Key Factors Affecting Thai Passengers to Select Low Cost Airline

140 Pages·2016·1.92 MB·English

Soochow University
Global Business Program, School of Business
Thesis

Key Factors Affecting Thai Passengers to
Select Low Cost Airline

Student：MANANYA SRIWORRARAT徐雅玲
Advisor：Dr. Chih-Ming Lee (李智明)
July 2016
Key Factors Affecting Thai Passengers to
Select Low Cost Airline

A Thesis
Submitted to
Soochow University
in partial Fulfillment of the Requirements
for the Degree of
Master of Business Administration

In

Global Business Program

By
MANANYA SRIWORRARAT (徐雅玲)
Global Business program, School of business, Soochow University
July, 2016

Abstract
In the past few years, global airline industry has grown dramatically, and low cost
airline obviously become prosperous and gains enormous market shares of the airline
travelling. Furthermore, low cost airline in Thailand has increased their competitiveness
rapidly and earned significant market share from full service airline. The purpose of this
study is to find the key factors affecting Thai passengers to select low cost airlines, and we
hope that the results of this study could serve as a guideline for the managers of Thai low cost
airline to effectively develop their marketing strategies in order to gain the competitive
advantage and meet passenger’s satisfaction. A framework with four dimensions and 19
factors influencing passenger’s selection of low cost airlines were derived by literature
review. Then, a questionnaire of AHP was designed and a questionnaire survey of Thai
passengers was done. Next, AHP methodology was applied to obtain the priority of
importance of these dimensions and factors. We found that the rank of importance of
dimensions is: airline corporate, service quality, flight management, and airline aircraft. As
for the rank of importance of 19 factors is: price, punctuality, safety record, reliability,
responsiveness, flight availability, comfort, cleanliness, brand image, promotion and
advertising, empathy, flight announcement, service supply chain, tangible, assurance,
facilities, flight compensation, alliance, and entertainment, respectively. Further, we
compared our results with those of other papers. Finally, we make suggestions to both Thai
low cost airlines and Thai government.

Keywords: Low Cost Airline, LCA, Low Cost Carrier, LCC, Budget Airline, No-Frill Airline,
Analytical Hierarchy Process, AHP, Decision Making Model.

i
Acknowledgement
This master thesis has been written for global business program, in the department of
business administration of Soochow University, Taiwan. It will not be completed and
perfected if there are no assists from these important people.
First of all, I would like to raise the full credit and give thanks to my thesis advisor
Dr. Chih-Ming Lee (李智明), who is the most important person that has been supporting me
at large with the fully good suggestions from his various qualified ability and his greatly
patience throughout this thesis process for more than a half past year long. In addition, I
would also like to acknowledge the defense committee members, including, Dr. Jin-Shyang
Roan (阮金祥) and Dr. Ji-Chyuan Liou (劉基全), the two important persons who are willing
to dedicate their valuable time participating in my oral defense examination so as to listen
and provide me the precious opinions and good suggestions for making my work done
completely.
Secondly, I want to give thanks for中華扶輪教育基金會 (Chung Hwa Rotary
Educational Foundation), 雙連扶輪社 (Shuanglian Rotary Club), Rose Wu, and C.T. Wu,
who have subsidized me a large number of educational scholarship, as well as, Dean of GBP
(詹乾隆教授) who offered me the good opportunity to get this fund. I also would like to give
thanks for global business program of Soochow University that offers and provides me the
qualified course arrangement, professional teachers, and lovely classmates. Moreover, I
intend to be thankful for Serena Chiang, the secretary of global business program, who
always stand by me with various kinds of supportive all every step during I have educated for
my graduate study here, as well as, thanks to all Taiwanese and Vietnamese friends who
make my days when I have stayed in Taiwan.
Lastly, I am grateful to Porntipa-Manu Sriworrarat, my super mother and father, the best
parents who never let me walk alone. They always stand besides, encourage, support,
subsidize, and give the worthy of love and care for me all the time of studying and living in
Taiwan, and all steps of my life. As well as, I would like to be thankful for my best younger
and elder brothers, Suppanai (the younger brother), Suppanan, and Supanart (the elder
ii
brothers) Sriworrarat, who also provide the great encouragements, great supports, and great

suggestions to me every time since we have been being brother and sister of full blood.

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Table of Contents
Abstract ....................................................................................................................................... i
Acknowledgement ..................................................................................................................... ii
Table of Contents ...................................................................................................................... iv
List of Tables ............................................................................................................................. v
List of Figures ........................................................................................................................... vi
Chapter 1 Introduction ............................................................................................................... 1
1.1 Background and Motivation ....................................................................................... 1
1.2 Purposes of the Research ............................................................................................ 6
1.3 Research Process ........................................................................................................ 7
Chapter 2 Literature Review ...................................................................................................... 9
2.1 Papers Related to Airline Service ............................................................................... 9
2.2 A Hierarchical Framework of Key Factors .............................................................. 18
2.3 Papers Related to the Analytic Hierarchy Process (AHP) ........................................ 22
Chapter 3 Methodology of Analytic Hierarchy Process .......................................................... 26
3.1 The Principle of AHP ............................................................................................... 26
3.2 The Process of AHP ................................................................................................. 27
3.3 The Advantages of AHP ........................................................................................... 38
3.4 The Applications of AHP ......................................................................................... 38
Chapter 4 Results of Survey and Discussion ........................................................................... 41
4.1 Personal Information of Thai Passengers ................................................................. 41
4.2 Results of Questionnaire ........................................................................................... 47
4.3 The Comparisons of Results with Those of Other Papers ........................................ 72
5.1 The Summary of Results .......................................................................................... 82
5.2 Suggestions for Related Organizations ..................................................................... 83
5.3 Research Limits and Future Development ............................................................... 92
References ................................................................................................................................ 94
iv
List of Tables
Table 1.1 Total Number of Passengers and LCA Passengers 2010-2014 ............................. 5
Table 1.2 LCA Market Shares by Passenger Volume (Fiscal Year 2013) ............................ 6
Table 2.1 Summary of Literature Review of Factors in LCA Selection ............................. 16
Table 2.2 The Definitions of Dimensions and Factors ........................................................ 20
Table 3.1 A Pair Wise Comparison Measurement Scale .................................................... 30
Table 3.2 The Pair Wise Comparison Table on 4 Elements................................................ 31
Table 3.3 The Result of Pair Wise Comparison Matrix ...................................................... 31
Table 3.4 Average Random Consistency Index (R.I. Value) .............................................. 36
Table 3.5 The Applications of AHP .................................................................................... 39
Table 4.1 Summary of Thai Passengers’ Demographic Characteristics ............................. 42
Table 4.2 The Weights and Ranks of Dimensions and Factors ........................................... 48
Table 4.3 Score and Rank for Factors in the Review Papers .............................................. 72
Table 4.4 The Results of Comparison with Those of Other Papers ................................... 76

v
List of Figures
Figure 1.1 Air Passenger Movements 2008-2015 ................................................................. 3
Figure 1.2 Research Process………………………………………………………………..8
Figure 2.1 A Hierarchical Framework of Key Factors Affecting Thai Passengers to Select
LCA ..................................................................................................................................... 19
Figure 3.1 Decision Hierarchy (Saaty, 1980) ...................................................................... 29
Figure 4.1 The Frequency of Catching Air Transportation ................................................. 45
Figure 4.2 The Main Purpose of Taking Flight ................................................................... 46
Figure 4.3 The Number of Passengers Who Travel on LCA .............................................. 47

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Chapter 1 Introduction
1.1 Background and Motivation
Undoubtedly, transportation plays an important role in human daily lives. In
particular, air transportation is already necessary in travelling whether for leisure or for
business, in terms of convenience, timeliness, and safety.
Airline industry is considered as an important branch of air transportation. It is a
typical service industry, being a part of aviation industry and focusing on moving people and
cargo from one location to another. Airline industry is divided into three main sections: Full
Service Airline (FSA), Low Cost Airline (LCA), and Charter Airline (CA) (Keyne, 2009).
In former times, airline industry has gone through a significant remodeling in its
structure. The competition in the airline industry is very intense. Currently, this strong
competition forces the whole industry to rethink their marketing strategy to meet the demand
of customers. Therefore, all airlines need to try hard to increase profit.
The airline industry in Thailand has continuously grown. However, it is controlled by
government’s regulations and policies. The beginning of airline industry in Thailand can be
traced back to the year of 1933, since KLM airline, a foreign commercial airline from
Netherland, first flew and transited to Don Mueang International Airport, the previous main
airfield of Thailand. The current main airfield is Suvarnabhumi International Airport, because
the limitation of space in Don Mueang area.
Later on, Thai government established Thai Airways Company (TAC) as the first
domestic flag airline in 1947, registered capital of 20 million THB. Moreover, in 1960, Thai
Airways International Public Company Limited (THAI), was established as a joint venture
between TAC and Scandinavian Airlines System (SAS). Scandinavian carrier provided
capital of two million THB and owned 30% share of THAI. However, in 1977, TAC
purchased 30% share from SAS with Thai government consensus, therefore THAI has
become a national flagship airline of Thailand since then.
Nowadays, there are 28 domestic airports and 6 international airports in Thailand.
Furthermore, there are more than 500 airlines serviced in Thailand. In 2014, Airports of
1