CUSTOMER PERCEIVED VALUE AND PATRONAGE OF AIRLINES (A CASE STUDY OF PORT HARCOURT, RIVERS STATE)

CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

The Nigerian airline industry has a unique historical evolution. The history of aviation in Nigeria dates back to 1925 in Kano when the Royal Air Force (RAF), a British pilot made a breath-taking but safe landing on the horse race course in Kano, thus going down in history as the first recorded aviation activity in Nigeria. This became an annual business for a few years thereby creating the need for more aero planes. When this development came about a representative of the Air Ministry in London visited Nigeria to inspect what could then be appropriately described as “landing grounds”. This led to the selection of six points in Nigeria for plane landing namely Maiduguri, Oshogbo, Lagos, Minna, Kano and Kaduna. In August, 1958, the Federal Government of Nigeria in partnership with the British Office of Aviation Control (BOAC) and Elder Dempster lines formed the West African Airways. This single historic move heralded the genesis of the airline industry in Nigeria (Bassey & Joseph, 2014). Airline passengers expect to receive valuable services from airlines at all times. Customer value in respect of airlines may be considered as the extent to which the passenger receives value for money after the performance of the service. This means that the passenger received quality service at a reasonable or low price, the desired service expectation was achieved and the service received was top class and commensurate with the price paid. The motivation for air passengers to switch loyalty and patronage to competitors is the desire for service excellence and attainment of customer value (Archana & Subha 2012).

Despite the intricacies involved in meeting customers’ expectations, airlines should endeavour to satisfy such expectations, because their competiveness and sustainability thrive on passenger satisfaction and customer value or value for money received.Patronage is a situation where an individual displays a conscious effort in choosing products and services that will satisfy his or her need (s) through the process of analyzing situations that he thinks would be rewarding and relatively satisfying amidst some challenges faced in the course of fulfilling his own desires. This explains why individuals can exhibit unconditional attachment and affection towards objects or persons (Adiele & Grend, 2016). Patronage in the aviation industry entails the deliberate act of a passenger to consistently fly with a particular airline instead of going to other airline service operators.

Patronage could be defined as a passenger’s selection of an airline from a set of alternatives. More so, Patronage can be viewed from the perspectives of being inductive in nature. This suggests that the level of patronage is induced by some external conditions that prevail at a given time. This dimension of patronage dominates the business and service industry or market and it accounts for the array of literature on customer patronage (Adiele & Etuk, 2017). In Nigeria, patronage can be viewed or classified from two dimensions: conditional and unconditional patronage. Unconditional patronage is mostly associated with expectations which are not tied to reward for financial exchanges such as preference for issues that are affectively and psychologically oriented, particularly that gives them joy and satisfaction. The conditional patronage is common to goods and services that an individual purposefully or consciously maximizes to address his economic needs. When the expectations are less than the benefits received, quantitatively, the extent of patronage can fluctuate and will thus depend on the alternatives available (Adiele & Grend, 2016). Previous research in the Nigerian aviation sector has shown that airline patronage is heavily dependent on some factors which include fare and flight frequency, convenience, non-stop flight, reliability, easy accessibility to airports by passengers , service quality, perceived airfare fairness, flight availability, passenger disposition towards airline image (Jim- woo park, Rodger and Cheng, 2009; Hart & Rosenbergewill (2009). Analysis of the above identified predictors of airline patronage suggests that they can exert direct or indirect influences.

This further depicts interplay of complex variables that determines the airline choice decisions in a given economy. Different economies of the world have peculiar characteristics which shape the competitiveness and dynamics of each sub sector of the economy. Nigeria has its own peculiarities, especially in the aviation sector. The Nigerian aviation sector is projected to be one of the highest revenue earners for the country because of its enormous opportunities. Nigeria, the most populous African nation is endowed with natural, human, material and financial resources which made the country a favorable destination for other nations of the world. This notwithstanding, the Nigerian aviation sector is faced with numerous problems which may have affected the level of patronage observed by Nigerian domestic airline service providers A major problem confronting the Nigeria Aviation sector is low patronage of their services which is evidenced in stumpy commitment exhibited by customers of commercial airline operating firms in the country. The challenges that are quite noticeable within the aviation sector include overcrowded hall and traffic, obsolete and malfunctioning air navigation equipment, poor interaction and processes experienced in the purchase of air ticket (online & offline), persistent flight delays, regular flight cancellations without information to passengers and incessant plane crashes over the years are common scenarios in the industry Furthermore, some of the additional challenges experienced in the Nigerian aviation sector include: poor service quality, indiscriminate pricing of air tickets and price discrimination, poor operational effectiveness, inability of some of the airline firms to build and sustain a good corporate image, failure of airline service providers to constantly make available airplanes at the right time needed by the passengers, long hours of passengers waiting time without compensation, inadequate attentions to customers’ complaints are some of the common challenges witnessed in the Nigerian aviation sector.

1. STATEMENT OF PROBLEM

Different economies of the world have peculiar characteristics which shape the competitiveness and dynamics of each sub sector of the economy. Nigeria has the peculiarities, especially in the aviation sector. A major problem confronting the Nigeria Aviation sector is that of low patronage which is evidenced in low commitment exhibited by customers of commercial airline operating firms in the country (Mukarramah & Sulaimon, 2014). The challenges that are quite noticeable within the aviation sector include overcrowded hall and traffic, obsolete and malfunctioning air navigation equipment, poor interaction and processes experienced in the purchase of air ticket (online & offline), persistent flight delays, regular flight cancellations without information to passengers and incessant plane crashes over the years are common scenarios in the industry (Connor & Davidson, 2010). Of course, the state of business climate and infrastructure are crucial to sector performance but could it influence the passenger behaviour within the context of airline service delivery? Despite the relative challenges facing the aviation sector in Nigeria, what is the level of patronage exhibited by passengers towards domestic airlines? And could the peculiarities of the aviation sector in Nigeria predict the level of patronage towards airlines in Nigeria?

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine customer perceived value and patronage of airlines. Other general objectives of the study are:

1. To examine the perception of passengers about flight availability.
2. To examine challenges influencing the patronage of airlines in Nigeria.
3. To examine the impact of perceived value on customer satisfaction in Nigeria Aviation Industry.
4. To examine factors influencing passengers satisfaction in the aviation business.
5. To examine the relationship between customers perceived value and patronage of airlines in Nigeria.
6. To examine the challenges facing the aviation sector in Nigeria.

1.4 RESEARCH QUESTIONS

1. How is the perception of passengers about flight availability?
2. What are challenges influencing the patronage of airlines in Nigeria?
3. What are the impacts of perceived value on customer satisfaction in Nigeria Aviation Industry?
4. What are factors influencing passenger’s satisfaction in the aviation business?
5. What is the relationship between customers’s perceived value and patronage of airlines in Nigeria?
6. What are the challenges facing the aviation sector in Nigeria?

1.5 RESEARCH HYPOTHESES

H₀₁: There is no significant impact of perceived value on customer satisfaction in Nigeria Aviation Industry

H₀₂: There is no significant relationship between customer’s perceived value and patronage of airlines in Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

The research information will provide knowledge to the policymakers and regulators of aviation industry sector to design new strategies and policies for enhanced services in the aviation industry sector. The findings will provide insights to managers in aviation industry to better understand the different dimensions of services quality and how they influence customer’s satisfaction which is important in attracting and retaining their customers. This study will be important for researchers and students being that there are limited studies on determinants of passenger’s satisfaction in the aviation sector in Rivers state. The results of this study will be beneficial locally for future research.

1.7    SCOPE OF THE STUDY 

The study is based on customer perceived value and patronage of airlines in Port Harcourt, Rivers state.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Perceived Value: It can be conceptualized as the outcome of the customer’s trade off or exchange between quality discernment and the monetary and non-fiscal sacrifices (Zins, 2010).

Service Quality: Service quality has been defined as the consumer’s or customers overall impression or evaluation of the efficiency of an organization or a firm’s services (Namukasa, 2013).

Satisfaction: It refers to the ability of a firm (in this case airline company) to provide its customers (or passengers) with the benefits that surpass their expectations in so doing give them a perception that some value has been added (Lucchesi, et al, 2015).

Corporate Image: According to Zins (2010), corporate image is the underpinning customer’s emotional stereotypes or labels associated with an airline corporation.