UNIVERSITI TEKNOLOGI MARA

A STUDY ON CUSTOMER SATISFACTION

TOWARDS SERVICE QUALITY AND COMPANY
IMAGE OFFERED BY FIREFLY

NOR AFIZAH ABDULLAH

2009232948

Thesis submitted in fulfilment of the requirements

For the degree of

Master of Business Administration (MBA)

Faculty of Business Management

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 CHAPTER 1

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

This chapter provides background and rationale for the study. It will focus on the
customer satisfaction towards service quality and company image offered by Firefly.
Low cost carriers have reshaped the airline industry competitive environment within
liberalized markets and have made significant impacts in the world’s domestic passenger
markets, which had previously been largely controlled by full service network carriers
(O’Connel and Williams, 2005). By fulfilling the customers’ expectations and
consequently being different from competitors are important in order to survive in the
today world of globalization. It is very important that service industry measure and
monitor service quality and satisfaction with a view to influencing the behavioral
intentions of their customers (Saha and Theingi, 2009).

Airlines services categorized as low cost carriers or LCCs emerged in the airline industry
in the South-East Asia region following deregulation in the early 2000s. AirAsia
pioneered low cost traveling in Malaysia as well as Asia in general. The airline was
established in 1993. The second Malaysian low cost carrier is Firefly, a full subsidiary of
Malaysian Airlines which is the full service national carrier. Firefly was founded only in
the year 2007. The development strategy of low cost carriers can be summed up as “low
costs, low fares, and no frills”.

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1.1.1 Background of the Organization

Launched on April 3, 2007, Firefly, is community airline, is operated by Firefly

Sdn Bhd, and is a wholly-owned subsidiary of Malaysian Airline System Berhad.
Operating out of the Penang and Subang hubs initially and now the Main
Terminal Building of Kuala Lumpur International Airport, Firefly provides
connections to various points within Malaysia, Southern Thailand, Singapore and
Sumatera of Indonesia, aligning itself with the Indonesia-Malaysia-Thailand
Growth Triangle (IMT-GT) agenda.

Firefly would be able to capture the growing budget travelers market in the north
and east coast points of the Peninsula, and southern Thailand as the airline flies
to 6 destinations that are currently not served by any other airline (Leong, 2007).
In addition, it is the only airline connecting 3 popular tourist destinations,
Penang, Koh Samui and Phuket, enabling it to expand its reach to the foreign
travelers market. Firefly is a new venture by Malaysian Airline and wholly
subsidiary presents the national carrier with the opportunity to grow from a new
market segment.

The name Firefly was chosen to depict the airline’s personality which is agile,
brilliant, charming and fun. Since the name is unique and evocative, Firefly has
the potential to grow and command a brand premium in the future.

Firefly aim is to bring communities closer by overcoming geographical

constraints through their network of point-to-point flights, link the world to the
communities they serve and contribute to local economies by growing trade and
tourism. As code-share arrangements with Malaysia Airlines, they are also able
to introduce the wonders of Southeast Asia to travelers from beyond this region.

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Firefly started operations with two 50-seater Fokker F50 aircraft. As of
November 2011, the Firefly fleet consists of the following aircraft with an
average age of 5 years. Firefly fleet such as 12 flight ATR 72-500 with seat 72
passenger, 2 Boeing 737-400 with 162 passengers, and 1 of Boeing 737-400 with
189 passengers. The standardization of Firefly’s fleet to the highly fuel efficient
ATR72 airplanes not only leads to improvements in yield and revenue (Star,
2008), but also portrays a strong brand presence and an environmental friendly
airline.

Firefly have 17 domestic routes consist of Alor Star, Ipoh, Johor Baharu ,
Kerteh, Kuantan, Langkawi, Malacca, Kuala Terengganu, Kota Bharu, Pulau
Pinang, Singapore, Batam, Phuket, Medan, Pekan Baru, Bandar Aceh dan Koh
Samui.

Previously, Firefly’s give services to Sabah and Sarawak domestically. Firefly,

Malaysia Airlines’ (MAS) two-year-old community airline has started cancelling
routes between the peninsula and Sarawak, with the first cancellation starting on
Sept 16. Started on December this year 2011, the services were totally terminated
by Firefly’s, and MasWing subsidiary of Malaysian Airline System would take
over this service. So the passenger from Kuala Lumpur, need to take a transit if
they want to go Sandakan, Sibu and others places to Sabah and Sarawak, because
there is no direct flight.

As Firefly’s service spreads across the Association of South-East Asian Nations

(ASEAN) countries, specifically Malaysia, Thailand and Indonesia, the
technology used to conduct sales requires some specialized approaches. With the
internet penetration of 59% in Malaysia, 10.5% in Indonesia and 12.6% in
Thailand (Miniwatts Marketing 2008), the distribution strategy through online
sales and marketing is expected to be the major contributor for Malaysia, where-

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as for Indonesia and Thailand, sales offices within reach-able distance is
necessary.

AirAsia is a direct competition for two routes from Penang and six routes from
Kuala Lumpur (KL). Although Air Asia flies to the Low Cost Carrier Terminal
in Kuala Lumpur International Airport (KLIA) whilst Firefly flies to Subang, the
airports can be considered to be in proximity and a competition for point-to-point
passengers. For the remaining Firefly routes, no direct competition exists and
Firefly stands to fully benefit.

1.1.2 Firefly SWOT Analysis

1.1.2.1 Strengths

Being a subsidiary of MAS, Firefly’s start-up cost and learning curve in

the industry is significantly reduced. Firefly has introduced an innovative
product with new routes tapping into new markets of domestics and short
haul routes. It has landing rights and is the sole carrier from Penang to
world famous tourist destinations including Koh Samui & Langkawi.
Exclusive access to the Subang Airport enables it to fully capture
travellers opting for this route. The Subang Airport is closer to main
commercial and residential hotspots including KL and Petaling Jaya
compared to KLIA.

1.1.2.2 Weaknesses

Undoubtedly Firefly is new in the business, especially online sales. Even

its parent company MAS was late to introduce its online booking engine
only in January 2004 (O'Connell & Williams 2005). It lacks the

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experience in this field compared to Air Asia. Already in 2003, Air Asia
was voted as the most popular website for online shopping in a survey
conducted by AC Nielsen Consultancy (AirAsia 2003). Subang Airport as
a hub has its drawbacks though. Exclusive access to Subang eliminates
possibilities of other airline passengers using Firefly in Subang for
connectivity or during stopovers. The other limiting factor of the Subang
Airport is the lack of a systematic public transport to and fro the airport,
compared to the KLIA which boast the ERL (Express Rail Link), shuttle
buses to town and taxies. Subang Airport relies solely on taxis.

1.1.2.3 Opportunities

Connell (2006) comments that medical tourism has been a success in Asia
especially and has prompted global interest. Penang itself has 13 private
hospitals (APHM 2008) which Firefly can work with on promoting
medical tourism. Firefly also has many spokes out of Penang to popular
destinations (Firefly 2008). With international airlines plying Penang
Airport, Firefly can capture stopover passengers seeking to visit popular
destinations. In addition Firefly will gain opportunities as it tap into a
potential customer base of 100 million in the Indonesia-Malaysia-
Thailand Growth Triangle. It is also can capture the growing leisure
travellers market in the north and east coast of the Peninsula and South
Thailand, flying from Penang to six destinations that are currently not
served by any other airline.

Specifically in Malaysia and South East Asian (SEA) countries, budget

air travel continues to gain popularity. With the current economic
situation, more travelers will look for the best value for money in travel,
which translates to a boom for LCC (Low cost carrier).

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 1.1.2.4 Threats

AirAsia is the main threat to Firefly. The on-going price war between
budget airlines is expected to continue cutting into profits. With the
overall drop in Asia Pacific air-traffic expected to continue (AAPA
2008a), FSCs will consider joining in the fight for the budget travellers
segment directly or by launching a subsidiary LCC. There also exists
threats of substitute products namely the train services, bus services and
car travel especially for routes on the Peninsular of Malaysia, for example
the KL-Penang route. Aeroline, a Business Class like Bus Service charges
RM55 for a KL-Penang trip, and takes approximately 5 hours
(AEROLINE 2008) compared to 1 hour by flying (Firefly 2008).

1.2 PROBLEM STATEMENT

Understanding and meeting customers’ expectations and subsequently being different

from competitors are important in order to survive in the today world of globalization.
Due to the dynamic environment and increasing demand of better service from the
customer, it is a must for airline industry to provide excellent service and focus on
continuing improvement, so that they can remain the uniqueness of their services and
create more competitive advantages than the competitors.

The speed and intensity of change in service offerings has accelerated in recent years
within the airline industry (Atilgan et al., 2008). Challenge in the airline markets in
Malaysia is becoming globally tough as the passengers’ needs and wants are growing in
variety. In such an occasion, airline companies need to be aware of the latest shift and
trend to be able to react on time. Thus, precise and timely information on a wide range of
customer needs and expectations become critically important nowadays. There is strong

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evidence that service quality has either a direct or indirect influence on the behavioural
intentions of customers mediated through customer satisfaction (Zeithaml et al., 1996;
Cronin et al., 2000). Given these established relationships, it is imperative that service
firm’s measure and monitor service quality and satisfaction of their customers.

The rivalry in the same industry forces LCC to get more customers by giving a low price
to fly, package, do alliance active in social corporate responsibilities in order to create
brand awareness to customers. The bargaining powers of customers force this carrier
alert to customers’ needs and wants. Challenge in this industry is timeliness. Instead of
that the result is un-satisfaction by customers become an issue in everywhere.
Furthermore, this issue will lead into bad perception of the company and the industry
itself. Hence, it influences the revenue of the company. Customer satisfaction has also
been defined in various ways. Satisfaction is an effective response following an
expectancy-disconfirmation experience that involves a cognitive process (Oliver, 1980).

Firefly is likely mindful of the negative connotations typically associated with budget
airlines, also known as discount or no-frills airlines. These stem from numerous
complaints about anything and everything: flight delays, an inability to reach the airline
by phone, the length of time needed to obtain a refund and poor customer service in
general.

The numbers of complaints against low-cost airlines have risen to 108 just within the
first six months of 2009, compared with 157 for the whole of 2008 according to Mr.
Eddy Leong, managing director of Firefly (NST Blog, July 2009).

Based on Skytrax forum (2010), most Firefly passengers experience on flight delay and
cancellation. The quality service in Firefly is not up to the standard and they still left
behind on brand awareness and customer experience. They need to improve the service
quality in their flight to overcome negative perception. Although Firefly need to focus

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on the attributes that create competitive advantage such as affordability for low cost
carrier, it should also ensure it offering are been taken care properly. In order to do that,
Firefly needs to review its service strategy to increase customer satisfaction and
subsequently customer loyalty (Murugaiah, 2010).

Beginning mid-September 2011, Firefly has started discontinuing flights served by its
Boeing 737 fleet. As a result, passengers were left in limbo on their flight status and they
had complained Firefly lack of professionalism in handling of flight cancellation. As the
notice was short or non-existent, passengers particularly on group bookings had suffered
massive losses. Firefly has also been under massive fire when their social media team
started deleting passenger comments on flight problems. Tour operators were reported to
be fuming as well as their queries on flight cancellation was not answered by Firefly. A
good company image will help a company build close relationships with its clients while
a bad one is likely to keep the clients away (Kuzic, Giannatos and Vignjevic 2010).

According to Azuan (2008), Firefly can improve their operations and marketing to
capture a bigger piece of the market-share cake from the competitors by start consider
having a frequent flyer programmed so that passengers satisfaction can be managed and
retained. The customer’s able to pay what the company offering the services. It can be
observed from Firefly advertisements and promotional activities that they working to
position itself low budget airlines by lowest price of tickets and enhance its marketing
effort. However, low priced alone will not keep customers coming back to Firefly. There
are many other factors that affect customer satisfaction which are important to create
customer loyalty. Therefore, we found the importance of a research required to provide a
clear view into the factors that influence customer satisfaction among Firefly passengers.

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1.3 RESEARCH OBJECTIVES

In view of the above scenario, the objectives of this research are:

 To indicate the responses on customer satisfaction towards service quality
and company image offered by Firefly.
 To identify the important factors that can contribute to the improvement
of customer satisfaction on Firefly management.
 To determine the significant relationship of company image and services
quality toward customer satisfaction of the Firefly management.

1.4 SCOPE OF THE STUDY

The study will be conducting at Sultan Abdul Aziz Shah Airport in Subang, Selangor.
This research will focuses on customer satisfaction towards service quality and company
image offered by Firefly. The variables that will be measure are service quality and
company image. These are independent variable to be found out their interrelationship
with the dependent variable which is customer satisfaction. The questionnaire will be
distributed among all the customers and it is assumed that they will give all the required
information regarding the topic will be study. The customers will be lead by our
members during the answering the survey to more interactive between the respondents
and researcher.

1.5 SIGNIFICANCE OF THE STUDY

This research is important for many parties especially to the company itself, to the
researcher, to the university and as guidance for future research. This is because this
study will help all those parties to define and implement the factors that can be influence

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the customer satisfaction and how it is influence by the service quality and company
image. These research significances are as follows:

1.5.1 To the Organization

By allowing the researcher to conduct the research in the organization, this

organization will be able to identify what are the factors that influence the
customer satisfaction. The finding of this study will assist the company
management in developing their marketing strategy in a way that will increase
their profitability and also satisfying their customer. Besides that this study will
ensure everybody in the organization know about the importance of service
quality for the company future growth.

1.5.2 To the Researcher

By conducting this study, the researcher can broaden the existing knowledge on
this field of study. At the same time, by conducting this research, researcher can
improve her skills, knowledge and experiences in the research area. The
relationship between the researcher and the organization is created during the
completion of this research, as well as between the researcher and the staff of
Firefly.

1.5.3 To the University

Conducting a good research can benefit the university in many ways. One of
them is producing a good reference for future researchers in the university and
also to the faculty itself. It can also be a source of reference for other students
who need to conduct research for their studies in the future. Other than that, it
can be a new body of knowledge and also as guidance to the future researcher.

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1.6 LIMITATIONS OF THE STUDY

During researchers’ study there are several challenges that they have to face. These
limitations could be a constraint to make the research to be conducted smoothly. Due to
these problems, precautions will be taken in order to minimize and eliminate these
factors from affecting the results of the study. Those limitations are:

1.6.1 Accuracy information gained

There are difficulties in choosing the right resources with the high level of
accuracy. There is a lot of information but not all the information is relevance to
the topic will be study. Thus the proper selection of information and material is
required. Some of information that we required form the Firefly is
confidential. So we keep all the sources and try to elaborate and relate during this
study.

1.6.2 High cost

This is considered as usual problem faced by the researcher in conducting a

research paper. Cost incurred in conducting this research is quite expensive in
order to get an accurate information and feedback from the respondents. The
cost includes are the cost of distributing the questionnaires to the respondents and
all the cost of finding the respondent. In order to get absolutely high quality
information, it is necessary for the entire researcher to put extra money to pay for
all the costs involves such internet costs, transportations costs and telephone
costs.

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1.6.3 Time constraint

In order to finish the ultimate relevance research paper, a lot of time needed by
the researcher, but due to acceptable circumstances this research has to be finish
in more or less in three month time. This has challenged the researcher to come
out with the high quality and relevance findings with short time scale. Not all
respondents are willing to answer the survey during the distribution the
questionnaires. In result we just get 150 respondents with complete answer form
200 respondents we target before. Mostly they are waiting their flight.

1.6.4 Passengers using Firefly

The airline, which is also known as the “community airline” clearly stated that
the passengers are from the various level of passengers but currently 50 per cent
of Firefly passengers are business and corporate travelers who travel on a shuttle
basis. However, there are also passengers travelling for one off basis especially
teenagers or students with the last option for getting to the respective
universities/colleges.

1.6.5 Lack of cooperation and response from respondents

Because of most of Firefly passengers are from the business peoples, corporate
travelers and also teenagers or students, most of them are in the situation of no
time to give quick response, in hurry and rushed to their respective destination it
may causes the research difficulties to get the response and feedback.

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1.7 DEFINITIONS OF KEY TERMS

1.7.1 Customer satisfaction

Customer satisfaction is defined as “the individual’s perception of the

performance of the product or service in relation to his or her expectations”
(Schiffman & Kanuk, 2004). According to (Chan, 2000) in the airline sector,
judging what passenger wants and imagine is necessary to deliver excellent
customer service and quality and subsequently to analyze the firm’s performance
standards.

1.7.2 Service Quality

Perceived service quality is a form of attitude, related but not equivalent to

satisfaction (Zeithaml et al., 1990). In such a scenario, service quality is a
significant driver of passenger satisfaction, loyalty and choice of airline (Sultan
et al 2000).

1.7.3 Company image

Ind's (1997) define company image as the picture that an audience has of an
organization through the accumulation of all received messages. Ostrowski et al.
(1993) have considered reputation of a commercial airline company as a
dimension of company image. The image includes colors, symbols, words, and
slogans that convey a clear, consistent message and not simply the name (Berry
et al., 1988).

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 CHAPTER 2

LITERATURE REVIEW

2.1 PREAMBLE

A comprehensive literature review was conducted about customer satisfaction, service

quality (caring, reliability, responsiveness and tangibility) and company image in the
airlines industry as well as the service industries that related to the research area. The
researcher put a clear of the relevant research work done, thus for in the area of
investigation. This is to identify and highlight the important variables and to document
the significant findings from earlier research that will find as a foundation on which the
theoretical framework for the investigation that can be building as a hypothesis develop.
Moreover, both independent and dependent variables are supported by past research.

2.2 CUSTOMER SATISFACTION

Customer satisfaction is an output, resulting from the customer's pre-purchase

comparison of expected performance with perceived actual performance and incurred
cost (Churchill & Surprenant, 1982).

Over the last few years numerous airlines have felt the chilling effects of increased
'customer power', as greater customer choice and lower barriers to defection have turned
keeping customers into a battle that must be fought a new each day. Customer
relationships are the key to airline business growth. Airlines must take absolute
responsibility for a customer's satisfaction throughout the "want-it-buy-it-and-use-it"
experience. This requires learning and tracking customers' needs, behaviors, and

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lifestyles and using this information to create a specific value proposition. This strategy
is the path to consumer loyalty.

Arnould and Price (1993) and Westbrook and Oliver (1991) pointed out that customer
satisfaction through an understanding of the emotional content of services encountered.
Customers could experience positive, negative or both feelings during services delivery
process. Price et al. (1995) noted that customer satisfaction and positive feelings can be
provided by extra attention given to the customers by the service provider.

The marketing literature suggests that customer satisfaction operates in two different
ways: transaction-specific and general overall (Yi, 1991). The transaction-specific
concept concerns customer satisfaction as the assessment made after a specific purchase
occasion. Overall satisfaction refers to the customer's rating of the brand, based on all
encounters and experiences (Johnson & Fornell, 1991). In fact, overall satisfaction can
be viewed as a function of all previous transaction-specific satisfactions.

Cumulative customer satisfaction is an overall evaluation based on the total purchase

and consumption experience with a good or service over time. Whereas transaction-
specific satisfaction may provide specific diagnostic information about a particular
product or service encounter, overall satisfaction is a more fundamental indicator of the
firm's past, current and future performance (Anderson et al., 1994). This is because
customers make repurchase evaluations and decisions based on their purchase and
consumption experience to date, not just on a particular transaction or episode (Johnson
et al., 2001, p. 219).

Customer satisfaction is considered as prerequisite for customer retention and loyalty

and obviously help in realizing economic , market share, return on investment, etc. (
Reicheld, 1996; Hackl and Westlund, 2000). Although off-the-shelf measures of
customer satisfaction can be used to meet the customer satisfaction requirements, canned
measures often fail to capture the full breadth of issues that drive satisfaction (Flint et

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al., 1997). In fact, use of existing measures may contribute to making customer
satisfaction assessment a “routine ritual” and cause firms to miss important drivers of
satisfaction within their industries (Tikkanen et al., 2000).

Customer satisfaction stimulates repeat purchases and favourable word-of-mouth

(Rogerson, 1983). It acts as an exit barrier and therefore, able to help the company in
retaining its customers (Anderson and Sullivan, 1993; Cardozo, 1965; Fornell, 1992;
Halstead and Page, 1992), securing customer loyalty (Selnes, 1993), and producing
supercilious long-term financial performance (Karna, 2004; Kirwin, 1992). Authors such
as Cronin and Taylor (1992), Fornell (1992), Jones (1990), and Parasuraman et al.
(1991a, b) all agreed that customer satisfaction influences purchase repetition and
personal communication in regards to the product. Reichheld and Sasser (1990) found
that profitability of a company escalates proportionally with the number of loyal
customers. Referring to Heskett et al. (1990), getting new customers is more expensive
than retaining the existing target groups. According to Evans and Lindsay (1996), Huang
and Lin (2005), and Yi (1990), satisfaction occurs as a process or an outcome itself. The
product and the accompanying services remains an important criterion in determining
the quality that delivered to customers (Vavra, 1997). Musa et al. (2006) also argued that
satisfaction can be examined by looking at the respondents’ perception of the service
performance.

Satisfaction of a customer is a purpose of observed quality and notions of degree to

which remarked quality unsuccessful to counterpart customer expectations. Customers
will constantly evaluate the remarked performance of goods or service with little
performance mark. It believed that consumers will only be contented when the estimated
performance is more than the target; conversely dissatisfaction happens when the
performance is below the expectation. As per Rachel and Andy (2010), those customers
are merely satisfied and they find it simple to shift when other firm is providing a better
cost or package while the importance of customer satisfaction is highlighted in business

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where competition is severe by the Kotler (2000).The primary objective of airline sector
is to provide excellent service and competency.

Rachel and Andy (2010) argued that excellent service is vital while the number of
absolutely contented customers segment is an important factor as assessed by some
analysts for high profits. A business organization must regularly gauge consumer
satisfaction in order to analyze and identify whether clients were delighted or not.
According to Torbica and Storh (2001), particularly in the airline sector the degree of
customer happiness is plainly recognized off late in the process, whilst the majority of
the customers spent the cash by now. When firms study on which characteristics of a
service or products affect consumer satisfaction, their duty is to adapt their current
strategies in a manner that would lead to utmost consumer contentment.

According to the literature, outstanding service is achieved through committed and loyal
staff. To provide a reasonable level of service and quality, Rhoades (2008) stated that a
firms approach should be focused in improving the skills and ensuring efficiency,
motivation and commitment of the employees (Benner, 2009). As the personnel are vital
to service delivery, there is a necessity to have employment protection, training and
dispersed decision making. According to (Chitnis, 2007) Airline industry should assess
and determine the demands of its passengers and their satisfaction levels. Satisfaction
may be described as what the organization provided to its customers and whether the
company met the customer’s demands (EUPAN, 2008). Airline sector may develop the
scope of achievements if they allow its workforce to take individual responsibility and
go an extra mile to make the customers happy and contended (Chitnis, 2007). Customer
satisfaction is when the consumer is delighted with the service delivered by the airline
sector that meets the client desires, wants and expects.

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2.2.1 Related Study on Customer Satisfaction

The nature of customer care is very much service oriented as most goods are
consumed at the same time as services are experienced. To satisfy a customer,
the company needs to have the services that the customer requires (Davidow,
1986). If the customer perceives a service in a certain way, but expected less,
then the customer is satisfied. People and organizations that use professional
services are traditionally prepared to pay high fees for the services, because of
the uncertainty, importance, and risk involved. The customer wants to know that
they get the required attention. A service firm that is able of project a caring
image and backing that image with substance is likely to success (Maister, 1997).

Customer satisfaction also can be considered as of the most important outcomes

of all marketing activities in a market-oriented firm. The obvious need for
satisfying the firm’s customer is to expand the business, to gain a higher market
share, and to acquire repeat and referral business, all of which lead to improved
profitability (Barsky, 1992). Studies conducted by Cronin and Taylor (1992) in
service sectors such as: banking, pest control, dry cleaning, and fast food; found
that customer satisfaction has a significant effect on purchase intentions in all
four sectors. Similarly, in the health-care sector, McAlexander et al. (1994) found
that patient satisfaction and service quality have a significant effect on future
purchase intentions.

Customer satisfaction is at the heart of marketing. The ability to satisfy

customers is vital for a number of reasons. For example, it has been shown that
dissatisfied customers tend to complain to the establishment or seek redress from
them more often to relieve cognitive dissonance and failed consumption
experiences (Oliver, 1987; Nyer, 1999). If service providers do not properly
address such behavior, it can have serious ramifications. In extreme cases of
dissatisfaction, customers may resort to negative word-of-mouth as a means of

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getting back. A disgruntled customer can, thus, become a saboteur, dissuading
other potential customers away from a particular service provider.

Quite understandably, marketing practitioners have often aligned their bets with
customer satisfaction, using slogans such as “Our focus is customer satisfaction”,
or “Customer is king.” For example in the University of Michigan tracks
customers across 200 firms representing all major economic sectors to produce
the ACSI (American Customer Satisfaction Index). Each company receives an
ACSI score computed from its customers' perceptions of quality, value,
satisfaction, expectations, complaints, and future loyalty (Fornell et al., 1996).

Customer satisfaction is defined in Oliver's (1997) terms: that it is the consumer's

fulfillment response. It is a judgment that a product or service feature, or the
product or service itself, provides a pleasurable level of consumption-related
fulfillment. In other words, it is the overall level of contentment with a service or
product experience.

On the other hand, no matter how customer satisfaction is assessed, it reduces

sensitivity to price by lessening price elasticity (Garvin, 1988; Anderson, 1996)
and minimizes customer loss from fluctuations in service quality in the short
term (Fornell, 1992). The main result is high customer loyalty (Brady and
Robertson, 2001; Oh, 1999; Eklöf and Cassel, 2001; Hackl et al., 2000;
Edvardsson et al., 2000). In this context, it can be assumed that the relationship
between customer satisfaction and customer loyalty is positive.

As Palmer (1998) asserts, customers will hold a favorable attitude towards the
service provider compared to other alternatives available if some degree of
satisfaction exist. Customer satisfaction has a positive effect on customer loyalty.
However, Fornell (1992) argues that the relationship between customer
satisfaction and customer loyalty is affected by many factors, including the

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industry type, switching cost and the differentiation level of products in a
category.

The concept of customer satisfaction has been a historical thought of marketing

schools. The earlier study of customer effort, expectations, and satisfaction can
be traced back to the research done by Cardozo (1965). Soderlund (1998)
pointed out that customer satisfaction is getting much attention in many
organizations and academic researches. Different researchers have defined
satisfaction differently; thus different measuring tools have been proposed
accordingly.

Soderlund (1998) defined word-of-mouth as the extent to which customer that

obtained a certain level of satisfaction would inform other people about that
particular event. Holmes and Lett (1977) suggested that customers that have
positive experiences are more willing to communicate their feelings to others
than those with negative experiences. The finding contradicts Fisk et al. (1990)
and Hart et al. (1990) whom instead, discovered that customers who have had
bad and good experiences will inform up to 11 and 6 people respectively. About
60% of sales to new customers are reported to be due to word-of-mouth referrals.
Positive word-of-mouth activity on a particular organization will result in it
having a good reputation and eventually increases an organization's sales, attracts
more customers, and reduces customer departures (Rogerson, 1983). Saha and
Theingi (2009) stated that word-of-mouth represents trusted information that
obtained externally; enabling customers to evaluate a product or service that has
been associated with profitability and market standing of an organisation.

Getty and Thompson (1994) studied relationships between quality of lodging,

satisfaction, and the resulting effect on customers’ intentions to recommend the
lodging to prospective customers. Their findings suggest that customers’
intentions to recommend are a function of their perception of both their

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satisfaction and service quality with the lodging experience. Hence, it can be
concluded that there is a positive relationship between customer satisfaction and
customer loyalty.

In telecommunications, Nortel (Bowden, 1998) has recognized a need to enhance

the emphasis on customer satisfaction. Nortel takes into account such customer
base requirements as language, culture, and respondent influence within recipient
organization in their customer satisfaction process. Process-based business
models are means to facilitate continuous improve performance. Nortel has
determined that only their very satisfied customers consistently place repeat
orders. Customer value management must offer better value than the competition
does; the supplier needs to identify the key purchase criteria and attributes of the
customer and customer actions need to be broken down into categories of actions
and linked to internal process measures.

2.2.2 Relationship between customer satisfaction, service quality and

company image

The performance of a company leads to customer satisfaction with a product or

service (Huang and Feng, 2009). Customer satisfaction is fundamental to the
practice of consumer sovereignty. In recent research, customer satisfaction or
dissatisfaction has become an important issue for marketing practitioners because
of the rapid business environment. Customer satisfaction can be defined as a
judgment made on the basis of a specific service encounter (Bloemer and Kasper,
1995; Oliver, 1999).

Saha and Theingi (2009) pointed out that the emergence of low cost airlines has
raised concerns on how satisfied are the customers with the services provided.
Studies into customer satisfaction in aviation industry have largely examined the
aspect of service quality (Bamford and Xyztouri, 2005; Nejati et al., 2009;

22
O’Connell and Williams, 2005; Pitt and Brown, 2001; Saha and Theingi, 2009;
Tiernan et al., 2008; Wan and Hui, 2005) and travellers’ satisfaction with
airlines’ services (Atalik, 2009; Clemes et al., 2008).

Service quality and customer satisfaction are viewed as key drivers of customer
loyalty (Lai et al., 2009), and research generally tends to consider the links
between key drivers and loyalty (Balabanis et al., 2006; Guo et al., 2009). Many
researchers find that high service quality correlates with relatively high customer
satisfaction (Cronin et al., 2000), which in turn drives loyalty (Ennew and Binks,
1999; Lai et al., 2009). Overall, the causal order of service quality leading to
customer satisfaction receives considerable support and empirical validation
(Bove and Johnson, 2001; Brady and Robertson, 2001), and this link further
explains the variance in customer loyalty. Rust and Chung (2006) gave an
excellent review of existing marketing models of service and customer
relationship management. They proposed that service quality tends to encourage
customer loyalty to the service provider.

Arnould and Price (1993) and Westbrook and Oliver (1991) pointed out that we
can better explain customer satisfaction through an understanding of the
emotional content of services encountered. Customers could experience positive,
negative or both feelings during services delivery process. Price et al. (1995)
noted that customer satisfaction and positive feelings can be provided by extra
attention given to the customers by the service provider.

Corporate image is another important factor in the overall evaluation of service

quality. Corporate image is defined as the perception of an organization that
customers’ hold in their memories. Because it works as a filter through which a
company’s whole operation is perceived, a corporate image reflects a company’s
overall reputation and prestige. Aydin and Ozer (2005) claim that a corporate

23
image emerges from a customer’s net consumption experiences; hence,
perceptions of service quality affect corporate image.

Doyle and Wong (1998) found that successful companies have a differential
advantage in overall company reputation and communicate it as quality to their
customers (Solomon, 1985). Often, they are able to command premium prices
(Tepeci, 1999). It is found that the most important criterion for customers
selecting a company is because of their reputation (Boyd et al., 1994; Darby,
1999) while Rogerson (1983) stated that good reputation could increase an
organization's sales, attract more customers, and reduce customer departures.
Wen and Yeh (2010) found that airline’s image has obtained a high score in their
service attributes ranking study among the full service airlines. Both LeBlanc and
Nguyen (1996) and Yoon et al. (1993) suggested that reputation and image are
closely linked together as it influences customer’s expectations (Nejati et al.,
2009). Thus, it may be expected that airline customers would have high
expectation especially for full service airlines.

Brown and Dacin (1997) claim corporate image derives from customers’
perceptions of capability and social responsibility. Corporate capability refers to
the company’s expertise in delivering product and service offerings, such as
effective innovation and high service quality, while corporate social
responsibility refers to the company’s management of social issues. Corporate
image thus impacts a customer’s evaluation of service quality, satisfaction and
loyalty (Andreassen and Lindestad, 1998; Zins, 2001).

24
2.3 SERVICE QUALITY

Continued liberalization and ‘open skies’, the impact of global alliances, new low-cost,
no-frills carriers, on-line ticket selling, and privatization of state-owned airlines are some
of the crucial developments that have been impacting on airline business at a time of
continually falling average fares and yields. Increasing competition from low cost, low
fare carriers is one of the fundamental challenges being faced by the traditional full
service carriers (Chen, Gupta & Rom 1994; Cerasani 2002; Gillen & Morrison 2002;
Sayanak 2003; Franke1 & Hamilton 2004; Cary 2004; O’Connell 2005; and Pant 2006)
and it has also led to reduction in average quality of service provided to the customer
(Trapani & Olson 1981; Bhatt 1997; Chan 2000; Butler 2001; Servitopoulos 2002;
Mazzeo 2003; Morrison 2004; Manuela 2007).

The airline industry is inherently unstable (Doganis 2006) and highly competitive, where
all airlines have comparable fares and matching frequent flyer programs. Service quality
can be defined as a consumer’s overall impression of the relative efficiency of the
organization and its services. Understanding exactly what customers expect is the most
crucial step in defining and delivering high-quality service (Zeithaml et al., 1996).
SERVQUAL is one of the best models for evaluating customers’ expectations and
perceptions (Pakdil and Aydm, 2007; Chen, 2008). Despite criticism from other
research, SERVQUAL remains the most commonly used diagnostic model for
evaluating service quality. SERVQUAL has five main dimensions to measure service
quality: tangibles, reliability, responsiveness, assurance, and empathy (Zeithaml et al.,
1996). In addition to SERVQUAL related studies, we have measured airline service
quality through 4 dimensions such as caring, reliability, tangibility and responsiveness.

Gourdin (1988) categorized airline service quality in terms of three items: safety,
timelines and price. Elliott and Roach (1993) proposed food and beverage, timely
luggage transport, seat comfort, the check in process, and in-flight service dimensions.
Haynes (1994) used the processing of luggage, seat cleanliness, and the check-in

25
process, the convenience of transit, timeliness, and handling of customer complaints as
the standards of service quality.

Service quality may be defined also as the customer perception of how well a service
meets or exceeds their expectations (Czepiel 1990). Service quality can be measured in
terms of customer perception, customer expectation, customer satisfaction, and customer
attitude (Sachdev and Verma 2004). Ekinci (2003) indicates that the evaluation of
service quality leads to customer satisfaction.

Rust and Oliver (1994) define satisfaction as the “customer fulfillment response,” which
is an evaluation as well as an emotion-based response to a service. Service quality is a
consumer’s overall impression of the relative inferiority or superiority of the
organization and its services (Bitner & Hubbert, 1994). The importance of service
quality has been widely discussed by researchers. For example, Parasuraman, Zeithaml
& Berry (1991) argued that delivering high quality in the service industry has been
recognized as the most effective means of ensuring that a company’s offerings are
uniquely positioned in a market filled with “look alike” competitive offerings.

Sureshchandar at el., (2001) identified five factors as service quality is critical from the
customer’s point of views. These factors are;

1. core service or services product;

2. human element of service delivery;
3. systematization of service delivery; non human element;
4. intangible of service- services cape; and
5. social responsibilities .

Perceive service quality is one of the highly debated in research topic in marketing
theory, prima facie evidence for which is exhibited by the considerable academic

26
attention that has got from the researcher across the world (Buttle, 1996; Asubonteng et
al., 1996).

The researcher on service quality has identified numerous models by different researcher
across the world into airlines industry. However, the SERVQUAL instrument
(Parasumaran et al., 1998) a 22-item scale that measure service quality along 4 factors,
namely caring, reliability, responsiveness and tangibles.

Service quality has been described as a form of attitude where a long run overall,
evaluation, and two construct (serviced quality and attitude) are viewed as similar
(Parasuraman et.al., 1998; Zeithaml, 1998 ; Bitner et al., 1990; Bolton and Drew, 1991a,
b; Cronin and Taylor, 1992; Bitner and Hubert, 1994).

Providing excellent service quality is widely recognized as a critical business

requirement (Voss et al, 2004; Vilares & Coehlo, 2003; Van der Weile et al, 2002). It is
‘not just a corporate offering, but a competitive weapon’ (Rosen et al, 2003) which is
‘essential to corporate profitability and survival’ (Newman & Cowling, 1996). However,
service quality, particularly within the Services sector, remains a complex 4 concept and
there is little consensus as to the drivers for effective delivery (Voss et al, 2004;
Johnston, 1995).

The service profit chain, first proposed by Heskett et al (1994), provides one of the most
powerful and widely supported perspectives on this issue. Within the service profit
chain, service quality is driven, primarily, by employee satisfaction, which, in turn is
influenced by HR practices. The overall chain sees service quality driving customer
satisfaction, which creates customer loyalty leading to growth and profit. The original
propositions were based on research in 20 large service organizations and subsequent

27
research has broadly supported the proposed linkages (Loveman, 1998; Rucci et al,
1998; Brooks, 2000; Anderson & Mittal, 2000).

2.3.1 Service Quality Dimension

2.3.1.1 Caring

Caring is the service dimension that focuses on individualized attention or

care, such as providing the seat a passenger prefers or meals through a
pre-order system or having a Frequent Flyer Program (Bloemer, Ruyter,
& Wetzels, 1999; Cunning, Young, & Lee, 2004; Park et al., 2004).

2.3.1.2 Reliability

Reliability is the ability to perform the service in an accurate and

dependable manner. Reliability can be described as the ability to perform
service dependably and accurately, such as punctuality, efficiency of the
check-in process, and convenience and accuracy of reservations and
ticketing (Kim, 2010).

2.3.1.3 Responsiveness

Responsiveness refers to the willingness to provide help and prompt

service to customers. According to Kim 2010, responsiveness is related to
the willingness to help passengers solve service problems (flight
cancellation and baggage loss), response to emergency situations, as well
as prompt and accurate baggage delivery.

28
 2.3.1.4 Tangibility

Tangibles are defined as the physical facilities of the aircraft: seating

comfort, seat space and legroom, in-flight entertainment service (books,
newspapers, movies, games, and magazines), appearance of the
employees, and meal service (freshness, quantity, and appearance).

2.3.2 Related Study on Service Quality

Clearly, service quality is an issue that has engaged academics, leading to substantial
debate over its conceptualization. In 1988, PZB developed SERVQUAL, a method
to assess customer satisfaction for service industries, which started a stream of
research on service quality measurement that continues to this day. Their
measurement involved the difference between customers' perceptions and
expectations based on five generic dimensions: tangibles, reliability, responsiveness,
assurances and empathy.

Research based on a framework applied to the restaurant industry by Stevens (1995),

who created DINESERV from SERVQUAL with some encouraging results.
Although the SERVQUAL framework has been pursued with some enthusiasm in
various service industries, empirical support for the suggested framework has not
always been encouraging. Cronin and Taylor (1992) suggested that service quality
can be predicted adequately by using perceptions alone. In addition, Carman (1990)
suggested that in specific service situations it might be necessary to delete or modify
some of the SERVQUAL dimensions. Teas (1993) argued that measuring the gap
between expectations and performance can be problematic.

When SERVQUAL, consisting of the five original dimensions, was originally

conceptualized by PZB (1988), it was used to assess four organizations a bank, a

29
credit card company, a repair and maintenance organization, and a long distance
phone service carrier. In these industries customers typically develop long-term
relationships with just one organization. Moreover, PZB did not distinguish these
organizations on the basis of experience, search, and credence criteria (Zeithaml and
Bitner, 2003, p. 36). Each of these services is also a “pure type” with little or no
physical products exchanging hands. In the restaurant industry, only a part of the
offering is a service which is intangible and heterogeneous, and where the production
and consumption of the product cannot be separated. In addition, customers expect
and desire a variety of food selections and places to frequent, and typically develop a
“consideration set” which is a cluster of restaurants that they patronize on a rotating
basis (Neal, 1999).

In this mixed product-service context and where service assessments are largely
experience based (as opposed to healthcare or auto repair organizations where
service assessments are credence based), we contend that all five original dimensions
of SERVQUAL need not be included. For example, the assurance and empathy
dimensions originally suggested in the SERVQUAL framework may not be of great
significance for the following reasons: Assurance is defined as employees'
knowledge and courtesy and their ability to inspire trust and confidence. This
particular dimension of service quality is significant largely for credence based
industries such as healthcare, legal services, or auto repair, that have a higher degree
of risk per purchase and where the outcome of the service encounter is neither easy
to predict, nor well understood. In the restaurant industry, the customer's risk is low
given the purchase price, the outcome of the service, and the alternatives available.
Hence assurance is not likely to be as important in this industry. Moreover, the use of
scale items such as “you felt safe in your transactions with the restaurant” or “the
behavior of employees instilled confidence in you” (both derived from SERVQUAL)
simply did not seem appropriate for the restaurant context. Yet we acknowledge that

30
elements of assurance knowledge and courtesy are important, but may have
contextually modified meanings as we shall subsequently argue.

Similarly, empathy is defined in the SERVQUAL literature as the individualized

caring attention that is displayed to each customer. This dimension is more
applicable to industries where “relationship marketing” as opposed to “transaction
marketing” is critical to the organization's survival. These types of industries need
personnel that can offer “high technical” advice and/or develop important business
alliances where empathy can play a vital role. However, the need to demonstrate
empathy in the context of restaurants, especially for contact personnel such as a
server in a busy dinner rush when one is typically waiting on 20 or more people at a
time, may be fleeting at best. Customers also do not want a doting server providing
personal attention when all they want is to enjoy the food and the company. At the
same time, scale items such as “the restaurant gives you individual attention” or “the
restaurant had your best interest at heart” (derived from SERVQUAL) seemed
inappropriate for the context. Why else would customers be there when a variety of
other alternatives are available? Instead, reliable and responsive services may be
more desirable for restaurants when provided in a pleasing environment.

Reliability has been regarded as the most critical factor for US customers based on
both direct measures and importance weights derived from regression analysis (PZB,
1988). The SERVQUAL literature identifies reliability as the ability to perform
promised services dependably and accurately. For the restaurant industry, reliability
translates into the freshness and temperature of the food (the promise), and receiving
the food error-free and as ordered the first time (dependably and accurately).

Interestingly, these aspects or measures of reliability could also be interpreted to

represent “food quality” (provided fresh, at the right temperature, and error-free). In

31
this regard, we were surprised at our inability to uncover any previous research on
food quality. Considerable research has been conducted over whether people desire
fish more than chicken and/or vice versa. Menu design and the number of
appropriate items on a menu has also been extensively researched and reported in the
trade literature. However, what attributes of “food quality” restaurant goer’s desire
most has received little attention. It is probable that the “chain” restaurants have
conducted their own research, but have not shared this information due to proprietary
rights. Koskela 2002, interpret this dimension interchangeably as “reliability” or
“food quality” because of the common features as explained. Responsiveness, as
defined by the SERVQUAL literature, is identified as the willingness of the staff to
be helpful and to provide prompt service to the customer. In full service restaurants,
customers expect the servers to understand their needs and address them in a timely
manner. The more responsive the service provided by the restaurant, the greater the
level of customer satisfaction.

2.3.3 Relationship between service quality and customer satisfaction

In the service environment, it is almost impossible to provide hassle free service

round the clock due to unique nature of services. It hardly matters how exceptional
the service an organization delivers, every organization still often makes mistakes in
meeting the expectations of more demanding customers, who have a propensity to be
more demanding and less loyal than ever before. It is impossible to ensure hundred
percent error free services to customers due to unique nature of services (Bitner,
1993).del Rio-Lanza et al. (2009) argue that even the most customer oriented
organization with the strongest quality program is unlikely to be able to eliminate all
service failures. Service failure causes customer dissatisfaction with the service
provider, and due to that customers may exit silently, spread a negative word of
mouth, raise their complaints to the operator, or continue with the same service
provider regardless of their dissatisfaction (Kim et.al. 2009).

32
Most researchers recognize that customer satisfaction is a distinct construct from
service quality, with service quality generally viewed as an antecedent to customer
satisfaction (Robinson, 1999, Voss et al 2004).

Customer satisfaction is also being defined as the result of a subjective comparison

between expectation and the perceived post-purchase accomplishments (Fecikova,
2004; Liljander and Strandvik, 1992; Oliver, 1997; Tse and Wilton, 1988; Wirtz and
Bateson, 1992) or a comparison between rewards and costs (Bolton and Drew, 1991;
Churchill and Surprenant, 1982; Yi, 1990). It involves the human’s cognitive and
affective processes, both psychological and physiological effects (Oh and Park,
1997). Parasuraman et al. (1985) suggested that the satisfaction can be examined
through the understanding of service quality gap, where SERVQUAL has been
developed to measure service quality based on the gap between consumers’
expectations and service perceptions. Musa et al. (2006) had raised concern on the
accuracy of SERVQUAL as the expectation may be changed based on previous
perception; thus it may be evolved over time as well. However, as SERVQUAL has
been the most widely used and tested service quality survey instrument, the validity
is perceived as well-accepted.

Satisfying customers is a core business challenge which has attracted considerable

research attention. The existing customer satisfaction literature is dominated by two
theoretical perspectives: the service profit chain (Heskett et al, 1994) and
SERVQUAL (Parasuranam, Zeithmal & Berry, 1985). In brief, the service profit 2
chain posits a positive relationship between staff satisfaction, service quality and
customer satisfaction leading, ultimately, to profitability. SERVQUAL also
recognizes the significance of staff satisfaction and service quality as drivers of
customer satisfaction. However, SERVQUAL differentiates the service quality
construct distinguishing between functional service quality (doing things nicely) and

33
technical service quality (doing things right). Priority is afforded to functional
service quality.

Recently, there have been a number of challenges to these perspectives. For example,
researchers have questioned the adequacy of the simple linear relationship proposed
by the service profit chain (Anderson & Mittal, 2000). Similarly, the priority
afforded to functional service quality by the SERVQUAL literature has been
disputed (Newman, 2001). Meanwhile the emerging Business Process Management
(BPM) literature also challenges the prevailing orthodoxy by predicating an
alignment between processes and service delivery as critical to customer satisfaction
(Armistead, Pritchard and Machin, 1999).

An important factor driving satisfaction in the service environment is the service

quality. On this matter, however, there is some controversy as to whether customer
satisfaction is an antecedent or consequence of service quality. One school of
thought refers to service quality as a global assessment about a service category or a
particular organization (PZB, 1988). Research conducted by PZB (1985) illustrated
instances where respondents were satisfied with a specific event, but did not feel the
organization offered overall high quality. Because most measures of customer
satisfaction relate to a specific evaluation of a service episode, customer satisfaction
is viewed as it relates to a specific transaction (Howard and Sheth, 1969; Hunt, 1979;
Singh, 1990); hence incidents of satisfaction over time result in perceptions of
service quality (PZB, 1988). Oliver (1981) stated that satisfaction soon decays into
one's overall attitude. From this perspective, service quality could be viewed as the
whole family picture album, while customer satisfaction is just one snapshot.

Recently, however, it has been argued that while the two concepts have things in
common, “satisfaction is generally viewed as a broader concept … service quality is
a component of satisfaction” (Zeithaml and Bitner, 2003, p. 85). Because satisfaction

34
derives from various sources, Bitner and Hubbert (1994) propose two ways of
viewing satisfaction: service-encounter satisfaction (i.e. satisfaction or dissatisfaction
with specific service encounters) and overall satisfaction (based on multiple
encounters or experiences). In other words, little satisfactions based on each service
encounter lead to overall satisfaction with the service.

Most services are intangible because they are performances rather than objects,
precise manufacturing specifications concerning uniform quality can rarely be set.
Because of this intangibility, the firm may find it difficult to understand how
consumers perceive their services. For developing a good customer service, the
service marketer should stress on tangible cues and also create a strong
organizational image. This can be done by communicating clearly to the customers
the features of the service being provided. The in-flight services offered by high
morale flight attendants (Ng, et al., 2011) affect customer satisfaction. In example
for the Singapore Airlines voted as the best airline in the world, the Malaysian
Airlines has been voted as the best in-flight services airline for the year 2007.
Therefore, it is suggested that the in-flight services affect customer satisfaction, thus
In-flight Services on low cost carrier have a positive relationship with customer
satisfaction.

According to Atilgan et al. (2008), in most of the service settings customers may not
received the level of service they expected before the actual service experience. The
performance of the service falls either under customers’ expectations or above
expectation. When expectations are exceeded, service is perceived to be of high
quality and also to be a surprise. When expectations are not met, service quality is
deemed unacceptable. When expectations are confirmed by perceived service,
quality is satisfactory. However, quality, which falls short of expectations, has a
greater effect on customer satisfaction than quality which exceeds satisfaction
(Zeithalm and Bitner, 2000). The notion that service quality and customer

35
 satisfaction are distinctive variables has achieved some degree of consensus among
researchers (Saha and Theingi, 2009).

The construct of service quality is evaluated by the actual service performance in

terms of particular service attributes in the specific context; whereas satisfaction is
measured by the customers’ overall service experiences (Oliver, 1993). Customer
satisfaction depends on a variety of factors, including perceived service quality,
customers’ mood, emotions, social interactions, and other experience-specific
subjective factors (Rust and Oliver, 1994). According to Crompton and Love (1995),
the two constructs are likely to be positively correlated, but unlikely to be linear.
Although researchers have generally agreed on the conceptions and distinctiveness
of service quality and satisfaction, their causal relationship is yet to be resolved
including in the airline service consumption.

Service quality and customers satisfaction are arguably in two core concepts that are
at the crux marketing theory practice (Sprang and Markoy, 1996). In today’s world’s
intense competition, the key to sustainable competitive advantage lies in delivering
high quality services that will turn to customers’ satisfaction (Shemwell et al., 1998)

2.4 COMPANY IMAGE

Corporate image may be defined as perception of an organization held in consumer

memory and works as a filter which influences the perception of the operation of the
company (Gronroos, 1998; Keller, 1993). Dobni and Zinkhan (1990) defined corporate
image as the representation of a brand in the consumer’s mind that is linked to an
offering. Keller, (1993) argued that corporate image can be seen as a set of perceptions
about a brand the consumer forms as reflected by brand associations.

36
According to Ngyun and Lelanc (2001) corporate image is related to the different
physical and behavioral attributes of the company, like; business name, architecture,
variety of goods or services, tradition, ideology, and to the feeling of quality
communicated by each person interacting with the clients of the company. The corporate
brand is intangible in nature and invaluable for the organization.

Robert and Dowling (2002) argued that the corporate brand is a valuable intangible
asset, that is hard to impersonate, and which may help corporation in achieving sustained
superior financial performance. Good brand image not only indicates that the brand has a
positive image but also exhibits a higher level of brand image strength in comparison to
other brands (Kim and Kim, 2005).

The image includes colors, symbols, words, and slogans that convey a clear, consistent
message and not simply the name (Berry et al., 1988). The brand image plays an
important role in product choice because consumers attempt to reinforce their self-image
by buying products that are congruent with their self-image. For example, a consumer
may drive an Alfa Romeo rather than a generic brand because the Alfa Romeo reflects
the style and flair that the consumer sees in his or her personality. The consumer may
perceive that one brand is more desirable than its competitor’s solely because of the
difference in image (Schiffman & Kanuk, 1991). Image is considered to influence
customers’ minds through the combined effects of advertising, public relations, physical
image, word-of-mouth, and their actual experiences with the goods and services
(Normann, 1991).

Theory always underlies good practice. Theory identifies and defines the key variables
in the process under consideration and explains the interrelationship among them. In the
process for managing corporate identity, the fundamental variables are corporate
identity, corporate communication, corporate image, and corporate reputation. Corporate
image and corporate reputation are in the eye of the beholder. Image is the mental
picture that people have of an organization, whereas reputation constitutes a value

37
judgment about the company's attributes. Corporate image is the figure that people have
of a company. Corporate reputation, on the other hand, represents a value judgment that
people make about the firm as a whole or one or more of its attributes. Corporate images
typically can be fashioned fairly quickly through specific actions and well-conceived
communication programs, whereas reputations evolve over time as a result of consistent
performance (and they can be reinforced through corporate communication).

Clearly, a corporation must be concerned about its image and reputation amongst its
important constituent groups. In academic phraseology, these significant constituent
groups are called stakeholders. They are groups that have a stake in the company.
Stakeholders are affected by the actions of the company and, perhaps more importantly,
their actions can affect the company. Consequently, its image and reputation in the eyes
of its stakeholders is critical to the company. The principal stakeholders with which most
large firms must be concerned especially the customers.

The company's image and reputation vis-a-vis its various stakeholders will influence
their willingness to provide or withhold support. Thus, if its customers develop a
negative perception of the company or its products, its sales and profits assuredly will
decline. For example is the Nissan Motor Company. In the 1980s it enjoyed the image of
a customer-oriented, trendsetting automobile manufacturer with an excellent reputation
for automotive engineering. By the mid-1990s, however, as a result of a series of poor
decisions, its image as a cutting-edge producer, along with sales and profits, had
declined precipitously. It is now perceived by customers as well as other stakeholders as
a conservative maker of stodgy, boxy cars with its engineering reputation compromised.
A strong positive image with the general public can be beneficial to the firm. Research
suggests that a prominent corporate image and an outstanding reputation are
consequential factors in attracting a high quality workforce. Other examples are Merck,
Microsoft, and Hewlett-Packard, for instance, has traditionally attracted topnotch job
applicants because of their sterling reputations.

38
A consistent image among the various stakeholder groups, however, is also essential.
Although it is prudent to stress different facets of the firm's identity to its various
publics, the firm should avoid projecting an inconsistent image for two key reasons.
First, some of the concerns of the stakeholders overlap. For example, the financial
community and the shareholders would have many of the same financial and strategic
concerns about the company. In fact, many shareholders rely heavily on the advice of
experts from financial institutions. Both employees and the general public have an
interest in the overall prestige of the firm and the reputation of its products. A social
action group's criticisms, as in the example case of the Texaco boycott, whether
economically effective or not, are bound to influence some customers and affect the
company's public reputation. Of course, a regulatory agency such as the Occupational
Safety and Health Administration (OSHA) would focus narrowly on the firm's safety
record and policies but the company's employees and their labor unions also have a stake
in these matters.

The second and related reason for avoiding an inconsistent image is that the sundry
stakeholders are not separate, discrete entities. Membership overlaps. Consider the
example of a typical public utility where almost all of its employees are also customers
and a significant number may also be shareholders. Furthermore, it is not unlikely that
some of its employees will be active in environmental or consumer rights groups that
challenge the company on specific issues. It is also likely that some of the company's
bankers and regulators will be among its customers.

2.4.1 Related Study on Company Image

Corporate image can be defined as perceptions of an organization reflected in the

associations held in consumer memory (Keller, 1993). A planned and well
managed corporate image is the most promising marketing strategy for attracting
current consumers (Fombrun & Shanley, 1996). A company with a good image is
more likely to stand out in the marketplace because it draws both repeat

39
customers and trial users (Connor & Davidson, 1997). The more favorable a
company’s image, the more likely consumers will assume that the services
tendered by that company are better, of higher quality and worth more in actual
price (Dowling, 1994).

Previous research has identified corporate image as an important factor in the

overall evaluation of the service and the company (Gronroos, 1984). The
relationship between corporate image, service quality and loyalty has been
investigated in previous studies. Andreassen & Lindestad (1998) noted that
corporate image has an impact on customer’s choice of company when service
attributes are difficult to evaluate. Zeithaml & Bitner (1996) also asserted that
image can influence customers’ perceptions of the goods and services offered.
Even though previous studies have presented the role and the effect of corporate
image, it is still unclear whether there is a direct relationship between image and
consumer behavior (Bloemer, Ruyter & Pascal, 1998). Understanding the role
and the effect of company image in the customer retention decision is a key issue
that has received little attention in the service marketing area.

According to Dowling (1988) corporate image is a construct similar to the

construct of self-concept in psychology. Both terms refer to a set of thoughts and
feelings having reference to an object (e.g. a company or person). Building on
Keller (1993), substituting brand with organization may give a definition of
corporate image: “Perceptions of an organization reflected in the associations
held in consumer memory.” Associations are close to what is termed schemas in
cognitive psychology, i.e. “People’s cognitive structures that represent
knowledge about a concept or type of stimulus, including its attributes and the
relations among attributes” (Brewer & Nakamura, 1984; Fiske & Linville, 1980).

Proof of the importance of company image was found in the Norwegian

Customer Satisfaction Barometer (NCSB). In all industries studied a positive

40
correlation between company image and customer satisfaction existed, and
customer satisfaction was positively correlated with customer loyalty in eight
industries. Interestingly, in the service station industry a positive correlation
existed between company image and customer loyalty. This may be due to the
nature of the service (generic) and the structure of the industry (large
concentration, and similarity in service concepts) which means there are hardly
any switching costs associated. Andreassen and Lindestad in their studies found
that corporate image played an active role in the formation of customer loyalty
among existing customers (Andreassen & Lindestad, 1998a, 1998b).Since an
existing consumer's attitude toward a company is primarily experience based,
positive/negative disconfirmation may strengthen/ weaken the customer's
impression of and attitude toward the company.

2.4.2 Relationship between company image and customer satisfaction

Selnes (1993) advocated that brand reputation should be incorporated into the
explanation of loyalty together with satisfaction. Andreassen and Lindestad
(1998) argue that intrinsic cues (such as product attitudes) are strongly tied to the
product or service, whereas extrinsic cues such as corporate image are only part
of the product or service. If intrinsic cues have low predictive value or the
customer has low confidence in the evaluation of those, extrinsic cues will be
consulted more intensively (Hoch and Ha, 1986; Olson and Jacoby, 1972; Selnes,
1993).

Ostrowski et al. (1993) measured service quality and customer satisfaction in the
airline industry on the transactional level; yet, they concluded that “positive
experience … over time following several good experiences will ultimately lead
to positive image and preference”.

41
Corporate image can be treated as an outcome from accumulated attitude derived
from experience and/or direct or indirect market communication (Andreassen and
Lindestad, 1998). As a consequence for the relationship level, it is not apparent
whether corporate image should be seen as independent from perceived quality
and customer satisfaction (as proposed by Andreassen and Lindestad (1998) or as
dependent (as proposed by Selnes (1993)). Corporate image is defined in this
study as the customer’s emotional stereotypes associated with the airline
company. Therefore, treating corporate image and to the cognitive service quality
aspects (Andreassen and Lindestad, 1998) as influential to customer satisfaction
is suggested.

Corporate image can be defined as perceptions of an organization reflected in the

associations held in consumer memory (Keller, 1993). A planned and well-
managed corporate image is the most promising marketing strategy for attracting
current consumers (Fombrun & Shanley, 1996). A company with a good image
is more likely to stand out in the market place because it draws both repeat
customers and trial users (Connor & Davidson, 1997). The more favorable a
company’s image, the more likely consumers will assume that the services
tendered by that company are better, of higher quality and worth more in actual
price (Dowling, 1994).

Similarly in the airline industry, the more favorable image passengers have, the
more likely negative elements about the airline will be filtered out of passengers’
consciousness. Passengers who have a favorable image of the airline consider a
particularly bad flight to be an exception to their impression of the airline
(Ostrowski et al., 1993). Thus, a favorable image separates and distinguishes the
company from its competitors. Previous research has identified corporate image

42
as an important factor in the overall evaluation of the service and the company
(Gronroos, 1984).

The relationship between corporate image, service quality and loyalty has been
investigated in previous studies. Andreassen & Lindestad (1998) noted that
corporate image has an impact on customer’s choice of company when service
attributes are difficult to evaluate. Zeithaml & Bitner (1996) also asserted that
image can influence customers’ perceptions of the goods and services offered.
Even though previous studies have presented the role and the effect of corporate
image, it is still unclear whether there is a direct relationship between image and
consumer behaviour (Bloemer, Ruyter & Pascal, 1998). Understanding the role
and the effect of corporate image in the customer retention decision is a key issue
that has received little attention in the service marketing area. Neither the role
nor the effects of corporate image in the airline industry have been fully
investigated yet (Nguyen & LeBlanc, 1998).

Hence, airline image is considered as a significant variable that influences

passenger’s choice of Airline Company. An organization’s image is an important
variable that positively or negatively influences marketing activities. Image is
considered to have the ability to influence customers’ perception of the goods
and services offered (Zeithaml & Bitner, 1996). Thus, image will have an impact
on customers’ buying behaviour. Service literature identifies a number of factors
that reflects image in the customer’s mind. Image is considered to influence
customers’ minds through the combined effects of advertising, public relations,
physical image, word-of-mouth, and their actual experiences with the goods and
services (Norman, 1991). Similarly, Grönroos (1983), using numerous researches
on service organizations, found that service quality was the single most important
determinant of image. Thus, a customer’s experience with the products and
services is considered to be the most important factor that influences his or her
minds in regard to image.

43
2.5 THEORETICAL FRAMEWORK

Past researchers have explained about customer satisfaction, service quality and
company image in Airline Industry. There were 4 factor lies under service quality which
were caring, reliability, responsiveness and tangibility. In order to study customer
satisfaction towards service quality and company image offered by Firefly we have
construct the theoretical framework as below:

COMPANY IMAGE (H2)

( Gronroos, 1998; Keller, 1993; Dobni &
Zinkhan, 1990; Ngyun & Lelanc, 2001)

SERVICE QUALITY (H3)

 Caring (Bloemer, Ruyter, &
Wetzels, 1999; Cunning, Young, & CUSTOMER
Lee, 2004; Park et al., 2004) SATISFACTION (H1)
(Churchill & Surprenant,
 Reliability (Kim, 2010; 1982; Arnould &
Parasuraman, Zeithaml & Berry, Price,1993; Westbrook &
1988) Oliver, 1991; Price et
al.,1995)
 Responsiveness (Parasuraman t
al.,1985; Eggert & Ulaga 2002;Kim,
2010)

 Tangibility (Lehtinen & Lehtinen,

1991; Parasuraman et al.,1988)

Independent Dependent
Variables (IV) Variables (DV)

44
2.6 HYPOTHESES

The objective of this study is to identify the relationships that exist between customer
satisfaction and its two prerequisites; service quality and company image in the airlines
industry. To this end, three hypotheses have been developed, based on those
relationships identified in the previous section:

2.6.1 Customer satisfaction factors:

Ho = There is no significant influence between company image and services

quality on the customer satisfaction Firefly management.
H1 = There is significant influence between company image and services
quality on the customer satisfaction Firefly management.

2.6.2 Company image factors:

Ho = There is no significant influence between company image and

customer satisfaction of Firefly management
H2 = There is significant influence between company image and customer
satisfaction of Firefly management

2.6.3 Service Quality factors:

Ho = There is no significant influence between quality services and

customer satisfaction of Firefly management
H3 = There is significant influence between quality services and customer
satisfaction of Firefly management

45
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 PREAMBLE

According to Reich (1997), research methodology is the attempts to approximate a

compatible collection of assumption and goals underlying method and two ways that are
interpreted and evaluated are the results of carrying out the methods. This chapter
involves the process of gathering and analyzing data to get the significant results. Its
discussed various research components that make up the main activities of this research
process. The purpose of this chapter is needed to formulate the research model,
hypotheses and methodology. In the methodology, there are study variables,
measurement of variables, population/sample, data collection, and plan data analysis.

3.2 STUDY VARIABLES

There are two types of variables that are always used in research study, which are
dependent variable and independent variables. Therefore, this study is also using
dependent and independent variables.

3.2.1 Dependent Variable

According to Malhotra (2004), dependent variables are the variable that

measured the effect of the independent on the test unit. Test unit are individual,
organization or entities who response to independent variable. The dependent

46
 variable that is used in this research study is the factors that influence the
customer satisfaction.

3.2.2 Independent Variables

According to Malhotra (2004), independent variables are variable or alternatives

that are manipulated and whose effects are measured and compared. This study
has using two independent variables which are service quality and company
image.

3.3 MEASUREMENT OF VARIABLES

3.3.1 Questionnaire design

Questionnaire is a structured technique for data collection that consists of a series

of questions, written or verbal, that a respondent answers. It is a formulated
written set of questions to which respondent record their answer. This type of
instrument is to gather the data on the study of customer satisfaction towards
service quality and company image offered by Firefly.

The questionnaire is design properly and divided into three sections which are
section A, section B, Section C and D. That sections consist of a series of
question in which carefully developed in order for the researcher to get most
accurate information on the topic being studied.

47
3.3.1.1 Section A

In this section, the question being asked will gain proper information
regarding the respondents’ demographic background such as gender, age,
marital status, nationality, level of income, and others. It is more on
nominal scale. The examples are gender, age, marital status, nationality
and type of flight destination.

3.3.1.2 Section B

For this section, the question being asked will reflect the dependent
variable being studied. The variable is customer satisfaction. The
respondent will choose the answer by circling the answer which they feel
best reflecting their level of agreement, from strongly disagree to strongly
agree on the 1 to 5 scale provided. For the first section the questions using
the Likert Scale (strongly disagree, disagree, neutral, agree and strongly
agree).

3.3.1.3 Section C

Through this section, the question being asked will reflect the
independent variable that has been studied. The variable is company
image. The respondent will choose the answer by circling the answer
which they feel best reflecting their level of agreement, from strongly
disagree to strongly agree on the 1 to 5 scale provided. For the first

48
 section the questions using the Likert Scale (strongly disagree, disagree,
neutral, agree and strongly agree).

3.3.1.4 Section D

Through this section, the question being asked will reflect the
independent variable being studied. The variable is the service quality
which comprises four dimensions such as caring, reliability, tangibility
and responsiveness. In-flight services question been asked to know
customer preference. The respondent will choose the answer by circling
the answer which they feel best reflecting their level of agreement, from
highly dissatisfied to highly satisfy on the 1 to 5 scale provided. For the
first section the questions using the Likert Scale (highly satisfied,
satisfied, neutral, dissatisfied and highly dissatisfied).

3.4 POPULATIONS AND SAMPLE

3.4.1 Population

In line with the scope of the project, the population refers to the passengers of
Firefly that departure and arrived at Subang Airport. Populations for the study
that will be conducted on customer satisfaction towards service quality and
company image offered by Firefly are 300 respondents.

49
3.4.2 Sampling size

According to Uma Sekaran, sample is subset of the population. It comprises

members selected from it. In other words, some, but not all, elements of the
population would come from the sample. Within the customers of the Subang
Airport, a sample of 200 customers will be selected. This sample size is
considered appropriate; because of not all population in Subang Airport is the
passenger of Firefly. The sampling size for the study is small. This sampling
design has the list bias and offers the more generalizability. This is to draw the
need sample for the study among passengers as long as they are the customer of
Firefly and make it possible to generalize such properties or characteristics to the
population elements.

3.4.3 Sampling techniques

3.4.3.1 Non-Probability Sampling

This study used non-probability sampling to get the population needed to

collect the related data. In non-probability sampling design, the elements
in the population have no probability or predetermined chance of being
selected as a sample subjects. Non-probability sampling is often used
because the procedures used to selected units for inclusion in the sample
are much easier, quicker and cheaper when compared with probability
sampling. In this study, there are two method were used to selected the
respondents which is using purposive and convenience sampling.

50
3.4.3.2 Purposive Sampling

Purposive sampling is a targets a particular group of people. This

sampling will be used if the desired population for the study is rare or
very difficult to locate and recruit for a study. On this study, purposive
sampling is very important to achieve the sampling of the respondents.
Purposive sampling represents a group of different non-probability
sampling techniques. Also known as judgmental, selective or subjective
sampling, purposive sampling relies on the judgment of the researcher
when it comes to selecting the units (e.g. people, cases, organizations,
events, pieces of data) that are to be studied. Usually, the sample being
investigated is quite small. In our study, we have selected the passenger
of Firefly located at Subang Airport and age at least 18 and above as our
purposive sample.

3.4.3.3 Convenience Sampling

In conducting this survey, convenience sampling was chosen since it was

easily available and can be use for quick diagnosis of situation. Through
this type of sampling, it reduces much burden because if one respondent
refuse to answer the questionnaire, the researcher will easily pick another
respondent. Convenient sampling means the collection of information
from member of population who are conveniently available to provide it.
We has used convenience sample of passenger who used Firefly services
while they are waiting to departure or had been arrived in Subang Airport
during the study. From 200 distributed questionnaires, all 200 have been
collected; only 150 can be used due to error and incomplete answers.

51
3.5 DATA COLLECTION
There are two types of data collection methods for this study, which are primary
data and secondary data.

3.5.1 Primary data

According to Uma Sekaran (2004), primary data are individuals’ focus group,
panels of respondents specifically set up by the researcher and from whom
opinions may be sought on specific issue from time to time, or some unobtrusive
sources such as trash can. The Internet could also serve as primary data sources
when questionnaire are administered over it.

For this research purpose, this study has used primary data as one of data
collection method. According to Malhotra (2004), primary data can be defined as
data that originated by researcher for the specific purpose of addressing the
research problem. There are several types of ways to collect primary data such as
personal interviews and questionnaire form. Therefore, for this study, the
researcher decides to use questionnaire as a method in obtaining information.
The questionnaires were distributed to the selected respondents and they asked to
respond to these questionnaires. The selected respondents that are asked to
respond to these questionnaires are customers of Firefly at Sultan Abdul Aziz
Shah Airport in Subang, Selangor.

3.5.2 Secondary data

According to Malhotra (2004), secondary data are data collected for some
purpose other than the problem at hand. For this research study, secondary data
can be defines as data gathered and recorded from someone else prior to the
current needs of researcher. The advantages of secondary data for the researcher

52
are it is easily collected and inexpensive than the primary data that costly.
Besides that, the important of secondary data for this study is to be the major
sources to support it. The sources of secondary data comprised in this study are
internal sources and external sources.

3.5.2.1 Internal Sources

Internal sources consist of information gathered within Firefly Sdn Bhd,

such as organization’s background, monthly report and news, customer
complaints data, website of Firefly (www.fireflyz.com.my) and other
related information to this study.

3.5.2.2 External Sources

External sources are sources that are obtained from outside of the
organization. Most of secondary data are gathered from journals article.
All of these journals are significant to the researcher to complete this
research study. Besides that, textbooks (principal of marketing, marketing
research, quality management, customer behavior, service marketing,
relationship marketing and others) are also used in this study in gathering
appropriate information.

53
3.6 PLAN DATA ANALYSIS

3.6.1 Factor analysis

Factor analysis is a general name denoting a class of procedures primarily used

for data reduction and summarization (Malhotra, Hall, Shaw & Crisp, 1996).
Factor analysis helps to reduce a vast number of variables (for example, all the
questions tapping several variables of interest in a questionnaire) to a
meaningful, interpretable, and manageable set of factors. A principal-component
analysis transforms all the variables into a set of composite variables that are not
correlated to one another.

For instance, suppose a researcher measured in a questionnaire the four concepts

of mental health, job satisfaction, life satisfaction, and job involvement, with 7
questions tapping each. When we factor analyze these 28 items, we should find
four factors with the right variables loading on each factor, confirming that we
have measured the concepts correctly.

Factor analysis is a method for investigating whether a number of variables of

interest Y1, Y2, : : :, Yl, are linearly related to a smaller number of unobservable
factors F1, F2, : : :, Fk .

The fact that the factors are not observable disqualifies regression and other
methods previously examined. We shall see, however, that under certain
conditions the hypothesized factor model has certain implications, and these
implications in turn can be tested against the observations. Exactly what these
conditions and implications are, and how the model can be tested, must be
explained with some care.

54
The reliability of the measurement scales was asses using factor analysis. The
questions were analysis using a principle component extraction with variance
(orthogonal) rotation and using Eigen value greater than 1. The screen plot was
used as a guide to decide on the number of factors to be extracted, latent roots
criterion and the method used (Eigen value greater than 1) were Keiser Meyer-
Olkin.

Factor analysis is a collection of methods used to examine how underlying

construct influence the response s of number of measured variables. There are
two type of factor analysis: exploratory and confirmatory. Exploratory factor
analysis (EFA) to attempts to discoverable the nature of the construct influencing
a set of response while confirmatory factor analysis test weather a specified set of
construct is influencing responses in a predicted way. For our study,
confirmatory was used to measure the most important factors that can contribute
to the improvement on the customer satisfaction of Firefly management.

There are two element were examined for the customer satisfaction of Firefly
management, company image and services quality. In the services quality there
are four sub-variables were involved toward dependent variable.

3.6.2 Statistical Package of Social Science (SPSS)

0nce the questionnaire completely returned by respondent, the questionnaire will

be edited to ensure the respondent data are coded computed and processed. All
the data will be coded and edited by using Statistical Package for Social Science
(SPSS) version 19.0. SPSS is use to process the data to make analysis for the
research to be more accurate. There are some analysis will be conducted by
researcher:

55
3.6.2.1 Reliability test

To test the reliability of the set of items forming the scale a measure of
construct reliability (Cronbach’s alpha) was computed. Cronbach’s alpha
is useful in measuring how well a set of variables or items measure a s
ingle, one dimensional latent construct. The alpha values of 0.70 or
greater represent satisfactory reliability of the items measuring the
construct (dimension) and reliability less than 0.60 is considered poor
(Sekaran, 2003).

The items will be tested to determine how well items are positively
correlated to customers satisfaction are service quality and company
image.

3.6.2.2 Frequency Distribution

Frequency distributions were obtained for all the personal data or

classification variables. According to Zikmund (2003) frequency
distribution refers to a set of data organized by summarizing the number
of times a particular value of a variable occurs. It is done to obtain a
count of number of responses associated with the different values of
variable and to express these counts in percentage term. It is also used
to identify the number of times various subcategories of phenomenon
occurs, from which the percentages and cumulative percentages of any
occurrence can be calculated. The frequency data may be used to
construct a bar chart.

56
Frequency distribution is used to analyze the respondents’ demographic
or background such as gender, age, marital status, nationality of
respondent and type of flight destination. By looking at the frequencies
between the groups divided, we may conclude what the degree of
satisfaction between these group on service quality and company image
of Firefly.

3.6.2.3 Descriptive Statistic

A descriptive study is a statistic used to describe or summarize

information about a population or sample (Zikmund, 2003). A descriptive
statistic such as maximum, minimum, means were obtained for the
interval scaled independent and dependent variable. Mode describes the
most or frequently occurring numbers. Mean is a set of scores divided by
the numbers of scores. It is center of the data. Median is the middle point
of scores (Sekaran, 2003).

The value of mean, standard deviation, and variance of three variables are
customer satisfaction, service quality and company image. Frequency and
descriptive statistics is used especially to analyze the demographics
variables. Researchers use descriptive analysis to collect, compiling, and
summarizing and presenting data into graphical forms such as graphs,
table, or numerical forms such as averages and percentages derived from
them so that one can evaluate the data set easily.

57
3.6.2.4 Pearson Correlation

To justify strength of the correlation between the dependent and

independent variable parts, Pearson correlation coefficient was used in
this analysis. Pearson Correlation is use and will indicate the direction,
strength and significant of the bivariate relationships of all the variables
in the study (Sekaran, 2003). By using this technique, it can help to
indicate how one variable is related to one another. The simple
correlation coefficient is a statistical measure of the co-variation, or
association two variables. The correlation coefficient, r, ranges from +1.0
to -1.0. If the value of r is 1.0, there is a perfect positive linear (straight-
line) relationship. If the value of r is -1.0, there is a perfect negative linear
relationship or a perfect inverse relationship (Zikmund, 2003).

Scales below have been outlined by David (1971) which is can be used to
interpret the relationship between independent variable and dependent
variable.
I. 0.80 and above very strong relationship
II. 0.50 to 0.79 strong relationship
III. 0.30 to 0.49 moderate relationship
IV. 0.10 to 0.29 low relationship
V. 0.01 to 0.09 very low relationship

Pearson correlation is used for looking the relation of the customer

satisfaction towards service quality and company image offered by
Firefly.

58
3.6.2.5 Multiple Regressions Analysis

Whereas the correlation coefficient r indicates the strength of relationship

between two variables it give us no idea of how the variance in the
dependent or criterion variables will be explained when several
independents variables are theorized to simultaneously influence. In this
study we will look independent variables which consist of service quality
(caring, reliability, responsiveness and tangibility) and company image
(establishment, they portray themselves, brand equity and identity)
correlated to dependent variable in varying degree, but might also be
intercorrelated (i.e., among themselves).

59
 CHAPTER 4

DATA ANALYSIS

4.1 PREAMBLE

This chapter represents the data and findings for the analysis after conducting research
and getting information from respondents. There are four measurements was used in data
analysis through SPSS which is Descriptive Analysis, Reliability Test, Factor Analysis
and Multiple Regression and Correlation. Descriptive Analysis was used to answer first
objective to indicate the responses on customer satisfaction towards service quality and
company image offered by Firefly. Reliability Test or the Cronbach’s Alpha was used to
determine the significant on the customer satisfaction towards services quality and
company image offered by Firefly. To identify the important factors that can contribute
to the improvement of customer satisfaction on Firefly management, the researcher have
used Factor Analysis testing. Meanwhile Multiple Regression Analysis and Correlation
was conducted to identity the regression between independents and dependents variable.
Further explanation will be in this chapter.

4.2 PROFILE OF RESPONDENTS

At this point in time, the researcher believes it feasible to make critical by analyzing the
below presented data and highlighting its important findings in this section. This result
will suggests any future analysis of the competitive structure of the airline industry
should take into account on the low-cost effect.

60
Figure 4.1: Gender

From the above chart, the total respondents for this study were 150 whereby
58.7% of the respondents are female whereby 41.3% are male respondents. Most
of the respondent in this study is female respondents. During the survey, most
respondents are willing to answer was female. This may occur due to female
population is high than men. Maybe at the same time female love to fly with
firefly, since the route of aircraft is frequent fly in same destination.

Figure 4.2: Age

From the above chart, 9.3% of respondents are aged between 50 to 59 years old,
27.3 % of respondents are aged between 40 to 49 years old. Respondents
between 30 to 39 years old represent 36.7 % of respondents while respondents
aged between 20 to 29 years old represent 26.7% from 150 respondents. In this
study, most respondent that answered the question age between 30 to 39 years.

61
While less respondents ages between 50 to 59 years answered the question. From
the above chart, the age distribution of the respondents is between 20 and 59
years. The majority of them are in the age category of 20 to 39 years old. Based
on the age, mostly the customers’ which use this aircraft is age between 30 to 39
years old. This maybe occur due to most of the respondent are business traveler.
The lowest ages of customers’ represent in this study are 50 to 59 years old.
Meanwhile the respondents in age 20 to 29 years old also love to fly with firefly.
We predict than this age of customer come from student type of customer.

Figure 4.3: Marital Status

The chart above, show the marital status on the Firefly users. About 61.3 % of
the total respondents were in the married status, while 32 % of total respondent
were single. Only 6.7 % were in the others status, which is can be considered as a
single parent or divorce. Since Firefly offer good price of fare, married couple
may choose this airline for their travelling activities. They will benefit from the
low fare since they travel with family and others. Business traveler also mostly
are married individual since their age are mostly 30 years and above.

62
Figure 4.4: Nationality

Figure 4.4 show the pie chart of nationality of the respondents. About 80 % of the total
respondents were in the local respondents. 13.3 % of them in the permanent status and
only 6.7 % in the Non- resident’s status. Majority of the respondents are in the local
respondents. The total population in Malaysia until July 2011 is 28,728,607. Meanwhile
the estimated population growths 1.576%, with birth rate are 21.08 births/1,000
populations (sources indexmudi home). Since basically the routes are domestic, the result
may show why most of the respondent are Malaysian Residence.

63
4.3 DATA ANALYSIS

4.3.1 Reliability test

No Variables No. of items Cronbach's

Alpha
1 Customer Satisfaction 5 0.72
2 Company Image 8 0.77
3 Caring 5 0.78
4 Reliability 11 0.79
5 Tangibility 5 0.61
6 Responsibility 5 0.62
Table 4.1: Reliability Test

The table above shows the reliability test or the Cronbach’s alpha reliability
coefficients to determine the significant on the customer satisfaction towards
services quality and company image offered by firefly. While the services
qualities are including caring, reliability, tangibility and responsibility. The
distribution of the Cronbach’s alpha for six variables are between 0.61 to 0.79
with items of questionnaire between 5 and 11. For the customer satisfaction,
company image, caring and reliability have a good range with Cronbach’s alpha
value are 0.72, 0.77, 0.78 and 0.78 respectively. The lowest value of cronbach’s
is tangibility with Cronbach’s alpha value is 0.61 with 5 numbers of items.

Basically the closer the reliability coefficients near to 1, the higher the internal
consistency reliable. In general, reliabilities that are less than 0.5 are considered
to be poor, those in the range of 0.7 are to 0.6 acceptable and those over 0.8 are
good George and Mallery (2003). Thus, the Cronbach’s alpha for Firefly
customer satisfaction is considered good as others variables. Therefore the all
variables are considered as reliable since it is in the range of 0.6 and above. Thus,

64
the Cronbach’s alpha for Firefly customer satisfaction is considered good as
others variables. Therefore the all variables are considered as reliable since it is
in the range of 0.5 and above. It means all the 39 items of questions are reliable
and can be used for the study. Since all the variables are reliable according to the
reliability test, this finding can be trusted accepted since the data are good.

4.3.2 Descriptive Analysis

1st Objective: To indicate the responses on customer satisfaction towards

service quality and company image offered by Firefly.

No Statements Mean Standard

Deviation
1 I like flying with Firefly. 3.77 0.549
2 My expectations toward Firefly were met. 3.23 0.625
3 My satisfaction with Firefly has increased from time 3.08 0.597
to time
4 My impression toward Firefly has improved. 3.34 0.713
5 I have a more positive attitude towards Firefly. 3.29 0.856
Table 4.2: Descriptive Statistic for Customer Satisfaction

Based on the table above, it shows mean and standard deviation of customer
satisfaction of the Firefly management. The highest mean of the statement is “I
like flying with Firefly” with value 3.77. While the second highest is referred to
the statement “My impression toward Firefly has improved “with mean value
3.34. The lowest feedback from the customer is “My satisfaction with Firefly has
increased from time to time” with mean value 3.08. The distribution mean and
standard deviation of the result above is between 3.08 to 3.77 and standard
deviation 0.549 to 0.856.

65
 No Statements Mean Standard
Deviation
1 This airline has a good image in the minds of 3.49 0.903
passengers
2 This airline has a better image than its competitors. 3.03 0.915
3 I always had a good impression of this airline. 3.52 0.833
4 Firefly has a reputation for being fair in its 3.58 0.884
relationship with their customer.

5 Firefly provides information about the company 3.49 0.954

and services.
6 This airline has a good reputation in the market. 3.13 0.598
7 Firefly always offered a good value for money to 3.42 0.753
the passengers
8 The promotion offered through printed and 3.25 0.876
electronic media really works.
Table 4.3: Descriptive Statistic for Company Image

Referred to the table above, it shows the result of descriptive analysis for
company image of Firefly. There are about eight statements were involved in the
section. The highest mean value is “Firefly has a reputation for being fair in its
relationship with their customer” with value is 3.59. Followed the second highest
is “I always had a good impression of this airline” with mean value 3.52. From
the eight statements above, show the lowest mean is “This airline has a better
image than its competitors” with value is 3.03. These also show the distribution
of the mean and standard deviation is between 3.59 to 3.03 and 0.598 to 0.954.

66
 No Statements Mean Standard
Deviation
1 Employees willing to help passengers 3.87 0.444
2 Employees capabilities to answer passenger’s 3.75 0.626
questions
3 Full attention is given to passenger in needs 3.95 0.541
4 Employee sincere in solving problems 3.85 0.689
5 Quick response for passenger problem 3.77 0.549
Table 4.4: Descriptive Statistic for Caring

While for the table 4.4 is referred to the caring section which is including in the
services quality part. There are five questions were involved to represent the
meaning of caring toward Firefly management. The highest positive response is
“Full attention is given to passenger in needs” with mean value is 3.95, while the
second highest is “Employees willing to help passengers “with 3.87. The lowest
rating on the caring section is referred to the “Employees capabilities to answer
passenger’s questions” with mean value is 3.75. From the outcome it shows that
distribution of the mean and standard deviation is between 3.75 to 3.95 and 0.444
to 0.689.

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 No Statements Mean Standard
Deviation
1 Flight arrival 2.99 0.851
2 Flight departure 2.97 0.814
3 Level of waiting time to claim luggage 3.42 0.830
4 Level of safety of personal belonging 3.48 0.632
5 Level of service in registration process 3.55 0.720
6 Courtesy from sales staffs 3.67 0.709
7 Representative availability 3.49 0.849
8 Representative knowledge 3.85 0.560
9 Friendliness of the staffs 3.63 0.902
10 Complaint resolution 2.96 0.975
11 Responsiveness to enquiry 3.31 0.969
Table 4.5: Descriptive Statistic for Reliability

Table 4.5 shows the descriptive analysis for reliability, which is second element
in the quality services in the Firefly. There are about eleven questions that related
to the reliability elements in the study. The highest value of the result is referred
to the statements about “Representative knowledge” with mean value is 3.85.
The second highest is “Friendliness of the staffs” with mean value is 3.62 and
0.802 for standard deviation. The lowest response from the studies is “Complaint
resolution” with mean 2.96 and 0.975 for the standard deviation. Based on the
result, show the distribution of the mean is 2.96 to 3.85, while 0.560 to 0.975 for
standard deviation.

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 No Statements Mean Standard
Deviation
1 Cleanliness of the toilet 3.41 0.697
2 Convenience of the passenger seat 3.02 0.680
3 Convenience of the legroom 2.87 0.642
4 Realibility of the Air Craft provided 2.77 0.812
5 Level of convenience of in-flight ambiance 2.96 0.732
Table 4.6: Descriptive Statistic for Tangibility

In the table 4.6 shows the result section about tangibility of Firefly. About five
questions represented info about tangibility of the study. There are two positive
responses from the result which are “Cleanliness of the toilet” and “Convenience
of the passenger seat” with mean value are 3.41 and 3.02 with 0.697 and 0.680
for standard deviation. While there are three response questions given a negative
result which are “Convenience of the legroom”, “Reliability of the Air Craft
provided” and “Level of convenience of in-flight ambiance” with mean value
each of them are 2.87, 2.77 and 2.96 respectively. The distribution of the result is
2.77 to 3.41 for mean while 0.642 to 0.812 for standard deviation.

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No Statements Mean Standard
Deviation
1 Level of responsiveness from call centre 3.41 0.614
2 Level of convenience booking and buying through 3.65 0.705
counter
3 Level of easiness and convenience on booking and 3.47 1.060
buying through website
4 Responsiveness from cabin crews to passenger request 3.89 0.756
5 Convenience of flight schedule meet customer need 3.49 0.801
Table 4.7: Descriptive Statistic for Responsiveness

Based on the outcome above, show the table mean and standard deviation for
responsiveness for Firefly. Five questions were involved in the evaluation above.
The highest mean is “Responsiveness from cabin crews to passenger request”
with mean value is 3.89. The second highest is “Level of convenience booking
and buying through counter” with mean value is 3.65. in the result above, show
the lowest result is related to the “Level of responsiveness from call centre” with
mean value 3.41. From the result also show the distribution for mean result is
between 3.41 to 3.89 and 0.614 to 1.060 for standard deviation.

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Figure 4.5: Mean for Overall Factor

From the overall mean, it shows the highest value of mean is caring elements which
covered about 3.84 out of 5 Likert Scale. Followed by the second highest, responsibility
with has total mean is 3.58. The others elements such as customer satisfaction, company
image, reliability and tangibility have a total mean 3.34, 3.37, 3.39 and 3.01 with the
neutral level in the scale of measurements. From the overall section, the distribution of
the mean value is between 3.01 and 3.84, while 0.420 to 0.526 for standard deviation.

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4.4 FACTOR ANALYSIS TESTING

2nd Objective: To identify the important factors that can contribute to the
improvement of customer satisfaction on Firefly management

Factor analysis is a collection of methods used to examine how underlying construct

influence the response s of number of measured variables. There are two type of factor
analysis: exploratory and confirmatory. Exploratory factor analysis (EFA) to attempts to
discoverable the nature of the construct influencing a set of response while confirmatory
factor analysis test weather a specified set of construct is influencing responses in a
predicted way. For our study, confirmatory was used to measure the most influencing
statements in the customer satisfaction of Firefly management.

There are two element were examined for the customer satisfaction of Firefly
management, company image and services quality. In the services quality there are four
sub-variables were involved toward dependent variable.

Table below are the outcome of the factor analysis testing:

4.4.1 Customer Satisfaction

No Statements Loading
1 I like flying with Firefly. 0.685
2 I have a more positive attitude towards Firefly. 0.589
3 My satisfaction with Firefly has increased from time to time 0.544
4 My impression toward Firefly has improved. 0.544
5 My expectations toward Firefly were met. 0.543
Table 4.8: Factor Analysis Testing on Customer Satisfaction

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In the factor analysis result, show the dependent variable which is customer
satisfaction for Firefly management evaluation. Five questions were evaluated
using confirmatory factor analysis. The result show the highest loading for
customer satisfaction is “I like flying with Firefly” with loading value is 0.685.
While the others questions such as “I have a more positive attitude towards
Firefly.”, “My satisfaction with Firefly has increased from time to time”, My
impression toward Firefly has improved” and “My expectations toward Firefly
were met” have a loading factors between 0.543 to 0.589.

4.4.2 Company Image

No Statements Loading
1 This airline has a good image in the minds of passengers 0.746
The promotion offered through printed and electronic
2 0.743
media really works.
Firefly has a reputation for being fair in its relationship
3 0.674
with their customer.
4 I always had a good impression of this airline. 0.634
5 This airline has a good reputation in the market. 0.632
Firefly always offered a good value for money to the
6 0.591
passengers
Firefly provides information about the company and
7 0.584
services.
8 This airline has a better image than its competitors. 0.447
Table 4.9: Factor Analysis Testing on Company Image

Table 4.9 show the result of company image for Firefly management evaluation.
There are eight statements were involved in the studies to represented of
company image element. There are two statements were have a good loading

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factor namely “This airline has a good image in the minds of passengers” and
“The promotion offered through printed and electronic media really works” with
loading factor value are 0.746 and 0.743. While the others statements have a
range between 0.447 and 0.674. The lowest result of the company image
evaluation is “This airline has a better image than its competitors” with loading
factor 0.447.

4.4.3 Services Quality

4.4.3.1 Caring

No Statements Loading
Employees capabilities to answer passenger’s
1 0.757
questions
2 Full attention is given to passenger in needs 0.754
3 Employee sincere in solving problems 0.643
4 Employees willing to help passengers 0.623
5 Quick response for passenger problem 0.527
Table 4.10: Factor Analysis Testing on Caring

Table 4.10 shows the outcome of caring section on the factors analysis
result. There are five statements were referring to the caring section. The
good statement is “Employees capabilities to answer passenger’s
questions” with loading factor is 0.757. Followed by statement “Full
attention is given to passenger in needs” with the loading factor 0.754.
The lowest loading in the caring section is “Quick response for passenger
problem” with loading factor is 0.527.the distribution of the loading value
is between 0.527 and 0.757.

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4.4.3.2 Reliability

No Statements Loading
1 Level of service in registration process 0.835
2 Friendliness of the staffs 0.737
3 Level of safety of personal belonging 0.714
4 Representative availability 0.701
5 Level of waiting time to claim luggage 0.649
6 Flight departure 0.592
7 Responsiveness to enquiry 0.591
8 Flight arrival 0.555
9 Complaint resolution 0.508
10 Representative knowledge 0.477
11 Courtesy from sales staffs 0.388
Table 4.11: Factor Analysis Testing on Reliability

In the table 4.11, show the result of factors analysis for reliability element
in the Firefly management. Eleven statements were included in the tables
above which is have a difference type of loading factors such as high,
good, moderate and low loading factors in the result above. The highest
loading, mean the good of evaluation from the respondents “Level of
service in registration process” has a very good loading factor with
loading value is 0.835. While the others three statements namely
“Friendliness of the staffs”, “Level of safety of personal belonging” and
“Representative availability” with each of loading are 0.737, 0.714 and
0.701. There are two statements were in the lowest levels which are
“Representative knowledge” and “Courtesy from sales staffs” with
loading factors 0.477 and 0.388. The distribution of the outcome is
between 0.388 and 0.835.

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4.4.3.3 Tangibility

No Statements Loading
1 Convenience of the passenger seat 0.784
2 Level of convenience of in-flight ambiance 0.644
3 Cleanliness of the toilet 0.569
4 Convenience of the legroom 0.468
5 Reliability of the Air Craft provided 0.458
Table 4.12: Factor Analysis Testing on Tangibility

Based on the output above, show there are five statements were involved
in the tangibility element. Only one statement was in the good loading
which is “Convenience of the passenger seat” with loading value is 0.784.
While there are two statements in the moderate loading, “Level of
convenience of in-flight ambiance” and “Cleanliness of the toilet” with
loading factor are 0.644 and 0.569. There are two statements in the low
categories which is “Convenience of the legroom” and “Reliability of the
Air Craft provided” with each of them have a less than 0.5 loading
factors.

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4.4.3.4 Responsiveness

No Statements Loading
1 Responsiveness from cabin crews to passenger request 0.827
Level of convenience booking and buying through
2 0.708
counter
Level of easiness and convenience on booking and
3 0.600
buying through website
4 Convenience of flight schedule meet customer need 0.555
5 Level of responsiveness from call centre 0.371
Table 4.13: Factor Analysis Testing on Responsiveness

Responsiveness is a part of element in the quality services to measure the

customer satisfaction on the Firefly management. There are about five
statements were represented to evaluated responsiveness section. Based
on the output above, show the highest loading in the result above is
“Responsiveness from cabin crews to passenger request” with loading
factor 0.827. While the good loading is referring to the statement about
“Level of convenience booking and buying through counter” with loading
value is 0.708. The weakness of the responsiveness is referred to the
statements about “Level of responsiveness from call centre” and with
loading factor is 0.371.

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4.5 MULTIPLE REGRESSION ANALYSIS

3rd Objective: To determine the significant relationship of company image

and services quality toward customer satisfaction of the Firefly
management.

Once the reliability analysis certified that the survey instrument is reliable, the
multiple regressions were also needed to determine whether the independent
variables are correlated with the dependent variable. From the output derived
from SPSS analysis, the researchers obtained the results on regression output
such as R square, ANOVA and coefficients that lead to the hypothesis testing.

The result show regressing of two independents variables again the customer
satisfaction of Firefly.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 0.680a 0.462 0.455 0.34235
a. Predictors: (Constant), services_quality, Company image
Table 4.14: Model Summary of Regression

ANOVAa
Model Sum of df Mean F Sig.
Squares Square
Regression 14.815 2 7.408 63.205 .000b
1 Residual 17.228 147 0.117
Total 32.044 149
a. Dependent Variable: Customer satisfaction
b. Predictors: (Constant), services_quality, Company image
Table 4.15: ANOVA

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This regression output obtained has come with three relevance results which are
shown in model summary table, ANOVA table and Coefficients table. Based on
the table above show the value of the R is equal to 68 per cent on the correlation
of the two independents variables with the value of customer satisfaction on
Firefly. Furthermore in the model summary, R square is equal to 46.2 per cent
which has explained the total variance of the services quality on the Firefly
Company.

The rest of 53.8 per cent cannot explain by the regression analysis due to
omission of some important independent variables. Therefore when most of the
variations in dependent variables have been explained by the independent
variables, the variables seems to be accurate and can be accepted

Beside P-Value, ANOVA table which is Sig in the last column, F test is
considered the testing for overall model in the analysis. The model is significant
when F-test Value in the ANOVA table is greater than F-Value in Table
statistics. The ANOVA table above shows that the F Value of 63.205 is
significant at the 0.000 level of significant. In the degree of freedom (df) in the
same table, the first number (2) represent the number of independent variables
and the second number is (147) represent the total of the complete responses for
all the variable in the equation.

The results of F statistic which is 63.205 is also known as F calculation when the
mean square regression (MSR=7.408) is divided by mean square Error
(MSE=0.117). Therefore based on the decision rule, the researchers should reject
Null Hypothesis if F value on the calculation is greater than F in the table with
5 per cent level of significant. Since F calculation is equal to 63.205 which is
greater than F2,147 =3.05, the researchers should reject Null Hypothesis with 5
per cent level of significant and accept the Alternative hypothesis. In overall, all

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independent variables, services quality and company image can be used on the
predicted customer satisfaction on the Firefly.

Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) 0.235 0.312 0.753 0.453
1 Company image 0.284 0.071 0.324 4.013 0.000
Service quality 0.611 0.117 0.420 5.202 0.000
a. Dependent Variable: Customer satisfaction
Table 4.16: Coefficient Table

Referred to the table coefficient above, show the value to explained the
significant of hypothesis testing. The coefficient of determination is to help to
find which among the two independent variables influence on the Customer
Satisfaction of Firefly. By looking at the Beta column under Unstandardized
Coefficient, all the variables were significant which are services quality and
company image with p-value less than 0.05 level of significant.
Hence, based on the coefficient table and hypothesis testing above, the regression
equation can be derived.

Y= 0.235 + 0.284X1 + 0.611X2

Y = Customer Satisfaction
X1= Company Image
X2= Services Quality

As a result in the coefficient table, shows two variables were significant

influence toward Customer satisfaction of the Firefly. Based on the predicted
model above, we can concluded, for every increment changes in the company

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 image will be influencing on the Customer Satisfaction on the Firefly
management about 0.284, while the other variable is constant. On the services
quality significant, for every increment of the services quality will lead on the
positive influence on the customer satisfaction of Firefly management about
0.611 while the other variable is constant. Since the all of independent variables,
company brand and services quality are very important to the Satisfaction of
Firefly management, the management should consider to improve the highest
beta in the result above, followed with others variable with have a significant.

4.6 HYPOTHESIS TESTING

The coefficient table in Table 4.16 explained the significance of hypothesis testing. It
helps to find which among the two independent variables influences most the variance in
evaluation of customer satisfaction. Looking at the Beta column under Standardized
Coefficient, the highest number in Beta is 0.611 for services quality which is significant
with 0.01 level of significant. Followed company image with beta value is 0.284. Based
on decision rule, at least one of the Betas (β) in independent variables is not equal to
zero at significant level of 0.05, the alternate hypothesis can be accepted. In the other
word, it can be said that if the P-value less than 0.05, the group of independent variable
does show a statistically relationship with the dependent variable.

4.6.1 First Hypothesis

Ho = There is no significant influence between company image and services

quality on the customer satisfaction Firefly management.
H1 = There is significant influence between company image and services quality
on the customer satisfaction Firefly management.

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The t-test for each independent variable such as company image and quality
services can be obtained from the table 4.16 Coefficient Table which is 0.284 and
0.611. The t-test values are derived by dividing the value of coefficient (b) by the
standard error coefficient (Sb). The t-test table at 0.05 significant levels is 2.919.
Therefore based on coefficient table, hypothesis testing shows that there are
significant relationship between customer satisfactions, company image and
service quality of Firefly.

4.6.2 Second Hypothesis

Ho = There is no significant influence between company image and customer

satisfaction of Firefly management
H2 = There is significant influence between company image and customer
satisfaction of Firefly management

Since t-test value 4.013 is greater than 2.919 at 0.05 significant level, Ho should
be reject. As a result, it can be said that company image influence on the
customer satisfaction of Firefly management.

4.6.3 Third Hypothesis

Ho = There is no significant influence between services quality and customer

satisfaction of Firefly management
H3 = There is significant influence between services quality and customer
satisfaction of Firefly management

Since t-test value is 5.202 were greater than 2.919 at 0.05 significant levels, Ho
cannot be accepted. As a result, it can be said that quality services was
influencing on the customer satisfaction of Firefly management

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4.7 CORRELATION OF COEFFICIENT ANALYSIS

Correlation r
Very Strong Positive Correlation 0.90 to 1.00
Strong Positive Correlation 0.70 to 0. 89
Moderate Positive Correlation 0.50 to 0. 69
Low Positive Correlation 0.30 to 0. 49
Very Low Positive Correlation 0.00 to 0. 29
Table 4.17: Correlation of Coefficient

Variables Customer Company Image Services

Satisfaction Quality
Customer 1
Satisfaction
Company Image 0.603** 1

Services Quality 0.635** 0.663** 1

**. Correlation is significant at the 0.01 level (2-tailed).

A Pearson Analysis was used to test the correlation on the study to determine the
relationship of company image, services quality and customer satisfaction of
Firefly management. The purpose of the analysis is to measure the strength and
the direction of linear relationship between two variables. The value of r is
between -1 < r < +1. The positive and negative sign used for positive linear
correlation and negative linear correlation, respectively.

In the result above, shows the relationship in the company image and services
quality on the customer satisfaction of Firefly management. There are three
relationship were involved in the outcome above, which are customer satisfaction
versus company image, customer satisfaction versus services quality and lastly

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company image versus services quality with correlation value are 0.603, 0.635
and 0.663 respectively. On average all the correlation have a distribution between
0.603 and 0.663.

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 CHAPTER 5

CONCLUSION AND RECOMMENDATION

5.1 PREAMBLE

This chapter will discuss on the conclusion of finding for the study. The finding has been
discussed in further detail in order for us to understand it’s clearly. As we find out that
based on the result, caring, responsiveness and reliability is the most important response
from customer with the highest mean value. While from the six sections of the studies,
most of the section needs at least one statement need to be improve and monitor to
achieve a good evolution of the management. All the relationship between each section
has a positive relationship to each other. Furthermore recommendation has been
suggested certainly for the purpose of improvement of Firefly management, future
researcher and university.

5.2 CONCLUSION

Based on the reliability test, all variables can be accepted to the studies, because most of
the variables have at least 0.5 and above for Cronbach’s value. The first objective was
answered by finding on the responses on customer satisfaction towards service quality
and company image offered by Firefly. Based on the result the highest response was for
factor caring, responsiveness and reliability. Among 5 statements of caring the higher
customers answer ‘’ is full attention is given by to passenger’’ with 3.95 in mean. The
second importance factor is responsiveness, which highest mean statement is
‘’responsiveness from cabin crews to passengers request’’ with mean 3.89 out of 5
statement under this dimension. The third importance on customer’s satisfaction during

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this study is reliability. Based on 11 statements, statement on ‘’represent knowledge’’
was the highest mean answer by customers.

This finding is consistent with studies by Parasuraman t al., (1985) and Eggert and Ulaga
(2002). The findings of studies that ability of service provider to properly use reliability
and responsiveness in services in term of registration of enrolment examination and
academic record will increase undergraduate perceived value and lead to increase
academic staff satisfaction.

According to Parasuraman et al., (1991) customer satisfaction can be achieved by

organizations that display consistency, reliability and fairness in the provision of their
service. Responsiveness and reliability in a service management is importance, where
the ability of an organization to use reliability, responsiveness in delivering service will
increase customer’s perception of value, may lead to higher customer’s satisfaction
(Sureshander, 2002).

Descriptive analysis show that mean of customer satisfaction have range around 3.08 to
3.77 out of 5 likert scale. It is show that most of the respondents response as neutral for
their answers. Eight statements have been asked in Company image factor. Most of the
answers show the distribution between 3.03 and 3.58. In the scale of measurement, the
result still in range neutral result, this has neither negative nor positive result.

Company image also is important for customer’s satisfaction. Image tells customer
everything about the company. It is more into the reputation, brand name of the
company. Image can be positive and negative for the company. It based on how the
company shows the image towards customers. In researchers study, airline must have a
good image, to attract customers to using their services. The image was also connected
with comparison with others competitors in airline industry. Therefore they must build a
good relationship between their customers to ensure reputation of company in mind of
customers. The communication through the media, magazine, promotion, will support to

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build better company image at present and future. The image includes colors, symbols,
words, and slogans that convey a clear, consistent message and not simply the name
(Berry et al., 1988). Gronroos (1982) tried to improve this model by focusing on what
customers perceive; therefore they see service quality as three dimensions which include
functional and technical quality and image.

While for the services quality, caring is an important part to enhanced customer
satisfaction of Firefly. On the mean result show the range of mean is between 3.75 and
3.95. From that range, the result skewed to the positive way, which indicates customer
agreed about caring for customer on the Firefly management is quite good.

The lowest result mean in this study is under dimension tangibility. The lowest mean
under tangibility dimension is convenience of the legroom while the highest mean is
awareness of customers towards cleanliness of toilets in airline services. .

To determine the significant relationship of company image and services quality toward
customer satisfaction of the Firefly management, multiple regression analysis had been
done to achieved the outcome. Based on the result, it show two of the independent
variables, namely services quality and company image have significant influence on the
customer satisfaction. With the result also, the researcher can determine how far the
influencing of the independents variables affect the performance of customer satisfaction
on Firefly management. It also show that the independents variables also given a
positive influence on the customer satisfaction of Firefly management.

Furthermore, correlation of coefficient also had been done to determine the relationship
for each variable. As a result, there are three relationship were involved in the studies
above. Three of relationship, namely customer satisfaction versus company image,
customer satisfaction versus services quality and company image versus services quality
have significant on the 0.01 level of significant. The correlation of the result is between
0.603 and 0.663, which is in the positive moderate correlation.

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In overall, there is significant relationship between company image and services quality
on the customer satisfaction Firefly management. Since the result tells all the
independents variables such as service quality and company image are very important,
the management should consider improving on those factors.

The study also shows that variables are reliable to use on further study in customers
satisfaction in airline industry. Result show every increment in service quality and
company image will led into customers’ satisfaction. In order to maintain and sustain the
level of satisfaction on customer’s, management should improved on low mean analysis,
since this tell which element should be enhance to increase their customers satisfaction.
To identify the important factors that can contribute to the improvement of customer
satisfaction on Firefly management, confirmatory factors analysis was used in order to
achieve the objective. There are six element were used to determine which factors that
can contributed the high performance of the Firefly management which are customer
satisfaction, company image, reliability, caring, tangibility and responsiveness. The
importance factors contribute to the improvement of customer satisfaction on firefly
management on service quality is reliability with factor loading .835 on statement ‘’level
of service in registration process’’ from 11 statements. Therefore, by maintaining and
sustain the performance of delivered a good services in registration process, it may lead
onto customers satisfaction. Under reliability statements ‘’friendliness of the staffs’’ was
second importance in service quality, followed by ‘’level of safety of personal
belonging’’ with loading factor .714 and ‘representative availability’ with loading .701.
This result consistent with studies in ‘Reliability has been regarded as the most critical
factor for US customers based on both direct measures and importance weights derived
from regression analysis (PZB, 1988).’ For the restaurant industry, reliability translates
into the freshness and temperature of the food (the promise), and receiving the food
error-free and as ordered the first time (dependably and accurately).

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The second importance factor is responsiveness on statement ‘responsiveness from cabin
crews to passenger request’ with loading factor .827. Followed by statement ‘level of
convenience booking and buying through the counter’’ with .708 factor loading. Only
two statement achieve on 0.7 an above the 5 left between 0.371 and 0.600. Therefore the
firefly management should improve on responsiveness. This studies consistent with
Furrer et al. (2000) who stated a positive relationship between masculinity (China is
high) and responsiveness.

The third importance factors are tangibility, with loading statement .784 ‘Convenience of
the passenger seat’. The management firefly should keep and sustain on the convenient
passenger seat since this statement was in highest loading, compare with other statement
on level of convenience on flight ambience (.644). Cleanliness of the toilet (.569),
convenience on the legroom (.468) and the lowest statement under tangibility is .458
with statement on reliability of the air craft provided. These show that Company should
make an effort to enhance the reliability of the air craft provided to gain customer
satisfaction.

Many firms and companies especially service organizations pay attention to service
quality as an important component for their competitive advantage because they believe
that it is a mandatory factor for retaining and improving their level of competitiveness.
Marketers recognize that service quality has increasingly become a critical factor in
success of any businesses. Therefore, marketers should have to ensure the delivery of
superior service values to their customers, especially companies that are active in the
banking sector (Parasuraman, Zeithaml, and Berry 1985, 1988).

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5.3 RECOMMENDATION

After conducting the research at Firefly Sdn Bhd about customer satisfaction towards
service quality and company image, the researcher has comes out with several
recommendations that would be beneficial for the organization to be applied in order for
them to improve the customer satisfaction among their customers. The researcher hopes
that the recommendations would be valuable for Firefly Sdn Bhd.

Study by Ostrowski et al (1993) shows that airlines could acquire and retain customer
satisfaction by continuing to provide high quality services. Empirical studies of demand
for airlines services show that service quality is central to the choice or airlines by
passengers, both for business and leisure travel (Abrahams, 1983; Etherington and Var,
1984; Young et al. 1994). Thus, providing service quality should be the main agenda for
all airlines in order to remain competitive.

Based on the result of study, the firefly management should stepping forward to address
what the most factors that contribute towards customers satisfaction such as, in caring,
responsiveness, reliability, tangibility and company image. The immediate action should
be taken on hygiene factors, knowledgeable of staff, and long term planning action
should be address for factor that have lowest factor loading in the factor analysis testing
which are courtesy from sales staff, quick response for passenger problem, the airline
have better image than competitor, level of responsiveness from call centre and
reliability on aircraft provided.

Based on the result, training and organizational development should be greatly expanded
on Firefly staff. According to the international Civil Aviation Organization (ICAO),
human factor is a notion to identify how people interact to their living and working
condition; it is related to their interaction with hardware, software, and the average
surroundings, as well as their connections with others. In the context of aviation
industry, the integration of this relationships measures whether an expert will control an

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aircraft safely or not. To balance these relationships, an expert should have a specific
quality, skills and knowledge and distinct personality characteristics HanHui, (1997).

Flying operations are complex, which need fast and accurate decisions, thus, the
‘operational skill’ could be only achieved and maintained from the extensive training.
The three criteria, skill, knowledge and personality characteristics are integrated to each
other, which in turn, measures personal professionalism. Thus, in terms of training of
skills, knowledge and personality, trainers must considers every factors: knowledge,
skills and personality. Moreover, a completed education system should be created for
every level of professional: pilot, controller, mechanic, crew and so on. It should be an
on-going process, which is integrated into the on the job training and the company’s
culture environment. Furthermore, the training of skill, knowledge, and personality
characteristics should be incorporated in Firefly educational system.

As response for passenger problem and level of responsiveness from call centre was
need for improvement, Firefly can hire cabin crew and call centre staff proficiency in a
variety of foreign languages is such way to response from various possible nationalities
of their customers. For cabin crew, they can hire cabin crew from other country such as
Mexican, Korean, Japanese and South African. As they now have a multiracial
composition in their crew, who are proficient in foreign languages besides English, such
as Indian and Mandarin, but they can be encouraged to master more foreign languages
by way of bonus and cash incentive schemes.

The term hygiene factor is a term widely used in the field of business management. It is
related to the study of motivation and job satisfaction in the workplace. Factors that
affected job satisfaction in a positive manner are classified as motivation factors. These
include achievement, recognition, responsibility and advancement. Factors that affected
job satisfaction in a negative manner are classified as hygiene factors. These include
working conditions, company policies, relations with coworkers and pay.
Firefly should focus of internal service quality such as quality of the workplace; job

91
content and variation, recruitment, selection and sufficient training of employees,
management support, rewarding employees for good job performance, and recognizing
employees for good job performance.

Furthermore, this airline should put evaluation and reward systems into practice to
ensure good performance is monitored and rewarded (e.g. with cash bonuses or free
tickets). Other than that, this management of Firefly should empower front-line
employees. This is a tool for improving employee motivation, as having the power to
own, manage and resolve a problem makes roles more meaningful and interesting.
Moreover, in improving the service quality to the customer, Firefly should provide the
frequent service education and training can enhance the ability of front-line staff to
provide greater levels of customer care. It also prepares them for handling the differing
demands of customers. To overcome the courtesy issue of their sales person, company
should develop courtesy programmed to ensure all their sales person have excellent
attitude in order to maintain relationship with current and potential customer

From the study findings, it shows that tangibility is the least important factors in service
quality that contributes towards customer satisfaction offered by Firefly. The term
“tangibles”, or “physical quality”, usually refers to the tangible elements of the services
including the appearance of the physical facilities, tools and equipment, personnel,
communication materials, other physical features used to provide the service, and other
customers in the service facility. Lehtinen and Lehtinen (1991) further divided their
“physical quality” into physical product (a good or goods consumed during the service
production process) and physical support. Parasuraman et al. (1988) used the term
“tangible” in their SERVQUAL model as one of the “solid” dimensions used to assess
service quality.

While each passenger may have his or her own idea of what makes an airline seat the
best on the flight (some love catching a glimpse of the countryside or icy clouds while

92
others prefer the easy access of an aisle seat), some seat standards make everyone’s
“ideal seat” list. Regards to that, Firefly should maintain the level of convenience in
passenger seat where they should offer optimum comfort, safety and convenience to
their passengers.

Initially, Firefly should improve the size of the aircraft where currently they are using
the Fokker-50 aircraft which is the cabin with 4 seats to a row seating is a bit narrow and
had the feeling of being in a small airplane. Firefly should take immediate action by
changing their aircraft to a bigger size such as the new size of aircraft that made the
cabin seem to be roomier and more comfortable. This additional aircraft will be used to
strengthen Firefly’s current network footprint through increased frequency for high
demand sectors which is a strategy in increasing the number of passengers and
reinstatement of some Penang based routes that were previously suspended as a result of
a network rationalization due to unfavorable economic conditions.

The comfort, reliability, speed, and safety of the new airline's aircraft all will enable it to
be the airline of preference for virtually all business, government, and organizational
travelers from both within and outside the target region when traveling to or within the
region, and it also will be preferred by most leisure and personal travelers, including
those from with the target region, as well.

Greater reliability and punctuality of the aircraft, augmented by state-of-the-art

navigational devices that permit operation under a wider range of weather and visibility
conditions, will enable the airline to compete most favorably on those bases also, and
will ensure the least likelihood of flight cancellations, postponements, and missed or late
connections.

Frost and Kumar (2000) suggested that airline services are homogeneous, and that
airlines differentiate their offerings by providing better service quality (Hamill, 1993),
by offering lower fares (Gourdin, 1988), or by cutting costs (Labich, 1994). Thus,

93
although some airlines focus on offering low fares, they sacrifice the delivery of some
service-quality dimensions (such as tangibles).

Recently, many company used the social network such as Facebook, Twitter, Tagged,
Email, SMS, MMS and others, purpose build strong connection towards customers. By
building the strong connection with the customer, it does build strong relationship
between company and customers. This will also enhance their company image. A
technology is the way asses to have connection beyond limit. The information about the
company and customer’s feedback will give a benefit towards company in improving
their performance.

In addition, to maintain in customer satisfaction Firefly need to look at the certain

recommendation that will enhance their service quality. They can provide shuttle
transfer connecting Subang Airport to KLIA, providing feeder traffic for both Firefly
and Malaysia Airlines. Moreover to enhance their service, they can introduce Online
Check-in. It’s a simple concept and the platform software is already being used by MAS.
We believe this is a great ‘nice-to-have’ feature as it will attract more business
executives who do not want the hassle of being in the airport for too long (1-hour prior
to departure). Online-check-in also helps to reduce ground staff dependency and long
queue at counters. A general bag drop and tagging counter is sufficient to cover for all
destinations for online check-in passenger. Online-check in also allows passengers to
check in for return flights which is very ideal for day trippers like me.

Furthermore to increased customer they should have more focus promotion and road
tours at universities and colleges located in Subang, Shah Alam, Damansara as students
are potential long-term customers that travel frequently back to hometown or for
holidays. As their price is affordable they should increase their target market to remain
competitive in the industry.

94
Another marketing program to enhance their company image is to build relationship
with companies by establishing key accounts management that allows special rate to
executives of the companies and also payment via company accounts rather than
employee’s credit card. This could be an opportunity for Firefly as agencies/companies
such as Petronas, Iskandar Malaysia etc have executives travelling between Firefly
destinations very frequently. Hence they can continue expansion to new routes not
covered by other airlines (Subang – Kuching, Subang – Singapore) as well as venturing
into a new hub at south part of Malaysia.

As customer satisfaction will lead to customer loyalty, Firefly should to link up with
Enrich (MAS loyalty programmes). Loyalty programmes like Enrich and low-cost does
not blend well. It’s always seen as a liability that adds cost to the airline. However
Firefly should start consider having a frequent flyer programme so that customer’s
loyalty can be managed and retained. A simple approach is to link up with MAS’s
Enrich and gain a reduced amount (for example 50%) of the actual miles/distance. The
system is already there and won’t burden the company that much. As for lounge access,
dedicated counters etc, those can be introduced at later stage. At this point we think it’s
sufficient to just have the option for passenger to get some miles from Firefly flights.

95
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