In 1971, Southwest Airlines was the pioneer of the low-cost carrier concept in the United States. It started as an intra-Texas carrier and has grown to become the fourth largest airline in the U.S. At the start of the new millennium, low-cost carriers began to emerge in Asia and Oceania with successful operators such as AirAsia and Virgin Blue. In the Middle East, Air Arabia was the first to introduce the concept and was followed by Jazeera Airways with several other announcements of intent to set up low-cost carriers (NBK Capital, 2008).
In 2004, the Kuwaiti Government permitted the establishment of a non-governmental airline firm, essentially ending Kuwait's 50-year old dependency on Kuwait Airways. The 2004 Emiree Decree #89 established Jazeera Airways as the first airline to enter this newly liberalized industry. In fact, Kuwait travelers were lagging so far behind, that until the launch of Jazeera Airways in late 2005, the only way customers could purchase tickets were in person, either at the travel agent or the airline's office. Kuwait did not have the exposure to low cost carriers experienced worldwide. Jazeera Airways recognized that launching low fares without preparing the market might cause skepticism and that it may have an adverse effect on its revenue. During the start up phase, Jazzera Airways knew that it needed to keep seat costs as low as possible to meet its business plan targets. The airline had to avoid paying high travel agent commissions or the overheads caused by having a network of offices if it wanted to meet its business plan projections. The airline had no alternative; it had to drive travelers towards booking directly without high operational costs. The obvious solution was to invest in both an online booking engine and a call center, and then drive people to book directly. Essentially, whether the airline would be successful or not depended on whether it was able to change a 50-year old consumer habit (Kuwait Transportation, 2009).
In 2005, Jazeera Airways actively marketed both, and employed interactive tactics to deliver their benefits. These plans included using internet connected laptops in shopping malls with a host to guide the user, launching special promotions for students on colleges, and giving talks in college classrooms. Gradually the market began to react and Jazeera Airways was able to convert travelers to their booking methods. In February 2008, 64% of all ticket sales were made online, 26% was done through travel agents, and the other 10% were booked via call centers and reservation desks. The strengths of these numbers prove that traveler habits can change if travelers are presented with a more empowering proposition. In this case, Jazeera Airways has been able to overcome an age-old habit of booking with great success (www.jazeeraairways.com).
Jazeera Airways has worked hard to entice travelers to book through its website by making it the cheapest method to purchase tickets: other methods incur additional fees. Many promotional offers made by the company are available only to travelers who book online. Basically speaking, Jazeera Airways is rewarding travelers who book online.
According to the latest official figures, the population of Kuwait stands at 3.3 million, of which 1 million are Kuwaiti nationals. The remainders are mostly expatriate workers living in Kuwait with their families. Table 2.4 shows the distribution of the expatriate population in Kuwait by region of origin. Many of the expatriates living in Kuwait are blue collar workers and do not travel frequently, because of the cost it entails. The low fares of Jazeera Airways appeal to this price-sensitive market. At the same time, Jazeera Airways also appeals to white collar expatriates who take advantage of the low fares to increase their frequency of travel (NBK Capital, 2008).
Table 2.4: Distribution of Expatriate Population by Region of Origin
Arab Levant countries
Source: Public Authority for Civil Information, NBK Capital (2008)
The Jazzera Airways concentrate on direct sales, particulary online with tickets sold through its website as the main distribution channel. Online booking is a very efficient distribution method for airlines. It reduces the required number of back office staff, in addition to reducing the payment cycle. Website sales provide the added benefit of allowing the company to compile a database of its clients.
Currently Jazeera Airways operates from a main hub in Kuwait, capitalizing mostly on the Arab expatriat population. A new hub will be annouced soon that would provide reinforcement of future growth to Jazeera Airways after the restrictions of its second hub in Dubai. Jazeera Airways has a major advantage by operating out of Kuwait, because it is the country's only low cost carrier, competition is limited and it has a unique business model that enables it to achieve mass appeal. In addition, Jazeera Airways faces limited competition from the other Middle East low cosr carriers. In May, 2009 Jazeera Airways signed a five year contract agreement with Kuwait's Boodai Aviation Group as the airline's ticketing agent in Kuwait, in addition to the direct paperless booking though the internet or call centers, typical for low cost carriers. This will expand Jazeera's distribution network into new areas in Kuwait and accommodate travelers who are more comfortable with agent bookings (Kuwait Transportation, 2009).
Even though Jazeera Airways shares many charactristics of low cost carriers, it cannot be classified as a pure example. It is a low-fare ailine, yet not typically low cost. It is considered a hybird airline that combines both low cost carrier traits with those of traditional airlines. As a result this combination of the blended traits allows Jazeera Airways to target a larger segment of the market. Jazeera Airways have adapted the low cost carrier business model to demand in Kuwait, which offers a unique value proposition that sets it apart from regional low cost in addition to conventional carriers (Kuwait Transportation, 2009).
Therefore this study of customer satisfaction and service quality related to online ticketing of Jazeera Airways offers a unique insight into the experience of the travel consumer in Kuwait, with Kuwait's airline travel markets individual characteristics and competitive nature being influenced by economic, cultural, as well as technological advances.
CHAPTER THREE: RESEARCH DESIGN and METHODOLOGY
Chapter Three presents explanations and justifications for the research methods used in this study. It begins by discussing the research design, followed by the research objectives, questions, hypotheses and research strategy. A description of the questionnaire and the tools used to gather the data and how the data is analyzed is then given, alongside an exploration of the validity and reliability of the research.
3.2 RESEARCH DESIGN
3.2.1 Inductive and Deductive approach
There are mainly two different approaches when doing research; deductive and inductive. Deduction emphasizes scientific principals, moving from theory to data, the need to explain causal relationships between variables, the collection of quantitative data, the application of controls to ensure validity of data, the concepts that ensure the clarity of definition, researcher independence of what is being researched and the necessity to select samples of sufficient size in order to generalize conclusion (Ghezelayagh, 2007).
Conversely in an inductive approach research is done and from the results of the data new theories are developed. When the inductive approach is used, the researchers mainly collect qualitative data and have no or low means to generalize the results. It is done to understand the underlying meaning of situations for people (Saunders et al., 2003).
An inductive approach is usually used when there is only little or no theory written about the area and the researcher is concerned or believes he/she will search for other results than the current theory explains. With the low intentions to generalize and intention to receive an in-depth understanding, the inductive approach fits with the realism and interpretivistic philosophy. As of a positivistic philosophy, the deductive approach is considered appropriate for this study.
3.2.2 Quantitative and Qualitative Approach
In the quantitative approach the investigator primarily uses post positivist claims for developing knowledge (i.e. cause and effect thinking, reduction to specific variables, and hypothesis and questions, use of instrument and observation, and test of theories), uses strategies of inquiry such as experiments and surveys and collects data on predetermined instrument that