Abstract
This chapter examines the effects of the complaints about the practices of revenue management (RM) on the travel experience perception and loyalty of the customers. The analysis shows that the complaints about the RM practices have positive effects on the travel experience perception, and the travel experience perception has a positive effect on the loyalty of the customer who travel short distances. The results of the detailed sub-hypothesis test performed in relation to the travel purposes of the customers and the business model adopted by an airline company show that the companies which adopt low-cost business model are obliged to manage their RM practices on a much more customer-centric basis. The companies in the sector should develop special customer programs for their customer segments which remain outside the business purpose. Thus, the operational efficiency will increase, and revenues will be maximized.
TopIntroduction
The number of airline companies operating in the civil aviation sector has conspicuously increased especially after the 2000s (Lindenmeier & Tscheulin 2008; Mason & Alamdari 2007; Teichert et al.,2008). The services that airline companies are provided for their customers are evaluated, it is seen that each company has unique and different business models. Therefore, the level of service perceived by their customers is different. The diversification of the profile of an airline’s customers requires that heterogeneous customer segments which are made up of different demographic features should be given simultaneous service, especially during short-distance flights. Airlines categorize different short-distance /short-haul flight routes from airport to airport (point-to-point) as (i) flights lasting less than 120 minutes and (ii) flights lasting between 120 and 180 minutes (An &Noh, 2009). Under these circumstances, the expectations of the airline company’s customers relating to the quality of the service given to them during a flight are different from each other. Service perceptions that customers have experienced during the flight are different from each other due to different expectations of business versus leisure travellers Xu and Li (2016) which is a challenge for airline companies.
The intense competition in the market makes it crucial for airline companies to maximize their operational profits for the necessity of the continuation of their existence in the market. This pressure that the airline companies feel on their shoulders makes it a sectorial necessity for them to benefit from the revenue management (RM) tactics without any exceptions (Lindenmeier & Tscheulin 2008; Mathies et al., 2013). The approach which is called “dual entitlement” means the obtainment of the revenues by the companies that they need for the continuation of their existence in the marketplace. However, when the companies are obtaining these revenues, it is also necessary that they should render services to their customers at fair prices under suitable conditions (McMahon-Beattie et al., 2016; Wirtz et al., 2003). For all that, the RM practices of the airline companies are not always perceived as fair by their customers and cause displeasure and complaints.
As emphasized above, revenue management practices and how the economic burden on the customers is perceived by them should be evaluated within the scope of the “dual entitlement theory”. The dual entitlement theory suggests that price increases made without adding value to the service given to the customer are not found just by the customers. Within this context, the equity theory should be utilized for the purposes of measuring the justice perception, because the equity theory contains the perception of how just is the situation of a person in comparison to others (Campbell, 1999). In the prospect theory which is developed by Kahneman and Tversky (1979), how people make choices among alternatives when they are under uncertain circumstances is explained. Therefore, by making use of the prospect theory at the same time, it is necessary to deal with how the customer’s buying behavior is by time and price. It is also aimed at examining to what extent a passenger finds it just when he/she detects that he/she has paid more in comparison to some other passenger or that some other airline gives many more service possibilities for the same price. For this reason, it is necessary to examine the customer reactions from a general perspective by attributing the conditions relating to the RM practices to theoretical supports and converting them to standardized cases.
On the other hand, the company’s concerns for profit maximization create a conflict with the customers’ concern for buying the service for the optimal price. Coping with this is only possible by the simultaneous realization of airline companies’ customer-centric marketing applications and their RM (Mathies et al., 2013; McMahon-Beattie et al., 2016). Within this context, the critical element is that the perception of injustice should be eliminated on a customer basis by dealing effectively with the customer complaints relating to the RM practice (Lapre, 2011; Xu & Li, 2016). Thus, as a result of the elimination of the displeasure of a complaining customer, positive thinking is created in the customer concerning the re-purchase intention of the airline company the customer in the future (Kim & Lee, 2009).
Key Terms in this Chapter
Customer Loyalty: The preference of the customer for an airline in respect of his/her future flights starts becoming a habit. And this leads to developing an intention in the mind of the customer for using the same airline in the future.
Low-Cost Carrier: To be able to cover the operational costs of flight schedules with low ticket prices, hereby the costs expended on each flight will be reduced by lowering the quality of service and comfort provided to the passengers. To reduce operational costs by making the most of their aircraft assets by streamlining and boosting the efficiency of their business procedures.
Full-Service Carrier: Full-service provider airlines can manage connecting flights by linking aircraft traffic to routes in multiple flight networks. Airlines that provide this type of expensive service (flexibility such as cancelling a ticket or changing the ticket date to make the trip at a later time) compete in the market by shifting demand in their favor.
Service quality: Airline service quality dimensions include the quality of the physical facility owned by the airline company; the level of capability of the airline company to give the service to its customers reliably and correctly; the intention and skills of the airline company for helping the passenger; focusing on the individual requirements and needs of the passengers; giving confidence in the company’s organizational work doing model and competence of its employees to the customers.
Trust: Trust is related to the passengers start having been sure about the airline's service standards, the perceived risks regarding this quality of the flight experience decrease, and the flight process is realized more comfortably.
Perceived Value: Value perceived by the passengers in the process of benefiting from the flight service does not only include the monetary value paid by the customer. In addition to the monetary value paid, it also includes such burden as the endeavor and time that the passenger has spent in the whole process from the moment of his/her going into action for obtaining this service to the moment when he/she has received his/her luggage at the destination airport.
Deregulation: It means that the market becomes more competitive and customer oriented as legislative impediments to air transportation are removed, as are barriers to the entrance of private capital ventures in the sector.