Money, output, and prices relationships : the case of Malaysia

Abstract

Competition in the airline industry has intensified over the decade concurrent with the

rapid growth in air travel. Two of the defensive strategies employed by airline companies

to retain customers are customer satisfaction and switching barriers. In particular, a

switching barrier unique to the airlines industry is the frequent flier programme (FFP).

After a period popularity, FFPs have come under criticisms from users and airlines. As a

result, airlines are turning their focus back to providing quality service and enhancing

customer satisfaction. This research was conducted with the objective of comparing the

relative strengths of customer satisfaction vis-a-vis frequent flier programmes at retaining

customers A survey was conducted on passengers of Singapore Airlines and Qantas

Airways to facilitate this and an index was created to analyse the data. The results reveal

that FFPs have different effectiveness depending on their structure. On the whole, FFPs

do affect the decisions of passengers but not as much as the original expectations. Despite

this, airlines should not discontinue the programmes as FFPs have evolved to the point

where passengers take for granted the membership.