Service guarantees in the airline industry

Abstract

Many managers of service firms are unaware of the true value of service guarantees. The topic of service guarantees is only just emerging in the service marketing and management literature, yet this past literature has advocated guarantees as a tool for improving service quality, building marketing muscle and focusing on the customers needs. This paper explores service guarantees in the airline industry. The study was two fold and involved firstly an exploratory study of airlines operating within New Zealand and then an analysis. The analysis specifically focuses on the use of guarantees by two of New Zealand's leading airline companies, Ansett New Zealand Limited and Air New Zealand Limited. In particular the study has looked into the implementation of service guarantees for in-flight service. The results suggest that no airline company within New Zealand offer any form of guarantee. Ansett New Zealand believes that a guarantee would have no benefit to their organisation due to the intangible nature of the service they provide. Air New Zealand also do not see the value of service guarantees, the main reason for this being the heterogeneity characteristic of services as no two people will view the service the same. Both firms believe that the effective complaint management systems they have in place override the necessity for a guarantee.