Watson Square the Square Change Change Estimate Change 710a 505 495 46700 505 49.691 195 000 1.598 a Model Regression Residual Total Model (Constant) NL CSVC TD CS Sum of Squares 43.348 42.527 85.875 ANOVA Df Mean Square 10.837 218 Sig 49.691 000b 195 199 Coefficientsa Unstandardized Standardized t Sig Coefficients Coefficients B Std Error Beta 646 217 2.970 003 211 076 195 2.764 006 177 062 195 2.849 005 274 078 256 3.532 001 212 067 215 3.175 002 Residuals Statisticsa Minimum Maximum Mean Predicted Value Residual Std Predicted Value Std Residual F 2.5470 -1.23716 5.0196 1.54286 3.6583 00000 Std Deviation 46672 46228 N -2.381 2.917 000 1.000 200 -2.649 3.304 000 990 200 200 200 Page 78 BUSINESS RESEARCH METHODS 2015 Page 79 ... CUSTOMER SATISFACTION IN CASE OF DELAYED OR CANCELLED FLIGHTS OF JETSTAR PACIFIC AIRLINE 3.1 Some solutions aims to enhance customer satisfaction in case of delayed or cancelled flights of Jetstar Pacific. .. CANCELLED FLIGHTS OFJETSTAR PACIFIC AIRLINE? ??………………………………………43 3.1 Some solutions aims to enhance customer satisfaction in case of delayed or cancelled flights of Jetstar Pacific Airline ... CHAPTER II: ANALYZING SERVICE QUALITY OF AIR SERVICE IN CASE OF DELAYS OR CANCELLATIONS OF FLIGHTS OF JETSTAR PACIFIC AIRLINE? ??………………………… 23 2.1 Introduction of Jetstar Pacific Airline (JPA)