International Research Symposium in Service Management

ISSN 1694-0938

PASSENGER PERCEPTIONS AND UNDERSTANDING OF THE LOW-COST AND FULL-SERVICE AIRLINE MODELS IN SOUTH AFRICA AND THE IMPLICATIONS FOR SERVICE STRATEGY A case study involving South African Airways, British Airways (Comair), Kulula.com, Mango and 1time
Colin Diggines Senior Lecturer Centre for Business Management (CBM) University of South Africa (UNISA)
PO Box 6948 ANSFRERE 1711 South Africa 0027124293940 0027826612847 cdiggines@unisa.ac.za diggines@telkomsa.net

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International Research Symposium in Service Management

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PASSENGER PERCEPTIONS AND UNDERSTANDING OF THE LOWCOST AND FULL-SERVICE AIRLINE MODELS IN SOUTH AFRICA AND THE IMPLICATIONS FOR SERVICE STRATEGY ABSTRACT
Purpose: The study, which duplicates a study conducted in Europe and Asia, was conducted to gain an understanding of the perceptions South African passengers have of the low-cost carrier model and the full-service carrier model and establish how these perceptions relate to choice of airline when deciding to fly. Design/methodology/approach: The research is exploratory in nature and used the survey method to collect data at Cape Town and Johannesburg international airports in South Africa. Passengers were interviewed with proportionate representation across the two full-service carriers, and the three lowcost carriers operating in the South African market. A service quality measurement instrument was added to the questionnaire to rate the perception of service delivered by each airline. Findings: It is shown that passengers have a limited understanding of the difference between the two models. Fare was an important issue for low-cost passengers, with full-service passengers indicating that quality and safety were more important than the fare. Although low-cost airline passengers have a highly favourable perception of low-cost airlines, they are highly price sensitive and would readily switch to a full-service carrier should the full-service carrier offer a lower fare. Passengers on fullservice carriers are significantly less price sensitive, with a majority choosing not to switch to a lowcost carrier, even if the full-service carrier increased their fare by as much as 30%. Managerial implications: The findings of the study relate directly to competition between low-cost carriers and full-service carriers and have a direct bearing on airline marketing activities. Key areas that need to be considered by the low-cost airlines include their pricing strategies (and how they are communicated) and importantly, the design and implementation of their loyalty programmes. Originality: Limited research has been undertaken on the impact of the entry of low-cost carriers into the South African market. This research seeks to identify the South African flying public and the influences on their carrier choice decision to assist service providers in identifying and reaching their target markets. Key words: Low-cost airlines, Full-service carriers, price sensitivity, service quality, price perceptions, customer loyalty Paper type: Research paper

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1. Introduction
Growth and expansion in the South African airline industry has been fuelled by the emergence of low-cost carriers over the past 7 8 years. Prior to this a number of so-called cheap fare airlines arrived and departed only presenting a short term irritation to the existing full-service carriers before they collapsed due to the aggressive competitive pricing strategies followed by the incumbent fullservice carriers. The new generation of low-cost airlines however, presented a different challenge and they have been extremely successful in the saturated South African market. The characteristics of the low-cost model should have forced the traditional full-service carriers to reconsider their models and make the necessary adjustments to their strategies in order to compete more effectively in a crowded market. This should have included paying more attention to identifying and understanding the characteristics of their markets/customers and their perceptions and expectations of the services on offer.

The aim of this paper is to compare passengers selection criteria between full-service carriers (FSCs) and low-cost carriers (LCCs) within the South African market. In this regard, a number of critical questions will be addressed: What is the level of understanding of the concept of a low-cost airline? How do the passengers perceive the two models in terms of the service offered? What are the main reasons behind a passenger choice of airline? What role does ticket price play in the buying decision for the consumer?

This paper contributes to the literature by examining the differences in passengers perceptions between the two airline models in the South African market and thereby highlighting key issues to be considered when establishing pricing strategies for the services and developing their general product strategy including the development of loyalty programmes.

2. Background
The low-cost airline model has been in existence around the world for many decades. However, it is only since the late 1990s that it has really sprung to prominence as a successful model that has made waves around the world. Airlines like Southwest in the USA, Easyjet and Ryanair in Europe, and Air Asia in Asia are generally considered the trailblazers of the modern day low-cost model. The basic premise of the low-cost model is that the airline cuts out all the unnecessary costs and frills from its product offering and thereby minimises its cost of operations and offer it more scope to offer competitive fares. Some of the most common cost savings include using the internet as the main distribution and booking system, eliminating free food and drink onboard, careful selection of the most appropriate airports and aircraft, no business class, and non-participation in alliances or other cost generating programmes. These carriers have over the years evolved to a point where they are

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unbundling their products and services and offering the passenger the option to purchase those components that they require. As the model has evolved some low-cost carriers have added the option of a number of frills like frequent flyer programmes in order to generate additional loyalty and revenue. The vast majority of the so-called low-cost carriers are evolving into this new hybrid model (Kretschmer, C. 2008).

In 2001, kulula.com was the first low-cost airline to enter the South African market. They achieved immediate success and grew the market by as much as 8%. South African Airways response to this was aggressive pricing tactics, which proved to be unsustainable and unsuccessful despite their dominant position in the South African airline market. The success of kulula.com in an already saturated market led to the arrival of additional low-cost carriers in the form of 1time in 2004 and Mango (a South African Airways offshoot) in 2006.

In the context of the South African market, seven major domestic airlines operate in South Africa. These include the full-service carriers British Airways (operated by Comair) and South African Airways, the low-cost carriers kulula.com, Mango and 1 time, and the smaller regional carriers SA express and Airlink. A number of smaller charter airline companies also operate but fall beyond the scope of this study. In terms of airports Oliver Tambo international airport (ORTIA) is the air transport hub of Southern Africa, handling 17.6 million passengers in 2009. Cape Town International is the second-largest airport in South Africa and the third largest in Africa handling 7.725 million passengers in 2009 (Air transport intelligence, 2010).

The arrival of the low-cost model in South Africa presented a number of unique challenges to the incumbent full-service airlines. Important decisions had to be made on how to respond to the lowcost carriers way of doing business and their appeal to the broader South African flying population. The low-cost carriers also had a number of crucial issues to tackle if they were to succeed in a market dominated by South African Airways. Each operator had to identify an effective way to compete in the market without resorting to full-out price wars, which would have damaged them all.

From a business and a marketing perspective, a logical option would be to identify specifically who the flying public is and what their needs are. This needs to be taken back a step to firstly establish the consumers understanding of the concept of a low-cost carrier and their perceptions and expectations linked to the model. Once the marketer has an understanding of these issues, they will be in a better position to identify how to compete in the market effectively. Whilst a number of studies (O Connell & Williams, 2005; Park, 2003; and Turner, 2003.) of this nature have been conducted in Europe, the USA and Asia, the work in this field is lacking in the South African context. An attempt to directly

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apply the findings of the foreign studies to the South African market will invariably lead to failure as there are a number of unique circumstances and conditions in this market that need to be accounted and adjusted for.

To gain this greater understanding of the South Airline passenger market requires that they be surveyed on their levels of understanding, their perceptions of the services on offer as well as the determinants and influences on their choice of airline or decision to travel. The concept of perceived service quality and the model of total perceived service quality were introduced by Gronroos in 1982. This model measures the extent to which the customers experience meets their expectations and helps businesses understand how consumers perceive their product or services (Gronroos, 2007). This concept is integrated into the framework of the questionnaire and serves as a key tool to establish how the consumer perceives the airline services and the underlying influences on choice. The importance of these perceptions of the product and its features on the part of the consumer can not be underestimated. It has been shown that the better the perceived product/service quality, the lower the propensity of the consumer to switch to another provider and the greater the chance of achieving customer loyalty and consumer willingness to accept a slightly higher price (Lovelock & Wirtz, 2007).

3. Methodology
The research duplicated the methodology used in the study by O Connell and Williams in their 2005 study. Permission was obtained from the authors to duplicate their study in the South African environment. The questionnaire was based on the questionnaire used by OConnell and Williams with minor adjustments being made to accommodate the research specifics and the South African market. An additional section was added to rate the perceptions of service delivered by the airline (low-cost or full-service) being travelled on as well as the passenger perceptions of the opposing category of airline.

Surveys were undertaken to determine why passengers are selecting one particular airlnel over another specifically relating to their choice between a low-cost carrier and a full-service carrier. The passengers were surveyed in the domestic departure terminals at Cape Town International Airport (CTIA) and O.R. Tambo International Airport (ORTIA) in Johannesburg. Permission was obtained from the ACSA to conduct the interviews at the airports. Of the passengers surveyed whose final destination was within South Africa, 42.4% were flying to Johannesburg, 18.8% to Cape Town and 18.5% to Durban.

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The airlines were divided into their categories of low-cost carriers (kulula.com, Mango and 1time) and full-service carriers (British Airways and South African Airways). Respondents would be

restricted to passengers flying on these airlines as they operate on the same routes and thus serve to provide a direct opportunity for comparison of passengers flying on those routes and airlines. SA Airlink and SA Express were excluded as they are small regional operators operating routes to smaller towns not served by any of the full-service or low-cost carriers.

An initial 30 questionnaires were administered as part of a pilot study to ensure the questionnaire was correctly formulated and understandable by the respondents. A number of minor refinements were introduced as a result of this process.

A team of four fieldworkers were involved in collecting the data. The fieldworkers were briefed on how to approach the survey in the domestic departure hall. Additionally, they were briefed regarding the number and spread of surveys required across the various airlines. The fieldworkers conducted the surveys across the full day to ensure an even spread of traveller types. They did find that the queues where travellers were checking-in was a favourable point for getting respondents. In other cases, the areas demarcated for travellers to sit whilst waiting for their departure time was too successful an area. Here travellers were relaxed and happy to partake in the survey. It was found that very early in the morning (5.00am 7.00am) when the airport was very busy, travellers were not forthcoming to participate. British Airways queues were found to be shorter than the other airlines making it more difficult to get travellers to participate due to the shorter waiting time. This was due to the fact that the majority of their passengers booked in via e-ticket (online). A total of 732 responses were collected at the two airports (Cape Town International Airport (305) and O.R. Tambo International Airport 427), 30% of which comprised SAA passengers, 22% BA, 18% kulula.com, 16% Mango and 14% 1 time.

4. Survey findings
In line with European and Asian study, low-cost carriers attracted a high number of younger people, with 29% of the passengers surveyed being in the under 24 years age group. Of this age group, 86% were travelling for non-business purposes that included visiting family and friends and holiday. Parents mostly paid for these trips. For the 25 plus age group, this represented 71% of those surveyed, passenger choice changed in favour of the full-service carriers.

4.1

Understanding of the differences between the low-cost and full-

service model.

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Passengers were asked to describe their understanding of low-cost and full-service airlines. Passengers perceived low-cost airlines to be a cheaper, no frills service where refreshments needed to be purchased. Full-service airlines were perceived to be a more expensive service where

everything is included, refreshments are complimentary and more luxury and comfort is offered.

It is evident from the data collected that the passengers have a limited insight into the real differences between the two models. This was seen from the fact that 27.6% view price alone to be the key difference. Of those interviewed, 12.7% were not able to explain the difference at all. Table 1 highlights some of the key answers given by respondents when attempting to explain their understanding of the difference between the two models. It also identifies some of the answers that highlight that respondents do not understand the models. Coun 19 2 3 1 6 26 191 5 88 2 6 2 4 2 1 11 111 4 9 24 2 1 2 7 8 5 123 Percentage 2.7% 0.3% 0.4% 0.1% 0.9% 3.8% 27.6% 0.7% 12.7% 0.3% 0.9% 0.3% 0.6% 0.3% 0.1% 1.6% 16.0% 0.6% 1.3% 3.5% 0.3% 0.1% 0.3% 1.0% 1.2% 0.7% 17.8%

All inclusive Baggage allowance Better treatment Charge extra for baggage Class Comfort Cost Destinations Don't know Facilities For business Frequent flyer programme Gets you where you want to go Heavy penalties for cancellations or changes Limited food and drink Luxury Meals included Age of planes No difference No frills No reserved seats Pay for toilet Provides for sports people Quality Reliability Safety Service

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Table 1: Passenger understanding of low-cost and full-service airlines selected answers

4.2

Choice of model and airline

An important element of this research was to establish the principal reason why each passenger had selected a particular airline be it a low-cost carrier or a full-service carrier. Whilst fare constituted the primary reason for selecting a low-cost carrier, it was interesting to note that in contrast to the study conducted by O Connell and Williams (2005), quality and reliability featured quite highly for most low-cost passengers. Quality was the primary reason for selecting a full-service carrier with fare coming second but significantly lower than the level indicated by low-cost passengers. The evidence from this survey suggests that passengers choose a full-service carrier for a variety of reasons, focussing mainly on quality, safety, fare and reliability. Surprisingly, service featured low on the list for both models.

Figure 1: Passengers most important reasons for selecting an airline 4.3 Booking methods

Low-cost passengers are more likely to use the website (45.6%) to book a flight than Full-service passengers (37.9%). Many full-service passengers used a travel agent (29%), whereas this type of booking channel was only used by 12% of low-cost passengers. The carriers are significantly associated with the method of booking.

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Trave l agent Low-cost Full12.3 28.7

Purcha sed at airport 8.2% 6.6%

Airline call centre 5.8% 5.0%

Friend/famil y member booked my ticket 9.1% 4.2%

Airline website 45.6% 37.9%

Other travel website 3.8% 2.6%

Office booked ticket 9.1% 13.4%

Other 6.1% 1.6%

Total 100.0 100.0

Table 2: Booking profiles as a percentage of airline model

4.4

Fare paid

On average, full-service carriers were 53% more expensive than their low-cost competitors were (table 3). Outliers were removed from this sample to maintain the data integrity. These outliers included connecting passengers who stated the total fare paid which included the long haul international leg of their journey. Surprisingly, there is no apparent linear relationship between the cost of the fare and when the booking was made.

Questions How much did you pay for your ticket?

Data Filter SAA Mango Kulula BA 1time All Data

Count 155 94 106 111 83 552

Mean ZAR 2039.41 ZAR 1026.53 ZAR 1261.22 ZAR 2251.49 ZAR 942.08 ZAR 1605.24

Table 3: Average fare paid by passengers

Data filter SAA If you booked the ticket yourself, did you do Mango price comparisons before you made the booking? Kulula BA 1time All Data Table 4: Price comparison prior to purchase

Questions

Count 198 100 115 134 87 636

Yes 45.5% 73.0% 69.6% 37.3% 72.4% 56.1%

No 54.5% 27.0% 30.4% 62.7% 27.6% 43.9%

Fare constituted the principle reason for choosing a low-cost carrier (35%) while quality constituted the primary reason for choosing the full-service carrier (20%). It is clear that passengers travelling on low-cost carriers place great importance on price as 72% of passengers did price comparisons before making the booking (table 4) and for 51% of low-cost passengers the trip was directly influenced by the fare (table 5). This indicates that passengers are not loyal to a particular brand and will look for the best fare. A total of 42% of the full-service airlines passengers questioned stated that they had looked at other carriers offerings prior to booking their flights.

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International Research Symposium in Service Management Questions Data Filter Count 200 97 115 137 93 645 Mean 1.21 1.54 1.57 1.26 1.42 1.36

ISSN 1694-0938 Yes 21.05 53.6% 56.5% 25.5% 41.9% 36.1% No 79.0% 46.4% 43.5% 74.5% 58.1% 63.9%

SAA Was your trip Influenced by the Mango fare? Kulula BA 1time All Data Table 5: Influence of fare on trip decision

For both airlines models, the majority of passengers paid for their own ticket, but 31% of full-service passengers flights were paid for by their employer. Low-cost passengers booked their flight on average 34 days prior to departure, while full-service passengers booked 42 days prior to departure (table 6).

Questions How long ago did you book the ticket?

Data Filter SAA Mango Kulula BA 1time All Data

Count 200 103 115 126 92 638

Mean 53.25 40.79 41.08 38.86 27.65 42.50

Table 6: Advance purchase data

4.5

Passenger perception of the two models

Passengers were asked to rate their perceptions of the features and service offered by low-cost airlines and full-service carriers. Using the dimensions of quality (empathy, responsiveness, assurance, tangibles and reliability) as a basis, they were asked to give their rating on a seven point scale; where 7 represented excellent and 1 poor. On average, passengers rated low-cost carriers 4.92 (65%), versus an average of 5.73 (79%) for full-service airlines. From figures 2 and 3, it is clear that passengers travelling on full-service carriers have a less favourable view of low-cost airlines than they do of full-service carriers. It is evident that passengers travelling on low-cost airlines have a significantly higher perception of the features and services offered by low-cost airlines than do passengers on full-service carriers across all dimensions. It is however noted that although passengers on low-cost airlines have a highly favourable perception of low-cost carriers and the features and services that they offer; they have an even higher rating for full-service carriers. This finding can be directly linked to the reasons for selecting an airline by low-cost passengers fare. Passengers on full-service carriers have a high perception rating for full-service carriers and significantly lower perception ratings for low-cost

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Figure 2: Perceptions of low-cost airlines of passenger on low-cost and full-service carriers

Figure 3: Perceptions of full-service carriers of passenger on low-cost and full-service carriers

4.6

Switching sensitivities

An attempt was made to assess the cross-price elasticity of demand between full-service and low-cost carriers. Figure 4 provides an indication of what proportion of a low-cost carriers passengers would switch over to a full-service carrier if the full-service provider reduced its fares respectively by 10%, 20% and 30%. The results show that if SAA and BA were to reduce their fares by 10%, then 11% on average of Kulula.com, Mango and 1times passengers would switch over to them. A further

reduction to 20% would persuade 23% more and a reduction of 30% would persuade 51% more (85% cumulative). 15% would not switch due to loyalty or convenience. Those passengers that stated that they would consider switching would do so if the fare was cheapest (58.6%), or would switch because they feel full-service airlines are more comfortable, provide better service and include a meal and drink. Those passengers that stated that they would not consider switching felt that low-cost would still provide a cheaper fare and that they were happy with their airline. This, in conjunction with other findings presented in this paper, supports the fact that whilst fares are the reason they select low-

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cost carriers, they still have aspirational tendencies and do want to experience the perceived increased luxury of the full-service carrier.

Figure 4: Fare sensitivity of low-cost airline passengers

Figure 5 provides an indication of what proportion of a full-service carriers passengers would switch over to low-cost airlines if they raised their fares by 10%, 20% and 30%. The data show that fare increases of 10% and 20% would persuade approximately 16% and 21% of the full-service passengers to switch to low-cost carriers. If the fare was raised by 30%, a further 15% of passengers would switch, thus 35.8% of passengers would switch to low-cost carriers if the fare increased by 30%. Passengers were also asked why they would consider switching. The majority (93.6%) of those that said they would switch said they would consider switching due to the cost of the airfare. Another noted observation is that 48% of the full-service passengers would remain loyal. A large number of reasons were put forward in this regard. The main reasons were due to passengers being happy with their current airline or passengers not paying for the ticket/ the company deciding on the airline. Other significant factors mentioned include service and reliability. Some passengers are clearly willing to pay more for these features. This supports the fact that price was not the main reason for selecting the FSC over the LCC. This information also provides an indication of the amount of fare flexibility that full-service carriers have and identifies the point at which passengers would begin to shift their custom to low-cost carriers.

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The findings of the price sensitivity relating to the behaviour of passengers on low-cost airlines are inline with the findings of the study of European and Asian passengers. The main difference is the relatively low number of passengers (15.48%) that would not switch at all compared to 28% and 40% of European and Asian passengers respectively. This suggests higher levels of price sensitivity for South African low-cost passenger and lower levels of loyalty towards South African low-cost carriers.

Figure 5: Fare sensitivity of full-service passengers

Regarding passengers travelling on full-service airlines, the findings were inline with the previous study when looking at the 10% and 20% fare increase categories but showed significant differences for the 30% fare increase category and not switch category. The findings of the European and Asian study showed that at a 30% increase in fare, 43% and 47% of passengers respectively would switch to a low-cost carrier, but in the South African study only 15.25% stated that they would switch. For the not switch category, European and Asian passengers indicated that 35% and 34% respectively would not switch, compared to the South African finding that 47.74% would not switch. This finding does take the company paid passenger into account. This clearly indicates a high level of loyalty to the airlines, in this case particularly for the British Airways passengers. Looking at figure 5, it does also suggest that those passengers on the full-service carriers can be split into two distinct categories those that are highly price sensitive and those that are extremely loyal.

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ISSN 1694-0938 Coun 2 132 2 2 2 1 Percentage 1.4% 93.6% 1.4% 1.4% 1.4% 0.7%

Comfort Cost of fare Not much difference between low and full-service airlines Not much difference in quality Price too high for services/ quality/ safety/ comfort/ food Short flight

Table 7 Full-service passengers reasons for switching to low-cost carriers if SAA/ BA increased fares

Accommodate for sports people Always travel with airline Availability of flights Business Class Comfort Company pays/ company decision/ traveller does not Connections/ airport destination Convenience Food quality Frequency of flights Frequent flyer programme Happy with airline Loyal More luxury Price not an issue/ fares are fine Provide me with what I need Quality Reliability Reputation Safety Service Sponsored flights Value

Coun 1 4 1 1 4 18 5 2 1 1 1 24 4 1 5 2 3 7 1 2 13 2 1

Percentage 1.0% 3.8% 1.0% 1.0% 3.8% 17.3% 4.8% 1.9% 1.0% 1.0% 1.0% 23.1% 3.8% 1.0% 4.8% 1.9% 2.9% 6.7% 1.0% 1.9% 12.5% 1.9% 1.0%

Table 8 Full-service passengers reasons for not switching to low-cost carriers even if SAA/BA increased fares

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International Research Symposium in Service Management Coun 3 3 1 18 1 2 129 1 1 10 6 1 7 1 3 4 3 4 2 15 4 1

ISSN 1694-0938 Percentage 1.4% 1.4% 0.5% 8.2% 0.5% 0.9% 58.6% 0.5% 0.5% 4.5% 2.7% 0.5% 3.2% 0.5% 1.4% 1.8% 1.4% 1.8% 0.9% 6.8% 1.8% 0.5%

Availability of flights Better airline Better experience with full-service Comfort Connections and airport destinations Convenience Cost of fare Facilities Frequency of flights Meals included More for less More lenient with luggage restrictions More luxury Patriotic Prefer airline Quality Reliability Reputation Safety Service To experience full-service airline Work for airline

Table 9 Low-cost passengers reasons for switching if SAA/BA (full-service) reduced fare

Better attitude to customers Company pays/ company decision/ traveller does not Convenience Cost of fare Happy with airline Humour Loyal No need to go with a full-service airline for short flight Services are similar to full-service

Coun 1 1 1 14 8 1 1 1 2

Percentage 3.3% 3.3% 3.3% 46.7% 26.7% 3.3% 3.3% 3.3% 6.7%

Table 10 Low-cost passengers reasons for not switching if SAA/BA (Full-service) reduced fare

5. Management implications
Price is clearly an important issue in the selection of an airline service for low-cost travellers and to a certain extent for full-service carrier passengers. Plenty of evidence has been presented to support the fact that price not only affects the type of carrier selected but also whether the trip is actually undertaken. The willingness of low-cost passengers to switch to a full-service carrier if the price is

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reduced lends further support to this point. At a superficial level, this implies that the low-cost airlines should focus on providing the lowest price if they want to reach their target audience. Practical airline economics and common sense however dictate that this cannot be the case unless of course you are an airline like Ryanair. In a restricted market like South Africa, with a limited choice of domestic destinations to fly to, competing purely on price will push the low-cost airline into a corner and force them to ensure that they continuously provide the lowest price or face the wrath of the consumer. To the consumer, the concept of a low-cost carrier immediately suggests that the price of a ticket is cheaper than that of a full-service carrier. It is a fact of life that the consumer views the concepts of price and cost as interchangeable and therefore they will continue to expect low prices from low-cost carriers. This limited understanding of the concept of a low-cost carrier is universal and will not be changed. Further review of all the data gathered suggests that whilst price is an important concept for the low-cost carriers to manage, a more important concept is perceived price. This means that it is important low-cost carriers manage customer perceptions of their model by not necessarily being the lowest fare provider, but that their fares on average are perceived to be lower than the full-service carriers. The focus of their brand and image building in their marketing

communication should address other areas of importance for their passengers; for example quality, reliability, service and an overall good experience that matches the persona or character of the brand that has been developed.

The higher level of pricing sensitivity for low-cost passengers and thus the greater tendency for switching in reaction to fare increases suggests a lot of work is required for loyalty development, brand development as well as a multitude of other strategy elements to connect to the market. On the other hand, full-service passengers were seen to be either highly price sensitive or extremely loyal despite fare increases. This presents are more difficult situation for the full-service carriers than for the low-cost carriers. Whilst clearly identifying the target market is important for both models, fullservice carriers have two very different types of passengers and this requires carefully targeted marketing efforts to ensure that they retain and develop both of them. A balance needs to be maintained between satisfying the price sensitive traveller whilst attempting to maximise revenue from the loyal and less price sensitive traveller.

References
Air ports company South Africa. http://www.acsa.co.za/home.asp?pid=228 Accessed 15/07/2010.

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Air Transport intelligence. 2010. Airports. Accessed 15/07/2010. Gronroos, C. 2007. Service Management and Marketing: Customer Management in Service Competition. 3rd edition. Chichester: Wiley. Kretschmer, C. 2008. Blending models. Ascend magazine (magazine of Sabre airline solutions). 2008 (1), 23 25. Lovelock, C. & Wirtz. 2007. Services Marketing: People, Technology, Strategy. 6th edition. Upper Saddle River: Pearson/Prentice hall. OConnell, JF & Williams, G. 2005. Passengers perceptions of low-cost airlines and full-service carriers: A case study involving Ryanair, Aer Lingus, Air Asia and Malaysia Airlines. Journal of Transport Management 11, 259 272. Parasuraman, A., Zeithaml, V.A., Berry, L.L., 1988. SERVQUAL: a multiple item scale or measuring customer perceptions of service quality. Journal of Marketing 64, 1240. Park, J.W., Robertson, R., Wu, C.L., 2004. The effect of airline service quality on passengers behavioural intentions: a Korean case study. Journal of Air Transport Management 10, 435439. Park, J.W. 2007. Passenger perceptions of service quality: Korean and Australian case studies. Journal of Air Transport Management 13, 238242. South Africa.info. http://www.southafrica.info/travel/advice/flights.htm Accessed 15/7/2010. Turner, S. 2003. Comparison of passenger profiles and selection criteria: a study of LondonAmsterdam passengers, ATRS Conference, Toulouse.

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