Building customer relationships as retention strategy in the South African Domestic Passenger Airline Industry

Abstract

Organisations are increasingly focusing on building long-term relationships with customers, thereby increasing their probability for success by offering customers higher levels of satisfaction, increasing customer loyalty, and ultimately retaining customers. Airlines in particular can benefit from retaining customers as the airline industry is characterised by fierce competition and many airlines are finding it difficult to survive against the backdrop of enormous challenges in the past decade, including the significant decline in demand for air travel together with rising costs and the worldwide economic downturn. This study investigates the effect which a strategy by airlines of building relationships with customers has on customer satisfaction, loyalty, and ultimately customer retention. The effect of service failures on customers' relationships with airlines are also considered as a negative experience could results in customers defecting to competitors. A questionnaire, comprising six sections, was specifically compiled to determine customer retention in the South African domestic passenger airline industry. Data were collected by trained fieldworkers from OR Tambo International Airport by means of a non-probability convenience sampling method from 324 passengers flying with the various domestic airlines. Findings indicate that most respondents were satisfied with the airlines' overall service; respondents who formed relationships with domestic airlines were more loyal toward the airlines; and the relationships of respondents who were satisfied with airlines' service recovery efforts were either strengthened or unchanged. The findings from this study support findings from international studies by providing a unique South African perspective on the effect of a strategy of building relationships with customers on their satisfaction, loyalty and ultimately retention. It can therefore be recommended that the organisations competing in the South African service sector, and specifically the domestic airline industry, make special efforts to build relationships with existing customers, rather than to continually try to acquire new customers. This strategy could result in a higher probability of success by increasing customer satisfaction, customer loyalty, and ultimately customer retention.