Customer perceptions of service failure, service recovery and loyalty recovery: An investigation into the airline industry

Abstract

Building sustainable customer relationships through effective service recovery is a worthwhile goal for all airline companies in an era of intense competition. Developing service recovery strategies that can strengthen customer loyalty in the event of service failure has become a major challenge for the airline business, but yet has received little attention from academics. To address the dearth in the literature, this study sets out to investigate how customers’ perceptions of perceived justice of service recovery and those factors external to the recovery encounter, including service failure attributions and company reputation, impact their loyalty recovery in the airline context. This study uses a quantitative method based on a surrey approach. A selfadministered questionnaire was purposively distributed among airline customers at Suvarnabhumi International Airport in Bangkok, Thailand. The study was tested using data collected from 480 travellers who had previously experienced a full service airline’s flight delay in the past 12 months and was analysed with Partial Least Squares Structural Equation Modeling (PLS-SEM). First, the results of this research confirm the robustness of the Expectation Disconfirmation Paradigm (EDP) for understanding customer perceived justice of service recovery in an exchange relationship context by emphasising significant positive effects of all dimensions of justice in restoring positive customer relationships. Second, the findings clarify the interrelationships between postrecovery customer trust, customer’s overall company satisfaction and customer loyalty by highlighting the important role of which trust plays in recovering customer loyalty. Third, The results further demonstrate how customer perceived justice of service recovery is contingent upon service failure attributions and company reputation. Lastly, the research provides airline managers with useful guidelines on developing cost-effective service recovery strategies focusing on maximising customer loyalty in different service failure situations.