Group: 1 (Task 1-5)
Netty Yuliarti 224110176
Elparida Arni Basayanthy 224110133
Claudia Kartika Cahyati 224110163
Class: S1 MTU – ZU10
Nowadays LCC is booming among the users of air transportation. Besides the ticket price is cheap but still give priority to the safety aspects are reasons why LCC is in great demand by the public. Although the LCC presented only minimal services, it is not become an obstacle for people to use LCC.
But that does not mean, by the LCC phenomenon, then the FSC (Full Service Carrier) is not desirable. Instead the growth of aviation business in Indonesia with full service, recently increased. Many new players are starting to enter the market for full service that is only controlled by the airline Garuda Indonesia. Just call it Pacific Royale Airways is the first private airline in Indonesia to serve a full-service which has made its debut flight in some cities on June 11, 2012.
Although LCC services tend to dominate the aviation market in Indonesia, but the existence of the FSC is still visible. Indonesia National Air Carriers Association (INACA) or the Association of Indonesian Civil Aviation, said FSC class is only holding a smaller portion that is only 20% of Indonesian aviation market, the remaining 80% controlled by the LCC market. However, if the full service airlines remain consistent in excellent service, the market is still there.
Therefore, we conducted a study on the existence of a full service airline in the onslaught of low-cost airlines (LCC) aims to review how the public interest in the full-service airline, whether that interest is reduced as the rise of LCCs, or even FSC has its own market that is still survive.
The increasing demand of air transportation cause not only the upper class that requires this type transportation. The rise of the implementation strategy of the Low Cost Carrier aims to reach almost the entire community. Thus, the full service airline to be a bit marginalized. But if it remains consistent full-service market will still be there. According to the surveys we’ve done, here are some of the basic theory underlying the full service airlines:
1. Theory of flight services
Article 97 paragraph 1 of Law No. 1 of 2009 states:
Services provided by the scheduled commercial air transport enterprises in carrying out its activities can be grouped in at least:
a. service with a maximum standard (full services);
b. service standards (medium services), or
c. minimum standards of service (no frills).
From the article it can be concluded that the Full Service Carrier Services is a service provided by the airlines maximum standards. “Maximum” means the service is given in full. Services include pre-flight services, in-flight and post-flight. So the service will be received by passengers before the flight that includes services (online services, customer complaint service, check-in process which is easy), during the flight (seating arrangements, food and drink, music, newspapers, magazines), and after the flight (baggage, booking a hotel or taxi). Whereas in Low Cost Carrier, the passenger will receive only minimum service standards (basic services), by reducing the facilities provided to passengers, such as lack of catering, entertainment, and other additional facilities.
2. Theories related to cost
Supriyono (1999: 16), argued that the cost is a cost that is sacrificed or used in order to earn income (revenue) and will be used as a reduction of revenue.
From the definition, it can be said that, if the costs as low as possible, the profit obtained can be larger. In order to gain profit, the total income shall be reduced by the total cost .If in the reduction, the total cost is low, the positive difference obtained will be greater. This is what underlies the airline seeks to reduce their expenses, so that they can gain advantage by holding a maximum of Low Cost Carrier services. In the application of Full Service Carrier, although airlines do not do reduced cost, but in order to maximize revenue to cover operational expenses incurred, then this airline imposing a higher rate than the rates of Low Cost Carrier. Application of high tariffs also coupled with maximizing the quality of service provided to passengers, so despite high tariff does not mean full-service airline will lose passengers.
3. Price theory assumed quality
” …….. Setting a higher price for a product will make the consumer believe that the product of higher quality that can lead to sales and profits received bigger ……… “(Lincolin Arsyad, 2008).
Providing optimal services is usually accompanied by high prices. Just as Garuda Indonesia, every heard of this airline, always comes to mind is an expensive ticket prices but with premium facilities. Another case when we hear the name of Air Asia, then we think is a cheap ticket but did not get any food on the plane. Therefore, the pricing should be based on the value of a flight that could be felt by passengers.
4. Theory of flight safety
Article 1 number 48 of Law # 1 of 2009 mentions “Aviation Safety is a state of fulfillment of the requirements for safety in the use of airspace, aircraft, airports, air transport, air navigation, as well as supporting facilities and other public facilities.”
Aviation safety is a requirement that cannot be violated for any reason and in any condition. With high tariffs imposed in Full Service Carrier, not only gained additional passenger facilities, but also to the safety of flight, as evidenced by the implementation of a large insurance fund for each passenger. While the Low Cost Carrier, elimination of additional facilities in addition to improving renevue, also for the budget airline owned by the company can be diverted to support flight safety assurance.
The more widespread use of the concept of LCC (Low Cost Carier) by airline companies in Indonesia to make the concept of FSC (Full Service Carier) seemed a bit knocked out so we decided to examine the “DO FSC less attractive with the presence of LCCs? ‘. Regarding the background and the theoretical basis we have explained in previous studies. We will continue this research to develop a questionnaire to support the needs of data for research next.
In this case, we use a descriptive method to support the success of a recent survey. Using this method aims to see how the public interest against full service airlines. The survey is divided into two parts, the offline survey and online surveys. We made 10 essay questions for offline survey and 20 multiple-choice questions for online surveys.
The survey was conducted to review how the public interest against full service airlines, whether that interest is reduced as more widespread LCC (Low Cost Carier), or even FSC (Full Service Carier) has its own market. We chose businessmen, office workers, students and lecturers of STMT Trisakti, both men and women as a target survey as the most easily accessible and frequently travels by airplane.
In offline surveys, we conduct research directly to the expert / transportation professional (STMT Trisakti University Lecturers), so as to generate the data necessary research and actualization guaranteed. Implementation, realized by conducting interviews or question and answer directly to the expert / experienced transportation professionals on a full service airline and the Low Cost Carrier.
While in the online survey, we made a questionnaire on the site freeonlinesurveys.com.
In addition to using the site above, we are also distributing questionnaires via social networking sites such as facebook, twitter, and kaskus. Minimum target we have set is 30 respondents.
We have made a survey conducted by distributing questionnaires in the form of structured and unstructured questionnaires. In a structured questionnaire, the questions asked by some alternative answers (multiple choice) that have been determined by us. The questionnaire was distributed online. While the unstructured questionnaire, the questions were made in the form of essays, respondents are required to describe their thoughts in answer questionnaires. And a questionnaire was distributed offline. Forms of the data we collect is qualitative data, namely in the form of words or phrases such as questions that need answers. This survey was made to analyze the problems that are comparative to compare how the public interest against two (2) types of airline service, the Full Service Carriers and Low Cost Carrier. Total respondents that we can is by 52 respondents. We did the distribution of questionnaires since 2 October 2012 to 11 October 2012.
Below are the results from a recent survey:
From these data we have mentioned above, we will make an analysis that aims to determine how the public interest against the service Full Service Carrier with many emergence of Low Cost Carrier and what the underlying from the interest.
We analyze that, after many airline-emergence of a new airline with the concept of Low Cost Carrier or low cost airlines, many people who are resorting to using the service, but many are certain groups of people who remained loyal use Full Service Carrier. Underlying factors that according to our data including travel time, travel patterns, as well as underwriting travel expenses. Following review of our analysis:
If we want to use the service to fly with Low Cost Carrier, we have to make a reservation from a couple of months prior to travel. If time travel is sudden then we will not be able to make purchases of services. Because of low cost airlines rely heavily on their promotional strategies ahead of time before the scheduled flight performed, usually within a period of 3-6 months in advance. The closer with day of departure the ticket price will be more expensive. Therefore, the groups of people who tend to use the service to fly with Low Cost Carrier majority of students, who travel motive for a planned vacation. Since the holiday had been planned several months in advance, so that they will make a purchase at least 3 months prior to travel, and ticket prices will tend to be cheap. It is also based on the limited funds held by the student. They tend not to think about what kind of services they can receive, the most important basic services (destinations) could be fulfilled. While businessmen tend to keep using the service of Full Service Carrier, because the businessmen will travel on schedule that sometimes business or sudden nature cannot be planned in advance.
After we conducted a series of surveys both online and offline, from the questions that we asked in the questionnaire, we can measure the level of air passenger preferences based on the answers they provide, including:
1. choosing to use the Full Service Carrier 25 people = 48%
– Businessman = 5 people
– Office workers = 15 people
– Lecturer = 3 people
– More = 2 people
By reason of traveling, as follows:
– Business travel = 5 people
– Others (official) = 15 people
– Reason families = 5 people
2. Choosing to use the Low Cost Carrier by 27 people = 52%
– Students = 22 people
– Other = 5 people
By reason of traveling, as follows:
– Vacationing = 20 people
– The reason the family = 7 people
We can draw the conclusion that passengers using the service of Low Cost Carrier, more than the passengers using the service of Full Service Carrier, but this does not mean that the public interest is reduced to this Full Services . But due to the emergence of Low Cost Carrier services system, airlines who operating in the Full Service Carrier, mapping their own market segments which are identified most coming from the businessmen community and office workers. This shows that the Full Service Carrier does have its own market. They tend to sell to the passengers themselves who choose to use business-class flights with various reasons such as prestige, range of services, convenience of flying, safety that is more assured, and so forth.
- For Communities who use air transportation.
The public should elect the flying services that will be used is not based on the price of expensive tickets or cheap, but it should give priority to the need for safety of flight. Due to aviation safety is the most important thing. In addition, before using the services of an airline, whether full service airlines and low-cost airlines, consumers should find out as much as whether the airline in question has a good reputation in the eyes of its customers or otherwise. Because of the high and low price of the ticket does not guarantee the satisfaction gained by consumers.
- For Full Service Airlines.
Companies must maintain the quality of service provided. Due to the quality of service is a priority of full service airlines, especially in the service of each touch point must be considered in detail as Full Fare Airline communicate directly with consumers. Because if it is seen from the results of questionnaires that have been filled, the community has agreed that service quality full flight fare well. This is an opportunity for companies to continuously improve customer satisfaction and loyalty.