2.

1 Literature Review

2.1.1 Marketing

Marketing is trading process between a company with other parties in the amount
that have been desired. Marketing is also defined as part of the organizational culture or
business philosophy that put customers in the center of companys strategy and
operations (Keith, 1960). Marketing is a process where company creates value for
customers and builds strong relationships with customers, with the purpose to capture
the value from customers (Kotler & Armstrong, 2008). One type of marketing that is
closely related to the airline industry is the services marketing.

2.1.2 Quality of Aviation Services

Research on the quality of flight services is popular for many researchers that
studying about economy recently. This is because customer satisfaction on services has
an significant impact on the profitability of a company (Heskett & Schlesinger, 1994).
According to Rhoades (2006), there are five criteria to measure the quality of airline
services, that five criteria are the overall performance, convenience, service, food and
website of the airline. In addition to these five criteria, researchers often use
SERVQUAL which have five indicators, that five indicators are reliability, assurance,
form, empathy, and responsive (Saha & Theingi, 2009).

2.1.3 Low Cost Carriers

According to Hansson, Ringbeck, and Franke (2003), the cost differences between
LCC (Low Cost Carriers) and Full-services flight is caused by sales and reservations,
in-flight services, pilot salaries, and aircraft ownership. Traditionally, the LCC relies on
secondary airports to keep operating at the lowest possible cost. The secondary airport
has several advantages over the main airport. Secondary airports usually charge lower
service costs (Flouris & Walker, 2005). The airport costs has a significant portion to the
cost of an airline, LCC usually flies and landing at the secondary airports to get the cost
advantage. LCC uses secondary airports to improve efficiency. Secondary airport is
usually quieter than the main airport, so LCC can reduce turnaround time and can
increase daily aircraft utilization (Griffin, 2006).
 LCC often reduce operating costs by using only one type of aircraft. There are
several advantages in one type aircraft operations. First, the cost of pilots training, and
maintenance costs can be reduced because it require less flight training and
maintenance (Flouris & Walker, 2005). Maintenance costs can be minimized by using
only one plane, because purchasing spare parts will be more efficient if we buy in a
large quantity at once. This homogenous flight can improve efficiency in operations
because pilots, crews, and mechanics are familiar with the aircraft (Griffin, 2006).

LCC keep the costs low by offering simple products. Elimination of tickets for the
premier class and reservation seats helps improve efficiency. Elimination of premier
class makes LCC aircraft tend to be fulfilled by customers. LCC also make the
complementary services costs lower.

Manurung and Toruan (2010) states that in airlines, performance of services to

consumers based on LCC service model has benchmarks such as:

1. Price: Price is the main factor to differentiate the service.

2. Flight routes diversity: Business models using LCC will be balanced with
very low structures.
3. Flight Frequency: Flight routes diversity provided by airlines has the
advantage to eliminate the wasted time felt by passengers.
4. Distribution Airlines using LCC services have made many advantages using e-
bussines. This is seen with the use of websites that can help customers to view
flight schedules and booking seat as customers wished, an airline usually give
a discount on internet booking. In addition many airlines use call centers and
it charge nothing.

2.1.4 Aviation Industry in Indonesia

Aviation industry is the fastest growing industry in Indonesia (Fernando, Saad, &
Haron, 2012). Several airlines announced for route extensions in their flight schedule.
However, aviation security in Indonesia still primary issued. Komite Nasional Keamanan
Transportasi (KNKT) reported that since 2011, there were 74 airplane crashes in Indonesia
which forced increased budget for airplane (Times, 2007).

2.1.5 Safety Issue

 Today, air travel still remains the safest viable alternative to meet the ever-
growing travel needs of the business world and our ever-changing society (Hunt, 1995).
The job of maintaining air traffic separation is crucial. Aviation weather is a vital concern
and weather reports for this important service are based primarily on observation. The
flight service stations bear the responsibility for methods of distributing this weather
information. (Waikar, 1997).

2.2 Framework

As Manurung and Toruan (2010) said that low cost carriers (LCC) in which there are
price dimensions, diversity of flight routes, channel, and frequency of flight expected can affect
customer satisfaction from in terms of the LCC. A very satisfaction and trusting customer will
spread positive stories from mouth to mouth and instead of being a walking and talking
advertisement for a company, which will lower cost to attract new customers. Quality of service
within the LCC can affect customer trust.

REFERENSI
Fernando, Y., Saad, N. M., & Haron, M. S. (2012). New marketing definition: a future
agenda for low cost carrier airlines in Indonesia. Business Strategy Series,
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Flouris, T., & Walker, T. J. (2005). The Financial Performance of LowCost and Full
Service Airlines in Times of Crisis. Canadian Journal of Administrative
Sciences/Revue Canadienne des Sciences de l'Administration, 22(1), 3-20.
Griffin, R. s. a. (2006). State Aid, the Growth of Low-cost Carriers in the European
Union, and the Impact of the 2005 Guidelines on Financing of Airports and
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