Getting the Balance Right: Price-Based Competition and the Cost-Service Trade-Off

Achieving operational cost reductions through lower service reliability standards and customer satisfaction can undermine an airline’s long-term competitiveness. Airline success essentially rests upon providing a safe and reliable product. Standards of service reliability and customer satisfaction in this case can be interpreted as being on time, not losing baggage, providing comfortable seating, having a rapid check-in, low rates of flight cancellation, and having an informed and friendly customer service.1 Studies2 illustrate that corporate loyalty is largely dependent on high levels of customer satisfaction. Efficient and readily available customer services will ensure both repeat business and personal recommendations to potential customers.