Quality Services Improvement

The Quality of Services in Emirates Airlines: The Challenges of Continuous Improvement

Summary

This study examines quality of services at Emirates Airlines and reflects on the associated market orientation. The study also examines challenges and avenues for continuous improvement. These inter-connected objectives shape three research questions that are addressed based on customer responses to a structured instrument. This instrument has its origins embedded in the wealth of developments in methodological aspects to do with service quality assessment. The ‘perception- expectation’ gap and the gap with respect to ‘service delivery’ are reviewed across a multitude of research studies that are pegged around the central conceptual feature of SERVQUAL. This concept is discussed in detail including instances of its use in examining the airline industry. A structured close ended questionnaire informs this study that uses data generated from 250 respondents. The study is limited in methodological rigor due to use of descriptive statistics alone but at the same time provides a rich narrative using the data that is often not possible unless results are very strongly skewed in the case on inferential statistics. The lack of robustness has arisen due to data gaps which the study acknowledges.

Findings suggest that staff training on understanding the scope of service quality, and continuing with modernization and infrastructure upgrade- should be on top of the agenda at Emirates. The results also show that personalized attention provided to customers is a key selling point in why customers choose Emirates, but that there is lack of understanding related to proper customer relations management. Some conflicting results also tend to suggest that the dichotomy between customer expectations and perceptions is influenced by the relative offerings competitor airlines make. There is also a hint that short term resource impetuses like frequent flyer schemes do not do much to improve service quality perceptions. It is the long term embedded development of staff capabilities and understanding about the holistic nature of service quality that may prove to be ‘the’ competency for sustained competitive advantage. The study posits a need for further research in developing comparable service quality metrics across international airlines – that are available only in the US at present (AQR), and also a need for comparative case studies in the industry to inform globalization intentions.

Chapter 1: Introduction

1.1. Background

Emirates airlines is one of the largest and probably the most consistently profitable airlines of recent times. Since its inception in 1985 it has grown astronomically and in the last couple of years it has embarked upon a fleet upgrade and expansion that dwarfs other major airlines. It sailed through the 9/11 related downturn in aviation business, and the disturbance in the gulf to become an airlines whose success formula mystifies management wisdom. Off the cuff solutions to issues and problems as they arise seems to have worked exceedingly well for the airline. The airline claims to have an open culture and an open agenda where the need of privacy does not subsume the need to deliver from individual competencies under what can be termed a ‘fluid strategy process’ (Sull et al, 2006). The focus on fine issues and macro aspects alike are shared across all management levels comprising a multi-cultural workforce like no other airline.

The company is used to making leaps whether it is by using the recognition from airline of the year award in 1994 to establish itself among the giants, to the massive fleet expansion in 2004-2005- to become the envy of even the giants. Surviving the 9/11 depression clearly points to the merits in Emirates approach. The key issue seems in operating as a family, where when other airlines were downsizing and cutting staff, Emirates kept status quo on these fronts and communicated a feeling of belonging in its staff. This was the crucial lever that kept Emirates going- and in fact even prosper in times that were so trying for the industry. As Carlzon (1989) notes in his aft cited work ‘Moments of Truth’ this is flattening of structure in the true sense – so that messages get across quickly and effectively makes for a “powerful organisation that serves customers better and unleashes the energy in employees”. However, putting both these together to fine tune the market orientation through service quality is a challenge especially in times of growth and high momentum in external factors affecting the industry.

Other beliefs at Emirates like – around the prosperity of Dubai that it keeps as the nerve centre of its network, and keeping a rather conservative outlook towards alliancing with other airlines are not conventional. These shape a flexible core around which other attitudinal and behavioral aspects of the business model emerge. This emergence has often been punctuated with imposed or deliberated change – this study takes place at a time of deliberated change that of rapid expansion of Emirates airlines across the globe (Leckic, 2007).

The openness also transcends into the beliefs the airline has. The airline now seeks to grow more aggressively and reduce overt centering on Dubai. Creating a global brand based on current success is on the agenda. The airline realizes that reputations in a service industry are leveraged around service quality. In this light as it stretches out to routing across the globe and hiring more staff and acquiring physical infrastructure, that service quality does not get compromised – remains a concern close to heart (Sull et al, 2006; Byles, 2007, Leckic, 2007; Sending 2008).

1.2. Motivation

The international airline industry has seen a struggle to deliver profitability alongside ‘truly satisfying the flying public’ (Van Pham and Simpson, 2000). The alliancing arrangements, route mapping and offering packaged services through such alliances have tried to affect industry standards of service quality- which may not be the true reflection of customer expectations. The perception of customers about what is central to service quality vis-à-vis the state of affairs in crucial for informing service quality initiatives and the market orientation of a firm. Needless to say given the dynamic nature of offerings that exist across industries including the airline industry, such expectation-perception balances are continuously shifting, and are even more fast moving for an airline that is growing rapidly and encountering new customers around the globe. The challenge also thus extends to one of continuous improvement (Emirates, 2005-2007).

Given the success of Emirates and its unprecedented growth and plans for growth, it is clear that customer perceptions will be central to deciding performance in the future. In times of growth and expansion to new routes the probability of variation in service quality levels and variation in customer expectations is likely to be higher. How the airline can absorb such feedback to modify and fine tune its strategic marketing in the global environment is intriguing for managers, academics, and the wider industry -all having been amazed at the Emirates story so far. This study examines customer perceptions about service quality and relates it with market orientation to ponder over the way forward for Emirates, clearly something very central to research and practitioner interests in Emirates. The recommendations may also have some food for thought for the airline itself as it seeks continuous improvements for a story that is already a bestseller.

From a methodological perspective the use of service quality assessment approaches like the SERVQUAL and its interface with the market orientation of the company has been a motivation (Webb, 2000; Engelland, 1998; Devlin et al; 2002; Van Pham and Simpson, 2006). That these have informed the airline industry among others on service quality, customer and market orientation among others make this research founded on robust theoretical and methodological grounds.

1.3. Research Questions

This dissertation seeks to examine service quality at emirates, and examine the way forward as the airline seeks to market its image in times of rapid investment and growth.

The first builds upon the second as it is service quality perceptions as customer views that need to be the focus when shaping marketing strategies. This is in particular for a business model that is well resourced – as in the case of Emirates and the main concern seems to be of monitoring and improving customer uptake of service quality as the airline grows. This is to be contextualized with the market orientation of the company so far for shaping key initiatives that can augment the alignment between customer perceptions of service with their expectations of the same.

Thus three central questions that inform this dissertation are:

• What factors affect service quality perceptions about Emirates airlines?

• What factors are perceived to be central in informing continuous service quality improvement initiatives?

• How do these perceptions associate with the market orientation of the airline from past initiatives?

1.4. Dissertation Outline

The dissertation starts with an introduction to the context, scope and potential contributions from this study as here. The next chapter examines the literature in detail examining the concept of quality before leading on to the idea of service quality and research to develop methodological and conceptual paradigms around it. The idea of market orientation as a complement and associated aspect is also dwelled upon before closing the literature review that also uses research evidence across industries including the airline industry.

The hypotheses development chapter links the research questions to the backdrop of service quality drawing upon the research site of the airline industry and the conceptual orientation from the literature review. The Hypotheses are aligned closely with a structured instrument – that is discussed in the approach and methodology chapter. The approach and methodology chapter also provides for a rationale for selection of methodology, issues in conducting the study, limitations, and a time plan based narrative of how the study has been conducted. The sample profile, data and methods in analyses description here is carried forward in the findings chapter where results associated with each of the hypotheses are presented. A discussion chapter connects the results for a further discussion on implications and then leads on to conclusions. Here the recommendations are once again highlighted as study deliverables under each of the research questions. This is followed by a discussion on study limitations that include revisiting methodological limitations discussed before. The final chapter closes by some focused suggestions about future research in the area of service quality that are argued to be of much use for the industry and for globally expanding firms like the Emirates

Chapter 2: Literature Review

2.1 Introduction

This comprehensive literature review builds up the agenda of examining service quality in extant literature by starting off in the realm of Quality itself. In discussing TQM and consumer expectations it opens up a window to start examining the specialized concept of service quality. This concept is discussed in all its nuances especially around SERVQUAL – definite leap both conceptually and methodologically in this area. This is linked up with the idea of market orientation to extract a conceptual backdrop relevant to the investigation under this study. The use of extant research both in the airline industry and in other industries provides for resources to adapt the concept of ‘gaps’ and dichotomy between service expectations and perceptions to shape hypotheses and instrument to collect data for this study.

2.2 The concept of Quality

Quality has always concerned the societal intent of consumption. The reasons are fairly colloquial at one level where lack of quality can result in insufficient and unsatisfactory delivery of requirements from a product or service. At another level – given the growing complexity of the business processes over the last century quality has evolved into a discipline – characterized by an equally intertwined interface between control, assurance, and management in general (Dooley, 2006). Broadly speaking in the business context – quality is the ‘perception of the ability’ of a product to satisfy its users. By extension it also applies to the processes and management of the processes that shape the product. However, the satisfying paradigm underpinning quality has multiple manifestations: “conformance”, “fitness for use”, “basic minimum requirements vs. attractiveness”, and as a matter of “interest and individual disposition” to name a few (e.g. Juran, 1945; Pirsig, 1974; Corsby, 1981; Kano, 1984; Reeves and Bednar, 1994).

The definition of quality is rather difficult to come by because of the sheer nature of its wide applicability and strands of origin- ranging from the practical business origins to metaphysical origins. The American Society for Quality aptly captures this subjectivity in understanding quality by stating it as …“a subjective term for which each person has their own definition” (Wade, 2005; ASQ, 2007). Quality management is made up of two complementary aspects one is quality assurance and the other is quality control. The former is about ensuring a basic minimum standard through upfront production process design. The latter is about reviewing and monitoring output to wean out the ‘defectives’. Assurance is thus inherently preventive and control is mainly curative in a functional sense (Gunter, 1998).

Irrespective of the disparate origins, quality management can be safely said to be largely associated with the idea of excellence. A range of concepts and their operationalisation stem from this broader view of quality and mark the growth in research and practice of quality management. Six Sigma, Quality Circles, and Total Quality Management- are but a few from amongst numerous such frames of reference (dti, 2007).

The idea of quality at the advent of the century had been around as a selection paradigm- accepting the superior and rejecting the inferior and biased towards ‘control at best’- most of the time the evaluation came from the end user. Along the business value chain as production became large scale after the 1^st World War- quality assurance procedures started becoming formalized. It was not only the ‘end of the road’ customer assessment but also a series of filters ensuring only the better quality output being delivered to the customer made control and assurance an important in house practice . The inspection oriented quality control schema had its problems mainly in terms of competent individuals that could ensure monitoring despite not being the ‘know all’ skill set champions. Formalized roles of inspection and quality manager thus emerged and along side assurance models provided a great lift to quality management as a capability. Generic tools for quality management like the control chart emerged in the 1920s and statistical process control matured towards the middle of the century. The revival of the manufacturing of war torn Japan on mature principals of quality control and management finally brought quality management into the forefront. By the end of 1970s it was a global pre-occupation with everyone trying to imitate the success of Japanese low cost and high quality products (dti, 2007; Dooley, 2006).

When the word total quality came to the fore in 1970s and finally pinned quality management as a fundamental capability that ran through the organization. The West’s take on quality management was more about ‘standards’ than ‘culturalisation’-but based around the same operational frameworks as in Japan. These gave rise to national standards in response to the need to have a quality association with the national economy as a whole. At the business level quality is now a key management responsibility and a functional paradigm that has continuous improvement at its very heart (Gitlow et al., 1989).

Aside from the generalized profile of emergence of quality management above there are a few key landmarks that need to be noted. The first is probably the statistical developments in the 20s and 30s and the emergence of concepts related to probability of acceptance, risk, tolerance levels, and sampling aspects (Shewart, 1931; Dodge and Romig, 1959) – establishment of standards and societies also marked the 1930s and 40s (Hutchins, 1995; Dooley, 2006).

Industrial production was never under as much pressure as in the II world War. While quality assurance could not keep up with the pressure control came to the forefront to ensure acceptable working products. The maturing of the statistical processes and standards in this regard was a key development. The large scale transmission of these standards to the then military suppliers ensured that the War provided an acceleration to the diffusion of quality management standards and systems (Dooley, 2006; Grant and Lang, 1991).

With the end of the war in the formative phase of reconstruction quality was again given a ‘less rushed’ attention. The role of top management, the interface between organisation wide processes, among others found attention. Total quality control came to the fore as a holistic concept with a stage gate approach right from design to delivery to consumer (Fiegenbaum, 1951, 1957, 1961).

As mentioned, the post war Japanese revival is a key factor in development of quality management. Over the 1950s and 1960s the ideas of cultaration of quality with pride in workmanship, top management support, liberalized communication and quality circles took hold stemming from Japanese success. The good practice concepts like quality circles emerged as competencies that were tightly woven into the culture of business unique to Japan and required some effort when it came to imitation by the west (Koyangi, 1964; Deming, 1967; Juran, 1967). Quality became integral to organisational behaviour, goals, and associated personnel development.

2.3 Total Quality Management, Consumer Expectations and Continuous Improvement

The coining of ‘Total Quality Management’ (TQM), encapsulates this coming of age of quality management as an indispensable competency in the competitive arena that is augmented by increasing customer expectations (Deming, 1986; Anderson et al., 1994; Akers; 1991; Stratton, 1990). The main characteristics-changes and developments though numerous can be safely said to be around making quality:

-a responsibility for everyone,

-a necessity rather than a differentiator,

– relate better to services and information, and ever increasing set of non-manufacturing industries.

– relate to best practices, dissemination and learning

-recognized a key function and accordingly resourced in organizations

– reinforce the primacy of the customer

(Green and Welsh, 1988; Marquardt, 1991; Dooley, 2006)

As TQM goes from strength to strength the balance between assurance, control, and the new fangled third strand – learning is becoming vital given the dynamic nature and complex requirements that are associated with quality (Green and Welsh, 1988). The standardized tools need to be customized for organisational applications with a sense to create the competitive edge-because the omnipresent paradigm itself is tending to defeat the objective to seeking the competitive edge through quality (Dean and Bowen, 1994). Context specificity or in other customization of model and tools is the call of the day for research and practice alike The generic nature however needs to be preserved in the background given wider economic and societal association of quality management. For instance, as new frontiers like e-commerce – open a fertile bed of quality concepts and models will be very valuable for learning and adaptation to the economic and social context (Doty et al., 1993; Dooley, 2006). .

However, having an adaptable bed for quality management across diverse industries to draw from is not sufficient. The societal realties have also undergone transition – quality needs to broaden its founding grounds to reflect on new aspects like information management and the virtual realm where quality may have to question its own foundations that are deeply rooted in manufacturing. The successful adaptation to non-manufacturing i.e. services however, is evidence of the emergent nature of quality management that can take on fresh challenges that include alignment to ever changing marketing and consumer orientation needs.

2.4 Service Quality

Service quality is a subjective concept that remains challenging to define and to measure (Cronin and Taylor, 1992). This associates itself and can be understood as the application of total quality in the service sector in the main and also implying the service function in frontline delivery of product in other industries. The understanding of service quality has been synthesized from extant literature by Jennifer Rowley (1998). In her work it is seen as a “perception judgment from a comparison of what they feel service organizations should offer and the performance of the organisation offering the services”. There is no dearth of definitions that try to pack in comprehensiveness to this abstract concept. For instance, Hedvall and Paltschik (1989) refer to ‘willingness and ability to serve’ with a mention of ‘access’, Lehtinen and Lehtinen(1982) view service quality in a three-dimensional space that looks at ‘interactive, physical and corporate’ quality facets. Furthermore Gronroos (1984) simplifies the idea by seeing service quality as shaped by ‘technical and functional’ aspects of quality (Rowley ,1988).

The link between service and performance and by extension satisfying the customer is challenging because services have a unique combination of characteristics. The first of these combinations is their intangibility- causing issues in measurement as they are a function of the ‘experience’ of the customer. The next is their perish ability -meaning that they cannot delivered from existing stock and thus lending a dynamic nature to service delivery that is difficult to condition. The third is inseparability between production and consumption of service and the last is heterogeneity or customizability as each end user receives a different level-nature of service partly owing to individualized perceptions that are involved in assessment (Zeithaml et al., 1985; Rowley, 1998; Engelland, 1998; Webb, 2000;; Devlin et al; 2002).

The need is thus to work on ‘perceptions’ to assess quality given the cognitive frame of reference that dominates the characteristics of service. The associated requirement is to be able to classify services so as to peg a cognitive frame on a type of service. Such an attempt has provided for groupings within the service industry as a starting point to deliver customized measurement models (Dotchin and Oakland, 1994). The influences on consumer expectations have also been classified to augment such efforts (Gronroos,1994) . While the seminal work towards generic developments like SERVQUAL (Parasuram et al., 1988), provide founding grounds to service quality measurement- literature sees several issues in the applicability of this generic framework. This also relates to the inclusion exclusion and reconfiguration of the understanding of service attributes and the industry categories discussed before (e.g. Sasser, 1978; Dotchin and Oakland, 1994). A critical perspective on SERVQUAL comes later but upfront – it is of essence is to recognize the importance and complexity in measurement given the sheer abstractness of the idea of service and its quality.

The customization of measurement efforts and models in light of different service industry groups has been key to efforts at improving measurement (Dotchin and Oakland, 1994). In SERVQUAL the conceptualization of satisfaction has been found to be too simplistic and the multiplicity of the ‘total experience’ is arguably not captured – this is in addition to the non-customized generic nature of the SERVQUAL. A longitudinal and sometimes phenomenological analysis is suggested to capture these nuanced but important characteristics of service quality (Singh, 1991; Rowley, 1994).

However, the difficult in devising a comprehensive tool still disposes wider practice of measurement to simplistic methods. Important adjustments and realizations like the use of ‘importance and satisfaction grid’ (Harvey, 1995) provide a very useful feedback and prioritization. For instance, high importance and poor satisfaction is a combination that merits urgent management attention.

Another important variable in the service quality metric that needs to be accounted for is the nature of the contract. Again this is because of the attribute of ‘psychological contracts’ that is unique in nature to services (Thornrow, 1998). This has found particular appeal in measurement related to provision of public services. Having formal, informal and psychological components in service contracts provide a platform for balancing expectations and perceptions. These are otherwise very difficult to manage given the basic characteristics of service discussed at the onset of this section. Finally the perceptual plane needs to be also looked at with a balance though by classical definition the perception of the customer is the defining feature of quality-for service quality in particular the perception of the provider and the resultant psychological interface is also key to the metric. The role of customers is also not to be taken uni-dimensionally. There are different stakeholder brackets eg. users, influencers, deciders, approvers that associate with a service category and also vary in their significance (Rowley, 1988). These influence the generic satisfaction and associated performance variable.

Given this multiplicity and the psychologically complex nature of interactions, the ‘relationship exchange’ process (Morgan and Hunt, 1994) is key to providing some cognitive stability to overtime service quality measurement. It is also a suitable conduit to ensure that feedback is smoothly translated into strategic action for improvement. Such relationships can be supported by associating service with some ‘bonds’ (Chu and Lin, 2004). For instance, providing unique services, incentives, and even building social ties between provider and customer. However, on the other hand, the impact of such relationships on service quality needs to be moderated for a reliable assessment. They provide grounds for stabilizing the psychological map to better associate performance and expectations but at the same time bias it.

2.5 Customer Satisfaction and Service Quality Perceptions

Broadly speaking customer satisfaction is a performance indicator of the extent to which a firm has managed to meet customer expectations through its business deliverables. Having formed the foundation of the marketing concept for nearly half a century the attempts at harnessing the good practices and measurement approaches is a much explored realm when it comes to customer satisfaction (e.g. Drucker, 1954; Levitt 1960; Gronroos, 1990).

Over the last few years customer satisfaction has received a reinvigorated interest. Possible reasons for this have been seen as the after effects of a maturing TQM paradigm that is linked with several recognition awards, and also, arrival of national customer satisfaction barometers (Garvin, 1991; Johnson et al., 2001; Helgesen, 2006)

The associated concept of customer relationship orientation is posits a strong link between customer loyalty and profitability with customer satisfaction (Zeithaml, 1988; Oliver, 1996). While customer loyalty has been referred to as central to ‘competitive advantage’ (Porter, 1985; Chao, et al., 2007)- this is delivered through customer -satisfaction. This is the basic rationalization behind customer satisfaction being so central to both short term and long term performance assessment.

That the ‘ultimate aim of any firm is to achieve customer satisfaction’ remains the central thesis of market orientation (Levitt, 1960). Customer orientation seeks to align “organizational values, beliefs, assumptions and premises” to deliver a mutually enabling relationship between the customer and the firm (Day, 1994; Strong and Harris, 2004).

Strong and Harris ( 2004), define a set of tactics that can deliver customer orientation. They define three sets of tactics. The first define relational tactics (essentially relationship marketing) that engages a nurturing philosophy for long run gains. The second tactic as human resource tactic is more about the direct interface with frontline of the customer and rest of the organisation -essentially empowering the front line through training and support to reap rewards of realized quality of experience of the customer. The final tactic relates to procedural aspects that routinise and systemize customer care and support systems. The study posits that there is a strong interaction and dependency between the three tactics. This key work that examines customer satisfaction and its manifestations under the customer orientation paradigm shares ground with some key extant literature (Narver and Slater, 1990)

However, other studies tend to put one set of such aspects – though differently labeled as more important than the others. For instance, Chao et al. (2007) say that

while satisfaction remains an abstract idea sometime there is an overt component of interpersonal relationship building that because of over emphasis- instead of complementing customer orientation tends wean resources away from conditioning deliverables to meet consumer expectations. Research suggests that such a lopsided drive is ill-found in the long run While relationship marketing remains important it has to be pegged on consumer satisfaction from products and services for sustainability (Chao et al., 2007).

Businesses need to focus attention on relationship building. This however has to be conditioned for long run profitability. Customer satisfaction through meeting expectations from goods, transaction services and pure services, and a sustained follow up and support culture has to be the basis for relationship building. For instance, financial incentives/offers are likely to be ineffective and short lived if quality is undermined. As most of the research in customer orientation gets focused on relationship building this is an important consideration to use as a moderator. Value to the customer can never be undermined for seeking short term profitability. This is because such profitability is not suitably tied in with satisfaction which in turn guides customer loyalty.

Views to the contrary also exist mainly from some practitioners. Bruce Clapp (2007) of the Carlson marketing group says that “relationship strength is more important than satisfaction as a true indicator of loyalty. Customizing the experience of our customers, in-branch and in home, impacts the strength of relationship as it builds. In the experience, ensuring our message is relevant requires that we be closer to our customer. The communication we use, whether direct mail, e-mail or in person, must be tailored to the needs of the customer at an individual level. The term mass customization has gained ground as we look for ways to become partners with our customers and be there when they have a financial need…changing the perception about communication from irrelevant to relevant….mattered ” (Bruce Clapp in ABA Bank Marketing, 2007)

The above text signifies another important side to the changing times that of information and its quality as a deliverable that has become a key product attribute. Relationship management that works to harness this may improve the quality perception of its product without making changes to the product itself. The result is then improved customer satisfaction. The level of abstraction in the idea of ‘satisfaction’ and the changing times with an information overload -have created shadow characteristics for products and services. The idea of ‘value’ is ever more a backdoor into customer satisfaction.

Customer orientation in the milieu of – discussed tactics that include relationship management and the intertwining of satisfaction, loyalty and profitability is a complex arena. It is thus not strange to see that the core variable – customer satisfaction that inhabits the arena is often found missing from hundreds of studies that explore business performance (Capon, et al., 1990 -review of 320 empirical studies). The inter-linkages are so strong that even controlling for the satisfaction part (if a suitable measurement was deployed) tends to capture most of the variation in most cases. Given that studies seek to look at different sets of variables for instance, in say, production management exclusively – they understandably steer clear of satisfaction measurement and inclusion – resulting in poor significance and scope of such studies.

Studies which do involve the customer factor in examining performance have more significance in results but have their own issues. These are to do with industry specific nuances where the interaction between customer satisfaction, loyalty and profitability vary a great deal (e.g. Reichheld and Sasser, 1990; Soderlund and Vilgon, 1995; Page et al., 1996). Accounting for the differences in methods and measurements the issue remains that the customer orientation metric is also industry specific. Though it is omnipresent and universally central to business goals the way it manifests itself is what may vary across business types. For instance, the rate at which profitability increases with loyalty and conversely loyalty increases with satisfaction may vary (Helgesen, 2006).

In the days when customer was not inundated with choices -the notion of satisfaction was relatively stable despite its metaphysical connotations. As the number of choices has gone up so is the fickleness of satisfaction. Satisfaction can thus no longer be the guiding tenet for loyalty. The relationship perspective has thus become very important – and as argued above is widely contested in terms of how important? To the extent that it takes away resources from developing the arguably ‘real’ good or service it is overdone. However the ‘value’ it brings in terms of influencing consumer selection in an ambiguous setting of multiple satisfying options remains critical. The issue is that of a balance without a quality good or service to back up the relationship promise failure is imminent. However without being able to retain customers or attract them to quality products and services as there is always a ‘better’ out there investments in the ‘real’ good or service is also low yielding.

The challenge of customer satisfaction as the key variable in consumer orientation is to condition itself to the changing notion of ‘value’ that is now integral to information flows in every consumer-provider interaction. This conditioning should take into account the factors that affect loyalty and profitability because a knock on effect on these is very likely. Finally, there is also industry specificity to consider to an extent but to a lower extent- the times have not changed enough to question the centrality of consumer satisfaction- they are just placing new demands on it.

SERVQUAL

The recognition of the importance of customer -‘assessment and perception of the quality’ of service has led to the emergence of concept behind SERVQUAL, and its delivery as a tool. This was primarily through the work of Parasuraman, Berry and Zeithmal (1985, 1988, and 1991). The development is a good example of research being driven by the interests of the industry and in the process delivering an instrument of direct utility to the industry. In this section SERVQUAL is reflected upon with a view to explain its foundations, ponder over- the developments, posited advantages and critiques, and in the process, provide a holistic perspective on this key development in service quality management.

The basic concept behind SERVQUAL works on a ‘gap’ between the expected and perceived quality of service. The nuances on how this gap has been dealt with in this model -instrument, issues surrounding subjectivity, reliability and validity, and applicability across industries, have provided for generous discussion and developments over the last two decades.

It has also been used to assess service quality expectations in airlines, albeit with a focus on usage alone as the central explanatory variable (Van Pham and Simpson, 2006). However, the potential it has to inform study process and instruments for a much more comprehensive examination of service quality in airlines and other industries has been flagged often (e.g. Webster, 1991; Zeithaml et al, 1990). Also, the idea that customer feedback and perceptions can work to symbiotically support airline efforts at improving service quality, and thus enhancing value for all has been discussed in very recent research. This juxtaposes market orientation with service quality closer than ever before (Shannon, et al, 2008)

The original ten dimensions that comprised SERVQUAL namely: “reliability, competence, access, responsiveness, courtesy, communication, credibility, security, understanding customer and tangibles” (Parasuraman et al., 1988) – were eventually synthesised into five. These dimensions were based around the following areas: “(1) tangibles: physical facilities and personnel presentation; (2) reliability: performing the promised service dependably and accurately; (3) responsiveness: helping customers and providing prompt service; (4) assurance: knowledge and courtesy of employees and their ability to inspire trust and performance; and (5) empathy: caring, individualised attention the firm gives to its customers” (Parasuraman et al., 1988, 1991; Shahin, 2007).

SERVQUAL is popular in both the profit and non-profit sector (arguably more so in the latter) primarily due to the generic yet very useful nature of the investigative questions to a range of industries. It has the hallmarks of a good instrument – in being low on time consumption, easy to use and though argued – recognised by practitioners to have acceptable reliability and validity. The comparable aspect for benchmarking reasons is also of great appeal (e.g. Brysland and Curry, 1984). It can provide a useful progress chart if done over successive years both for self assessment against set goals and comparative assessment to feedback into objectives and planning.

Francis Buttle’s critique of Servqual (1996) provides some key shortcomings. The first one has to do with the subjectivity of expectations and perceptions. The second relates to the assumption the model makes about a “direct relationship” between service and quality- a perception that shares ground with the ‘gap model’ discussed later in this literature review. The final rather philosphical but valid point is related to subjectivity and asks one to reflect on whether the right things are being measured for the desired assessment (Buttle, 1996).

Luis Lages and Fernandes (2005) get metaphysical and question the “level of abstraction” associated with respondent customers. The posited Service Personal Values (SERPVAL) scale to refkect this presents three dimensions of service value to “peaceful life, social recognition, and social integration”(Luis et al., 2005) . In this scheme of things as a possbile supplement to SERVQUAL – customer staisfaction relates to all dimensions and loyalty and repurcahse intentions are the attributes than can be distilled from the assessment (Kang et al., 2002).

The validity position that has been contested in research also stems from the assumption in SERVQUAL as being generalizable across industries and products. Such research posits that some of the areas/dimensions outlined above may have higher or lower position given the nature of the industry or product, and by extension suggests requirement for some customisation in applying the tool.

The gaps in SERVQUAL have been of interest to researchers and practitioners to lend more validity to the model and reduce the dependence on ‘direct association assumptions’ between key customer and provider variables. These assumptions do not hold at times and are as enumerated in the reasons that are listed under each posited gap. The following is a list of such gaps that is also enumerated in figure 2 that follows the list. ( Curry, 1999; Luk and Layton, 2002, Shahin, 2007 )

“Gap1: Between customers’ expectations and management perceptions: Possible reasons: poor marketing research orientation, inadequate communication alongside overt hierarchy in organisational structure.

Gap2: Between management perceptions and service specifications: Possible reasons: poor explicit commitment to service quality, lack of focus on task standardization -description and goal setting.

Gap3: The variation that is there between outlay or specification of service and service delivery: Possible reason: poor work environment, poor resource fit and compatibility

Gap4: Delivery of services in relation to communication made about the same (expectations!): Possible reasons could be lack of communication within levels horizontally and lack of realization that over-promising is detrimental to customer satisfaction

Gap5: The mismatch between customer expectations and their perceptions of the service: Possible reasons are mainly external that extend the gap between expectations by customer and the provided-sources such as recommendations and external user reviews

Gap6: The discrepancy between customer expectations and employees’ perceptions: Possible reasons could be an inadequate understanding and sensitization of front line providers and poor feedback system that does not transcend the organisation properly

Gap7: The discrepancy between employee’s and management perceptions: Rationalization: shared understanding and interaction about customer satisfaction across levels could be issues between front line service personnel and senior management. By extension the middle managers role may be very inadequately developed to promote this” (Shahin, 2007).

The range of issues identified with the SERVQUAL model come from both the marketing literature and information systems literature. Production and Operations management literature also has a view on this. A key feature has been the subjectivity associated with such assessment that translates into validity problems. For instance, the expectations metric is found to be at odds with the performance metric. The gap elucidation tries to account for the assumptions that usually provide for such discrepancies. Furthermore, and by extension, “psychological appropriateness” that is associated with the instrument under a “difference score methodology” to generate responses has also been questioned (Dyke, Prybutock and Kappelman, 1997).

However, despite its limitations according to Nyeck, Morales, Ladhari, and Pons (2002) SERVQUAL “remains the most complete attempt to conceptualize and measure service quality”. As also discussed despite issues of the need to cutomise, the main benefit of SERVQUAL as a measurement -instrument is its applicability across service industries. The criticisms are but natural when one tries to develop such a conceptually valuable instrument – to further fine tune it. The expectations from the tool have been immense and the usage therefore has placed great demands on the instrument. A review of literature has indicated that the validity issue has often been side stepped in light of the greater benefits the tool provides as far as its applications are concerned (Nyeck, Morales, Ladhari, and Pons 2002).

By the same token, raising issues to improve the tool itself should be seen as a welcome phenomenon as long as it does not inhibit its existing use -that has found great appeal and has benefited research and service industry businesses alike. For instance, the use of SERVQUAL in the public sector and human service settings has found a lot of appeal (Wisniewski and Donnelly, 1996). Though, by the same token, its lack of inclusion of the tangibles of service (servicescape) (Sureshchandar et al., 2001) is seen as a drawback in arguing its comprehensiveness. Integration with other business performance measures has also been recommended indicating the centrality and ease of adaptation of this tool (e.g Hemmas et al., 1997; Sullivan and Estes, 2006)

Though the entire scope of the SERVQUAL instrument has not been deployable given the limitations of respondent time and administration key facets have been distilled to inform an instrument (Appendix I) in the context of Emirates Airlines. This adaptation has been validated through use of past studies on the airline industry that also deployed the SERVQUAL instrument (e.g. Van Pham and Simon, 2006). For instance, the dimensions along reliability, assurance, tangibles, empathy and responsiveness respectively have been translated in such studies to:

“-airlines ability to perform promised services dependably and accurately; -knowledge and courtesy of airline’s employees and their ability to convey trust and confidence;-appearance of the airline’s ground facilities, aircraft, personnel and communication materials;- caring, individualized attention the airline provides its customers;–the airline’s willingness to help customers and provide prompt service”

(From: Van Pham and Simon, 2006)

2.6 Customer Perceptions of Service Quality and Market Orientation

When Adam Smith referred to “Sovereignty of the customer” (Levitt, 1969), it was probably not fathomable that the concept would take nearly two hundred years to effectively translate to an operationalisable business mindset. Here market orientation is presented as a concept built around this philosophy. The aim is to reflect upon the genesis of and characteristics that shape the concept, and its manifestation in contemporary research and practice. The concept is elucidated first and then different perspectives that shape it are reflected upon. Key constructs and enablers of market orientation are distilled in this discussion to juxtapose with the idea of customer satisfaction and service quality discussed before.

Colloquialism and complexity go hand in hand when one tries to observe the concept of market orientation and its manifestation in practice and research. While marketing is essentially a clear idea with the customer at the heart of what a business enterprise does – the ‘orientation’ suffix to ‘market’ describes the ‘state of corporate mind’ with respect to its marketing strategy. In other words, the state to which a business aligns to ‘carry out’ the marketing concept (Felton, 1959; Pierson,1993; McCarthy and Perrault, 1990). Over the last few decades the efforts at conceptualization of market orientation have found research and practice flit across a host of allied terminology and frameworks (Kohli and Jawaroski, 1990).

A focused approach towards examining its connection with business performance and subsequently, ‘guidelines for its application and measurement’ came to the fore only since early 1990s (Narver and Slater, 1990; Jawaroski and Kohli, 1993, Hult et al, 200). In 1993, a research methodology developed by Kohli et al. -chiseled out the phenomenon of market orientation for: its connection with causal factors; its impact on business performance and; the environmental factors that moderate the link of market orientation with business performance (Dalgic, 1997).

Though the idea of market orientation today is very likely to be central to statement of a company philosophy- just several decades ago that it was rather peripheral. General Electric in 1952 was arguably the first firm to officially state that ‘their new marketing philosophy would take the marketing man to the beginning of the production cycle than at the end of it and integrate marketing into each phase of the business’ (Berkowitz et al. 1989; Dalgic, 1997). The origins of market orientation or rather the arrival of the concept as ‘central’ particularly from the 1950s came across as the customers became more demanding, and technology and business niches became ever increasingly fickle. In this environment, understanding customer needs and responding in time by aligning all parts of the business to the needs became paramount to survival (Bartels, 1962).

2.7 The Market Oriented Company

While over time macro-economic factors have shaped the take-up of market orientation. Micro level managerial and organizational characteristics have further honed the connection with business performance. These two perspectives dominate extant literature on market orientation (Dalgic, 1994).

Literature cites different eras of economic development that progressively shift the production orientation of an economy to sales and then market orientation (e.g. Kotler, 1990; Pride and Ferrell, 1989). An allied perspective is to associated market orientation with ‘maturity of the industrialization process’ that creates the capability to be market oriented (Seglin, 1990). As costs run low with production efficiencies, innovation-variety and volume tend to rise. The customer interface subsequently increases as there is both more discretionary income and tastes that drive innovation and creativity. The competition to wean the increased income leads to development of new market segments where corporate cultures are informed by a shared belief in the market orientation. This is not only through innovation in products and their interface with consumer tastes in a technologically fickle environment but also through learning to be a creative enterprises to continuously ‘create the competitive edge’ (Lusch and Lacznick, 1987; Seglin, 1990, Miller, 1993).

While there is general agreement that market orientation is associated with an advanced stage of economic development, market orientation stemming from a micro perspective of organizational and managerial leanings has also been subjected to extensive research. Numerous studies support the assertion that market orientation is strongly linked to business performance: a high degree of market orientation augments growth and profitability (e.g. Narver and Slater, 1990; Greenley, 1995, Hult et al, 2005). There is also some evidence on association with factors such as organization size: large organizations tend to be ‘more market oriented’ than small ones (Liu, 1995). From a different angle this implies that profitability and growth feedback to make their driver-market orientation even stronger.

On operationalising market orientation within a firm for coordinated, focused and shared creation of customer value-Dalgic (1997) summarizes the following three constructs to underline a market orientation. These are basically developed from Jaworski’s and Kohli’s (1993) research on determinants of market orientation. This extension caters to the basic shortcoming of the Jawaroski and Kohli model that does not explicitly put the customer in the construct.

“1. Organization-wide acquisition, generation of market intelligence information, pertaining to current and future customer needs; 2. Dissemenation of market intelligence, information, across departments within the organization; 3. Organisation-wide responsiveness, coordinated creation of customer value.” (Kohli, 1993)

While Kohli and Jaworski(1993) do not make the customer as explicit, Narver and Slater (1990) in their uni-dimensional structure do so – identifying customer orientation, competitor orientation and inter-functional coordination as determinants. The above listing juxtaposes both albeit with the requirement of additional factors that co-habit the space as further ‘antecedents’ and ‘consequences’ and listed in the discussion to follow.

As asserted upfront in this review interpreting customer needs and associated market signals are reflected in the aforesaid that highlight the role of information, its interpretation and shared understanding across the organization for a high and performance effective market orientation. Systems that facilitate this including structural reward and sanction related features that enable a regular and easy interface between marketing department and other functional units are thus vital (Levitt, 1969; Kohli and Jaworski, 1990).

This assertion leads on to the importance of sanction from top management, and employee commitment -both by virtue of the recognition systems in place and belief in sharing and distilling. These can be both explicit as in ‘formal internal procedures related to marketing information’ and, less formal culturally sensitized work environment that facilitates ‘spontaneity’ in such co-ordination and sharing. In the case of the latter inter departmental dynamics are disposed towards such sharing without any coercion of formalized procedural requirements (Piercy and Morgan, 1991; Soderlund, 1991; Jaworski and Kohli, 1993). The informal settings at Emirates discussed upfront in this dissertation seem to be rather effective as a possible rationale behind its success. This can also be leveraged to improve and handle the fast moving and reshaping premises

Arguably, the above two alternatives could be step-connected where initial disposition towards marketing orientation is infused through formal procedures but over time gets culturally inbuilt. The literature tends to imply this step approach but at the same time also seems to recognize regional and national cultures, beyond organization and industry specific cultural arguments- affecting the manifestation of formalization as against spontaneity as described here (e.g. Dalgic and Smit, 1993).

A range of research studies work on this regional and national peculiarities view on marketing orientation but do not posit great a variation in terms of key variables that affect market orientation. They do however reflect on the take up of the marketing concept, its centrality, and the interface of the micro organizational level factors with the socio- economic context of a country that is very important in context of globalization and multi-national corporations (e.g.Bamossy, 1988; Muller, 1991, Deshpande et al, 1993) – an agenda that is central to the growth intentions of Emirates airlines.

2.8 Conclusions

The perception for service quality in airlines has measures that are being increasingly objectified. However, such measures exist largely for U.S. based airlines (AQR, 2007). However, that they provide key indicators relevant to service quality and quality in general for airlines alongside the literature that has focused on the same (Van Pham and Simpson, 2006; Shannon et al, 2008) – they can be distilled to provide variables to inform service quality improvements under an overall marketing orientations. The review has discussed generic literature that links with service quality and marketing orientation and has also worked to reflect on airline industry specific and SERVQUAL (as the conceptual foundation of choice) related aspects where ever applicable. Using customer perceptions to help the airline direct its service quality initiatives and overall marketing orientation is taken forward towards development of hypotheses in the chapter to follow, before discussing the approach and methodology that provides empirical foundations to this study.

Chapter 3: Hypotheses Development

3.1 Introduction

Hypotheses development is a crucial link between research questions, identified variables and the translation of these into testable premises (*). In this chapter the research questions posited upfront in this theses as:

• What factors affect service quality perceptions about Emirates airlines?

• What factors are perceived to be central in informing continuous service quality improvement initiatives?

• How do these perceptions associate with the market orientation of the airline from past initiatives?

…are revisited in light of the discussion in the literature review and in context of the research site to focus on specific aspects to do with service quality, customer and market orientation.

3.2 Hypotheses

Based on the discussion in the literature review it is clear that service quality is a function that compares expectations with performance (Parasuraman et al, 1991). The SERVQUAL model in association with the idea of market orientation works to emphasizes that consumer perceptions of service and their expectations form the service are the two poles that need to be aligned as the challenge for continuous improvement, especially in times of continuous growth that is inevitably punctuated by reshaping and modifying service paradigms to suit varied customer tastes as Emirates airlines grows globally.

Literature has emphasized that customer profiles make a difference in their needs and thus perceptions and expectations from service. This profile includes gender, age and also the functional variable of usage, the latter having been examined as a explanatory variable for service quality as well in airlines (Van Pham and Simpson, 2006). However, these are not factors that can be addressed by the airline under a continuous improvement paradigm but appear as easily observable controls that can be used to fine tune and inform efforts at improvement. The interest lies in factors that affect service quality as posited under the first research question: What factors affect service quality perceptions about Emirates airlines?. For this the hypotheses are:

H1.1 Customers choose emirates because they feel it is value for money.

H 1.2 Customers choose emirates because the staff at Emirates works to deliver to customer expectations

H 1.3 Customers choose emirates because they believe that Emirates gives individual attention to customers.

H 1.4 Customers choose emirates because they believe that Emirates is safe to fly

H 1.5 Customers choose emirates because they believe that Emirates is punctual

H 1.6 Customers choose emirates because they believe that Emirates has great benefits for loyal customers

Notably the second hypothesis is an overarching one that tends to envelope others. However the results for this hypothesis are useful because they show the balance in terms of cumulative performance across the other more specific dimensions.

The next set of hypotheses relate to the second research question about areas that can make a difference for continuous improvement: What factors are perceived to be central in informing continuous service quality improvement initiatives. An indicative list of areas helps shapes the associated hypotheses for testing as below. This is pegged in a relative sense as resources for intervention need to be directed and optimized to have the maximum impacts. The orientation and phrasing of the hypotheses below takes this into account.

H2.1 For service quality improvements, Emirates should focus on investments in major physical infrastructure (at airports and extension – upgrade of fleet) relative to other potential areas

H2.2 For service quality improvements, Emirates should focus on making investments in minor facilities based infrastructure like in flight entertainment and catering, relative to other potential areas

H2.3 For service quality improvements, Emirates should focus on better training of staff, relative to other potential areas

H2.3 For service quality improvements, Emirates should focus on being sympathetic and reassuring to customers facing problems, relative to other potential areas

H2.4 For service quality improvements, Emirates should focus on promoting a feeling of safety, relative to other potential areas

H2.5 For service quality improvements, Emirates should focus on having a better spread in operating hours (pre flight – post flight) for improving customer convenience, relative to other potential areas

H2.6 For service quality improvements, Emirates should focus on improving staffing levels, relative to other potential areas

H2.7 For service quality improvements, Emirates should focus on being more punctual, relative to other potential areas

H2.8 For service quality improvements, Emirates should focus on having better presented staff and customer presentable like in dress code and layout of check in points, relative to other potential areas

H2.9 For service quality improvements, Emirates should focus on generating and using customer experience feedback, relative to other potential areas

Past initiatives are an indicator of the market orientation of the airline. In light of this the hypothesis associated with the third research question: How do these perceptions associate with the market orientation of the airline from past initiatives? – are as follows:

H3.1 There has been a progressive rise in service quality levels coming from infrastructural boost and modernisation

H 3.2 There has been a progressive rise in service quality levels coming from improved staff capabilities

H3.3 There has been a progressive rise in service quality levels coming from improved customer relations management

H3.4 There has been a progressive rise in service quality levels coming from an effort to match rising standards of the industry.

3.3 Conclusions

The Hypotheses have been tested using data collected through a structured instrument (Appendix I) that focuses on the aforesaid. The next chapter on approach and methodology also provides details on the instrument, sample, data and methodology, among other relevant aspects that describe issues in the research process. The testing of these hypotheses also varies from the conventional quantitative paradigm of using Z scores and significance levels. This is one of the limitations that stems from the nature and scope of data collected, and is also discussed in detail under approach and methodology

Chapter 4: Approach and Methodology

4.1 Introduction

Through the literature and extant research one can identify two main research methodologies: qualitative and quantitative, and two data sources primary and secondary. This study focuses on quantitative methods to provide empirical evidence from primary data. This is collected based on a structured survey instrument developed to closely follow the hypotheses discussed in the preceding chapter. While juxtaposing extant literature with the findings defacto makes the distinction ambiguous as some writers point out given that e