The impact of service recovery output/process on customer satisfaction and loyalty: The case of the airline industry

Abstract

The purpose of this research is to identify the impact of airline passengers' perception of service recovery output/process on their satisfaction and loyalty. We want to identify the direct and indirect effects of service recovery on airline passenger loyalty by distinguishing the output and the process of the service recovery. A questionnaire was distributed to airline passengers who had a problem during their last airline flight. As we had several latent variables, we used partial least squares (PLS), a variance-based structural equation modeling method. As findings, we observed that in general, clients were not satisfied with the way that the service has been recovered. The most frequent reason for complaining was a problem due to flight delay, followed by a problem with the baggage, overbooking, and flight cancellation. Nevertheless, the findings reveal the positive impact of service recovery's output/process qualities on customer satisfaction and customer loyalty. The output quality of service recovery is the most relevant.

Customer Satisfaction & Loyalty and Organizational Complaint Handling: Economic Aspects of Business Operation of Airline Industry

“…According to Homburg and Furst (2005), the quality service, responsiveness to complaint handling, and the effective system of complaints resolution drive the customer satisfaction and loyalty in the airline industry. The similar conclusion has been attained in several other studies that responsiveness to complaint handling is a major factor for the customer satisfaction in case of the airline industry (Etemad-Sajadi & Bohrer, 2019;Lee, 2017). Numerous studies have demonstrated that responsiveness to complaints brought the customer closer, satisfied the customer, and that the satisfied customer led to the increase of such economic aspects as business operations, sales, growth, and profits of the airline industry (Karamata et al, 2017;Dwikesumasari & Ervianty, 2017;Dennett et al, 2000).…”

“…Consequently, the airlines must recognize the prominence of complaint handling and respond immediately, which is of strategic importance for customer satisfaction. Customer satisfaction through immediate handling of customer complaints, loyalty of customers will be enhanced, which will be fruitful to retain existing customers and attract potential customers through positive word of mouth (Yao et al, 2019;Etemad-Sajadi & Bohrer, 2019;Oyewole et al, 2007;Fornell, 1992). Numerous studies have demonstrated that the immediate response time to respond to customer complaints not only retains the existing customer but also brings a new customer (Dudek et al, 2019;Prentice et al, 2017;Blodgett et al, 1995;Gummesson, 1994).…”

“…The management role is very crucial because written policies always come from the top; thus, the executives' role is paramount to implement and review policies and provide an effective communication environment to resolve customer complaints. As a result, all these efforts establish good relationships with customers, enabling the organization to attain the customer satisfaction, which may lead to the customer loyalty and future economic aspects of business operation (Chen & Jai, 2019;Lee, 2017;Etemad-Sajadi & Bohrer, 2019). Hence, based on the previous literature, we have formulated the following hypothesis:…”

“…The economic aspects of the services sector not only provide new business opportunities but also face competitive threats from other services industries, and the airline industry particularly takes on several challenges from other services industries. Traditionally, the governments were involved in the regulation of the airline industry due to one of the major economic aspects across the globe (Augusto et al, 2019;Etemad-Sajadi & Bohrer, 2019). However, since 1978, the US has passed the airline regulation act that transformed the global airline businesses into the competitive structure because the US deregulation has been part of greater global airline liberalization trend, specifically for the European Union, Latin America, and Asia (Metwally, 2013).…”

“…On the other hand, the airline industry is growing at a phenomenal rate, new airlines are stepping in, and old organizations increase their aircraft numbers, new airport facilities have been expanding day by day. Thus, in this scenario, there is an intense competition in the airline industry in terms of the economic aspects of business operation and competitive growth (Clemes et al, 2008;Etemad-Sajadi & Bohrer, 2019). Like in other service industries, the customer is a focal point; it is essential to make them satisfied and happy in order to retain customers for the repeat business (Alrawadieh et al, 2019;Prentice et al, 2017).…”