Balancing the quality and price of service - A case study

Abstract

The airline industry is highly competitive today. Many budget airlines have entered the airline industry and they offer attractive low airfares. However, the services provided by the budget airlines are far less than the traditional airlines. How to balance the needs for lower fares and higher service quality is a widely discussed topic today. This paper investigates some important issues and factors that influence the decision by consumers that could help airlines to develop a proper marketing strategy in different situations. Many passengers will prefer low fare airlines, while service quality could have a better profit margin. Through a survey and the used of KANO model, this paper also investigates how to achieve the balance between service quality and airfare, which is the main advantage of economical airlines over flag airlines and budget airlines. © 2004 IEEE.