Case Study of Philippine Airline and Ryan Air

Abstract

Customer satisfaction and customer loyalty are crucial elements for the survival of any business organization. The airline industry has not been an exception based on the various changes that continue to be experienced as a result of technological and economic reforms. As a result, service providers have opted to invest in a manner that works best for them about enhancing their respective profit levels. This has thereby led to an increase in the level of competition among airline companies. As such, different companies have been forced to face tremendous losses as a result of a decrease in the overall consumer base. This study aims at assessing the various ways in which airline companies may utilize critical strategies aimed at enhancing customer satisfaction and loyalty to prolong the period in which customers purchase the services being offered the study employed Ryan Air and Philippines Airline as the case studies. The study made use of questionnaires as the main primary data collection method. Also, secondary sources were also utilized in reviewing available literature about the topic of the study.

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Introduction

Background of the Study

On a global scale, the airline industry is considered to be the highest growing sector in the provision of intangible services (Hussain 2015, 168). Despite its growth in the 21st century, the industry faced significant challenges as a result of the 2008 economic downturn affecting airline sectors across the world. Globally, the airline industry is considered to have a considerable impact to international economy owing to its contribution to globalization enabling distinct countries to transact more freely to enhance their respective economic states (Jiang 2016, 87). The industry has allowed for both the growth of its revenues and heightened competition among consumers.

Contemporary research suggests that Asia is in the frontline about the growth of competition for airline markets domestically. For instance, the Japanese and Korean airline markets have experienced cases of increased competition among the various airline companies present leading to a state where each service provider is willing to lower their prices to ensure that they remain relevant to the overall market (Hussain 2016, 245). However, such cases have led to the introduction of low-cost airline companies. As such, this has called for the need of coming up with relative means of ensuring that a company is capable of retaining its customers at all costs. Companies have consequently been forced to adopt relevant strategies aimed at promoting the rate of customer retention and loyalty (Keiningham 2014, 415). Winning the loyalty of customers often rely on developing strategic measures geared towards ensuring that the welfare of customers is adequately catered for at all times. One of the market areas which need doing so is the Asian airline market system. Key companies in the region offering quality services continue to experience increased competition from low-cost airline companies that continue to emerge regularly (Hapsari 2016, 388). Companies facing such competition have seen the need for coming up with acute means of ensuring that customer loyalty is prioritized to ensure that they can retain their customer base regardless of the resulting competition.

The recent economic growth in China has resulted in the need for air travel services to propel the country's economy to new heights. Research studies indicate that the Chinese airline industry experienced a 20% growth during the period between 2000 and 2009, making China the country with the fastest growth in terms of air transport (Keiningham 2014, 416). As the industry continues to grow, airline companies in China continue to pose a significant threat to airline companies in Europe, Korea, Japan, and the North American market. The Singapore airline sector has also been able to come up with appropriate means of dealing with both local and international competition among carrier companies (Hussain 2016, 245). Some of the leading local competitors within Singapore include Air Asia, Lion Air, and Silk Air among many more.

Competition trends among airline companies are witnessed not only in Europe, North America, and Asia but also in other rising economies such as that of Africa and the Middle East. As the competition continues to grow among airline companies, involved stakeholders have seen the need of ensuring that they can retain their customers by avoiding a possible decrease in a number of their customers as a result of poaching by competitors (Hussain 2016, 247). Companies have therefore been able to devise customer-specific strategies that are likely to enable them to enhance the level of satisfaction amongst their customers. The purpose of doing so is inclined towards ensuring that customers do not find the necessity of opting to look for similar services from alternative service providers. For instance, companies such as South West Airline and American Airlines have decided to provide low-cost services to their customers as a measure of enhancing customer loyalty (Keiningham 2014, 415). Additionally, other techniques such as the issuance of incentives may also be utilized in allowing customers to choose one company over the others. Studies indicate that the United States has been able to maximize the availability of passenger airline services in the enhancement of the country's tourism industry.

Customer Satisfaction and Customer Loyalty in the Airline Industry

The growth of any business franchise may only be guaranteed based on how customers are likely to engage in the buying of products or services being issued. To ensure that consumers are capable of doing so, companies are required to ensure that they actively engage their customers in the manner in which they do business. This, on the other hand, guarantees the satisfaction of the customers in question (Jiang 2016, 88). Research studies suggest that customer satisfaction often tends to have positive impacts on an organization's overall profitability. As such, companies ought to take into consideration the level of satisfaction and dissatisfaction among consumers to adequately understand what to do to ensure that they retain a reasonable consumer base (Jiang 2016, 87). The reason as to why organizations should prioritize customer satisfaction is because of its close association with retention and loyalty. The three factors are popular for having a positive correlation. All organizations are often advised to ensure that the three elements are prioritized so that they are capable of meeting their respective objects in as far as growth is concerned.

Customer satisfaction may be guaranteed through the alteration of tangible, technical, and human aspects of service quality. The nature and quality of the services issued to customers directly affect the level of customer satisfaction which in turn affects their loyalty to an organization (Jiang 2016, 81). The human aspects of service quality are believed to be better than tangible and technical issues as they establish a better relationship (better one-on-one interaction) between an organization and its customers hence leading to increased loyalty.

Customer satisfaction may be perceived as an attitude by customer issued to service providers based n service quality. The better the quality of the services rendered, the better and the higher the level of customer satisfaction. In most cases, customers tend to react to a given service based on their emotional expectations (Keiningham 2014, 416). In a state where the service provider fails to meet the customers' expectations, the higher the customers are likely to be dissatisfied. In such a case, customers may opt to change their service providers hence leading to the loss of consumers (Hussain 2016, 245). Service providers are therefore required to invest in enabling consumers to enjoy the quality of services being issued to allow them to be in a position where they are likely to increase their overall purchases.

In the past decade, the airline industry can be said to have experienced significant changes. Some of the various factors that have played a substantial role in effecting the widespread changes in the industry include an increase in security insurance, escalating fuel prices, natural disasters and deregulation of the sector (Jiang 2016, 86). Natural disasters that have led to increased challenges, in this case, include volcano eruptions making it challenging to move from one end to another and the spread of diseases barring customers from moving from one country to the next.

Statement of the Problem

Currently, the Philippines and Europe, continue to face intensified competition among different airline service providers such as Philippines airline and Ryan Air respectively. The two companies have opted to adopt various measures which necessitate coming up with relative strategies that may allow each company to outdo the other to ensure that they deal with market competition accordingly (Jiang 2016, 87). Such measures may range from being a low-cost company to being a full-service airline company.

Philippines airlines is an air carrier company based in the Philippines s dwelling in both the local and regional markets. The airline company supports the movement of both cargo and individuals from Manila and other destinations such as Saudi Arabia among other countries within the Middle East and regional markets close to the country. Since its inception, the company has attempted to come up with competitive ways of ensuring that it is capable of drawing more customers to buy its services. The airline is considered to be a low-cost company owing to how it has been able to regulate its prices for distinct destinations to draw the attention of travelers (Heng 2016, 114). Those with low income may be a position where they are unlikely to pay for more to travel to their desired destinations. In such a case, the Philippines saw it necessary to come up with affordable rates which allow customers to compete for such services over time. Philippines airline has also opted to do so as a result of the need to compete with key rivals such as Cebu Pacific (Heng 2016, 111). The company has however declared the need to brand itself as a premium operator by developing a sustainable and modest means of service provision.

Ryan Air is a European airline company dealing with carrier services for individuals within Europe as well as those from regional markets. The company bears over 220 destinations globally in about 34 countries (Deville 2015, 313). Similar to Philippine airline, the company has been facing massive competition across the European airline market making it particularly necessary for it to come up with suitable means of ensuring that it is capable of retaining its consumer base (Jiang 2016, 87). The company has since been able to come up with methods of targeting low-income customers as their primary target. Ryan Air's 'Fare Finder' is a low-cost package that allows travelers to access adequate services hence leading to customer retention.

As time advances, newer and better technological advancements continue to be introduced. Consequently, airline companies continue to experience changes about the services issued as well as how different factors affect overall conditions of carrying out business operations (Heng 2016, 116). The airline industry continues to experience changes as a result of changes in technology and economic conditions. Being the fastest growing industry, companies operating in the airline sector must...