A new hybrid simulation-based assignment approach for evaluating airlines with multiple service quality criteria

Evaluation of airlines based on service quality criteria can help to improve the processes of airlines, and also can give guidance to travel agencies to provide better choices for passengers and tourists. In this study, a hybrid simulation-based assignment approach is proposed to deal with multi-criteria decision-making problems with a group of decision-makers. A probability distribution is used to model decision-makers’ opinions and constructing a stochastic decision matrix. Then some efficient multi-criteria decision-making methods are utilized for evaluating alternatives in a simulation process. The proposed approach is applied to a problem of evaluation of five airlines with respect to opinions of 58 experts on 28 criteria. The results show the efficiency of the proposed to handle decision-making problems with a large number of experts. Moreover, the evaluation results are more reliable than the other decision-making approaches because of simulating decision-makers’ opinions, using multiple methods and evaluating based on aggregative results.     

Impact of e-business on air travel markets: Distribution of airline tickets in Korea

Early e-business activity in the airline industry was limited to the provision of flight schedule information to customers on websites. Recently, however, many airlines have expanded the capability of their web sites for selling tickets to make use of this cheap distribution channel. Here, we explore the impacts of airline e-business on the performance of air ticket distribution channels. Through a conjoint analysis, we suggest a model to estimate the change of market sales for each distribution channel. The impact of e-business on air travel markets and some implications on e-business strategy for both airlines and travel agents are also identified through an empirical survey.     

Building a barrier-to-imitation strategy model in the travel agency industry

This study explores travel agency industry-specific barriers to imitation by first reviewing the literature on the barriers to imitation and the effects of barrier reductions on travel markets. This is the first attempt to explore and identify the external and internal barriers to imitation in the travel agency industry. It is also the first to examine the development of competitive advantages through the building of a barrier-to-imitation strategy, which is the conceptual model from the perspective of travel agency practitioners. A three-round Delphi research design was adopted to look into the present barrier-to-imitation strategy performance measures of travel agencies. Qualitative interviews with the chief executive officers of the top 15 large-scale travel agencies provided additional insights. The results show that Taiwanese travel agencies consider five external barriers, six internal barriers, and six developing barriers-to-imitation advantages, and four performance indicators of barrier strategies. This study is quite innovative in that no one else so far has analysed or tried to discern the issues of barriers to imitation, towards proposing an optimal strategic model for enforcing barriers to imitation. Finally, the construct of developing competitive advantages by building a barrier strategies model for travel agencies can help address practical and theoretical needs.     

The strategic impact of airline group diversification: The cases of Emirates and Lufthansa

The airline industry is a diverse sector, requiring the support of a varied range of ancillary businesses such as maintenance, catering and travel agencies to carry out its activities. Many of these supporting businesses demonstrate the potential to drive wider profit margins despite generating lower revenues than the airlines themselves, making them attractive investment opportunities in a sector prone to volatile and often lacklustre trading. This study investigates two of the largest diversified airline groups, Germany's Lufthansa Group and Dubai's Emirates Group, each adopting a distinct approach towards diversification that may serve as a model for airline groups worldwide. The areas investigated were Cargo, Maintenance, Catering and Travel Services. The research found that whilst diversification may not always present the most attractive option financially, strategic factors can often outweigh such concerns. Business units studied were found to have variable prospects; particularly in the case of Catering, a sector on the rise – versus in-house Maintenance, which for airlines, is likely to see decline. The pursuit of third party revenue streams to offset weak internal trading and growth in competencies were found to be the key drivers of success. Interplay between segments was also apparent, showing that a well-organised diversification strategy can achieve robust cross-functional benefits and deliver significant value to the parent organisation.     

The decline of the traditional travel agent model

This article analyzes the struggle between traditional travel agencies and airlines to gain control of the Spanish airline services market. Also analyzed is the strong emergence of a third player, online travel portals that act as online travel agencies. We use a multinomial logit model to study the influence of 27 socio-economic factors and trip attributes on passenger purchase channel choice. The results show that the profile of a passenger who has a greater likelihood of making his/her bookings online is that of a young person, a student or educated to a high level, a habitual traveler, booking a simple journey and using an LCC. The factors linked to an increased likelihood of making purchases by phone include: being male, middle-aged, on a business or short trip, and the passengers usually use a travel agency. Finally, passengers who are over 65 years of age, with a lower academic level, who use a travel agency and are going to make a more complicated journey, are more likely to purchase their tickets in-store.     

Voluntary overbooking in commercial airline reservations

This paper studies a voluntary overbooking model under rational expectation equilibrium to promote cooperation between customers and airlines, maintain goodwill of customers, and maximize the expected total returns to airlines. A decision tree analysis is constructed for both customers and airlines. Sensitivity analysis is conducted in both realistic and simulated no-show random variables for validation. The findings suggest considerable mutual benefits associated with a ‘voluntary overbooking’ policy that emphasizes mutual cooperation between passengers and commercial airlines. The main underlying assumption of the paper is that customers are willing to provide valuations to airlines seeking volunteers for overbooking. The originality of the proposed model is the incorporation of elements of the Rational expectations hypothesis into classical overbooking models gleaned from the literature.     

An investigation into traveler preferences and acceptance levels of airline ancillary revenues

This study determines traveler preferences and acceptability levels for a range of airline ancillary products and services by employing an on-line passenger survey to examine booking preferences as well as attitudes toward a selection of air and non-air travel components sold by the airlines. The survey results are combined with expert opinions collated from a recent international conference, along with secondary data, to generate an acceptance ranking which can be used by a range of airlines to formulate their ancillary revenue strategies. It is found that airport car parking and checked baggage charges proved to be the most accepted commission based and unbundled products for airlines to sell respectively. Despite the recent focus and successes in ancillary revenues, however, it can also observed that none of the ancillary products and services examined in this study achieved a high take up rating suggesting that airlines can do much more to convince travelers of the benefit and value in airlines selling non-core products and services to them.     

The impacts of the Asian Economic Crises on Asian Airlines: short-run responses and long-run effects

The optimism shared by agencies such as IATA and the Air Transport Action Group on the growth in the demand for air travel has been temporarily derailed by the Asian economic crisis which appears to have dimmed the prospects for growth of many Asian carriers. Prospects for growth and expansion appeared to be excellent and were the driving force in setting the agenda for privatization, liberalization and the formation of new airlines. This paper discusses responses by Asian airlines with respect to redefining the scope of operations, capacity decisions, cost competitiveness, alliances and service decisions. It concludes with an argument that economic crisis appears to have shifted air transport policies in the direction of greater liberalization.     

Exploring the Moderating Effects of Value Offerings Between Market Orientation and Performance in Tourism Industry

Market orientation as a business strategy has recently been adopted in the travel and tourism industry, as well as other industries, to enhance performance. Value offerings have also emerged as a new research interest within the strategic marketing domain. Based on the theory of strategy–environment fit, this study investigates the relationship between market orientation (i.e. customer and competitor orientations) and performance, and the moderating role of value offerings (i.e. service emphasis and price emphasis), using a sample of 132 Taiwanese travel agencies. The research results obtained from hierarchical regression analyses indicate that only both customer and competitor orientations, but not value offerings, have positive and direct effects on performance. However, the results show that one dimension of value offerings, i.e. service emphasis, has a moderating role in the market orientation‐performance relationship. The managerial implications of these results are also discussed. Copyright © 2012 John Wiley & Sons, Ltd.     

The effect of code-sharing alliances on airline profitability

Code sharing and global alliances both have been increasingly adopted by airlines worldwide in recent years. A growing number of airlines, therefore, are embedded in networks of multilateral “coopetitive” (i.e., cooperative, but competitive) relationships that influence their product offering, pricing strategies, operating efficiency, market power, and their overall successes. There has been considerable research analyzing the benefits for airlines from joining global alliances, including bilateral code-sharing partnerships. However, the joint effect of code-sharing and global alliances on airline performance has not been fully investigated. In this paper, we study how the use of code-sharing strategies and their structural embeddedness into global alliances may impact airline performance. Using a unique dataset compiled from Flight Global and Airline Business's Annual Airline Alliance Report, the paper empirically investigates the joint benefits of code-sharing partnerships and global alliances on airline profitability. The results based on a group of 81 airlines during the 2007–2012 period show that the profit margin of an airline is positively associated with the number of code-sharing partners it has. Furthermore, the profit margin gains from code-sharing are greater when an airline has a higher proportion of its code-sharing partners in the same global alliance; i.e., allied code-sharing partners. Finally, we find no significant evidence that the percent of comprehensive code sharing partnerships to total partnerships has an impact on profit margin.     

UK air travel preferences: Evidence from an East Midlands household survey

Air travel preferences of the general public are examined from a household survey in the Charnwood Borough Council area of Leicestershire, within the East Midlands region of the UK. Survey analysis shows that individuals frequently fly using low-cost airlines for leisure purposes, and often travel long distances to access airports. The price sensitivity of respondents to changes in air fares varies across the sample. Most respondents agree that there are both economic benefits and environment disbenefits associated with aviation.     

Measuring airport quality from the airlines’ viewpoint: an application of data envelopment analysis

The main objective of this paper is to develop a model to determine the relative efficiency and quality of airports. This factor seems to have a strong effect on the airlines’ choice of hubs. Previous studies of airport quality have used subjective passenger data whereas in this study airport quality is defined from the airlines’ viewpoint. Accordingly, we have solicited airlines’ evaluations of a number of European and non-European airports by means of a detailed questionnaire. Statistical analysis of the median score has shown that these evaluations vary considerably relative to quality factors and airports. The key methodology used in this study to determine the relative quality level of the airports is Data Envelopment Analysis (DEA), which has been adapted through the use of principle component analysis. Of the set of West-European airports analyzed, Geneva, Milan and Munich received uniformly high, relative efficiency scores. In contrast, Charles de Gaulle, Athens and Manchester consistently appear low in the rankings.     

Differences in travel objectives between first‐time and repeat tourists: An empirical analysis for the Kansai area in Japan

This study investigates the differences in travel objectives between first‐time and repeat tourists. We conduct a questionnaire survey of travel agencies, which asked about specific tour plan for target tourists, their experiences and travel objectives in the Kansai area in Japan. We estimate a logit model for the relationship between travel objectives and visiting experiences. The results indicate that the first‐time tourists' main objective is to enjoy looking around sightseeing spots, while the repeat tourists' objective is simply to enjoy the stay, including the hotel visit and participating in events. Copyright © 2010 John Wiley & Sons, Ltd.     

What role for offsetting aviation greenhouse gas emissions in a deep-cut carbon world?

The long-term goal of containing average warming below the 2 °C limit requires deep cuts in emissions from all sectors. The fast growing global aviation industry has committed to reduce carbon emissions. Carbon offsetting is an integral element of the sector's strategy. Already, airlines offer voluntary carbon offsetting to those customers who wish to mitigate the impact of their travel. To ensure carbon offsetting can make a meaningful and credible contribution, this paper first discusses the science behind ‘carbon offsetting’, followed by the associated policy perspective. Then, against the context of different aviation emissions pathways, the paper provides empirical evidence of current airline practices in relation to offsetting mechanisms and communication. Building on these insights, the challenges of reducing aviation emissions and using carbon credits to compensate for ongoing growth are discussed. The paper concludes by proposing five principles of best practice for carbon offsetting that airlines can use as a basis to develop credible emissions strategies, and that could inform the sectoral framework currently being developed by leading aviation organisations.     

Airline choice by passengers from Taiwan and China: A case study of outgoing passengers from Kaohsiung International Airport

Understanding what factors passengers consider when selecting an airline is critical, as airlines can utilize this information in market segmentation and marketing strategies. However, few studies have explored how passenger demographics and the nationality/type of carrier (full service or low-cost; regional or international) affect the choice factors of passengers when selecting airlines. The main objective of this study was to explore the airline choice factors considered by passengers, compare the choices of passengers with different demographics, and analyze which factors are emphasized by passengers from Taiwan and China when selecting airlines. We conducted a questionnaire survey of outgoing passengers at Kaohsiung International Airport in relation to 22 factors underlying their choice of airline. Using factor analysis, we identified the five factors: ground services, convenience, in-flight services, price, and travel availability. We then utilized cluster analysis to identify four groups, each concerned with price, comfort, convenience, and ground services, respectively. Nationality, age, income, flying frequency, and purpose of travel lead to differences in deciding which factors were considered by cross-strait passengers. Passengers of different nationalities concerned with different factors when selecting airlines. Our findings can add to the completeness of existing research as well as provide airlines with reference in developing marketing strategies for different customer groups.     

Managing valuable Taiwanese airline passengers using knowledge discovery in database techniques

Taiwanese domestic airline passenger loads have declined over the past decade, and the inauguration of the Taiwan high-speed rail service in 2007 has further intensified the competition facing the airlines. Gaining and retaining valuable passengers thus has become essential in maintaining domestic airline profits in the increasingly competitive transportation market. This study develops a knowledge discovery in database process, including the recency, frequency, and monetary model and the C5.0 decision tree. The former is used to assess passenger value, while C5.0 is used to mine demographic, travel behavior, and critical service quality information for valuable passengers. The results identify valuable passenger characteristics that can help Taiwanese airlines maximize their number and retention.     

Organizational learning,operating costs and airline consolidation policy in the Chinese airline industry

This study investigated and reviewed organizational learning in the Chinese airline industry, which is dominated by state-owned or state-controlled airlines. This empirical research focused on the extensive scale of airline mergers and acquisitions among 12 Chinese airlines for the period of 1996–2014. This research aims to make a contribution towards addressing the general lack of academic reflection on the impact of organizational learning on airline performance during and after the completion of mergers and acquisitions. The empirical findings of this paper suggested that there was, in general, organizational learning experienced by Chinese airlines from their prior operating experience in improving operating costs. However, airline mergers in 2001/02 increased airlines' average operating costs, as most state-owned airlines are notorious for poor cost management. Significantly, the performance improvement among Chinese airlines was found during the post-merger periods in this study, and the increase in Chinese airlines’ operating costs during the post-acquisition periods due to the limited integration of 2010 acquisition compared with the 2001/02 mergers.     

Enhancing Singapore travel agencies' customer loyalty: an empirical investigation of customers' behavioural intentions and zones of tolerance

The services marketing literature focuses on the measurement of service quality and its impact and consequences on businesses. Set in the context of the travel retail agency in Singapore, this study focuses on the relationship between service quality and favourable behavioural intentions. The findings revealed that improving service quality can increase favourable behavioural intentions. However, service improvements that exceed customers' minimum‐service threshold and those that exceed customers' desired‐service level were found to have mixed effect on behavioural intentions. Hence travel agencies must carefully determine the behavioural intentions they wish to foster amongst their various customers and develop service quality strategies in line with the findings of this study. Copyright © 2007 John Wiley & Sons, Ltd.     

Attracting tourists to travel companies’ websites: the structural relationship between website brand,personal value,shopping experience,perceived risk and purchase intention

This article aims to examine the structural relationship between website brand, personal value, shopping experience, perceived risk and purchase intention from travel websites. Built upon the theory of consumers’ perceived risk, a theoretical model was proposed and a questionnaire was developed. The fieldwork utilized responses from 409 participants who purchased travel items from websites of Malaysian travel companies. Partial least square (PLS) path modelling approach, a variance-based structural equation modelling (VB-SEM), was used to assess the overall goodness-of-fit tests, measurement and structural model. The results highlight different aspects related to the effectiveness and attractiveness of travel companies’ websites. Its unique finding highlights the importance of personal value as a user characteristic factor that can strongly affect online purchase intention. In addition, by combining user characteristics and website characteristic and examining them in a single model, this study provides a clear multidimensional picture of causal relationship between latent constructs in an online travel purchase context. Theoretical and practical implications of study results are discussed and suggestions for future research are provided.     

SOCO's impact on service outcomes of tour guides: the moderating effect of customers’ shopping orientation

This research examines the effects of both sales-oriented and customer-oriented service strategies of tour guides on service outcomes: rapport, customer satisfaction, customer loyalty, and willingness to tip. This research also investigates how customers’ shopping orientation moderates the above relationships. A convenience sampling was conducted and 370 valid questionnaires were obtained. The data were analysed using structural equation modelling. The findings are as follows: (1) customer-oriented strategy of tour guides has a significantly positive impact on the service outcomes; (2) selling-oriented strategy of tour guides has a significantly negative impact on customer satisfaction and customer loyalty; and (3) shopping orientation of tour members moderates the relationships between selling orientation and service outcomes. Thus, if tour guides can provide service for customers in a suitable way, they will then improve the customers’ perception of services. These findings provide practical information for travel agencies and tour guides.