ANALYSIS OF TRAIN PASSENGER RESPONSES ON PROVIDED SERVICE Case study: PT. Kereta Api Indonesia and Statens Järnvägar (SJ) AB, Sweden

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1 ANALYSIS OF TRAIN PASSENGER RESPONSES ON PROVIDED SERVICE Case study: PT. Kereta Api Indonesia and Statens Järnvägar (SJ) AB, Sweden ABADI DWI SAPUTRA Supervisor: Lars Haglund Service Science Program Karlstad University Spring 2010

2 ABSTRACT Railway is one of public transport mode on land transportation. Railways, as mass public transport modes, have unique characteristics. It has large capacity, high safety level, and free from traffic jam. Those characteristics make railway a primary public transportation. In fact, even railway transportation has a lot of benefits for society life but they still faced by the problem. Service quality level of Railways transportation is still low compared with other transportation modes. At present railways operation is still colored with the delay, limited condition vehicle, and unclear train travel information that often disadvantage passengers, and many other services offered fail to attract passengers. These conditions result in decreasing the quality of services and insufficient railways operation. The objective of this research is to analyze the relationship between customer satisfaction towards provided service with the desire to do a complaint and to find the factor from service quality that has significant influences to customer satisfaction towards PT KAI services. From that data, and also comparison study between PT Kereta Api Indonesia and Statens Järnvägar (SJ) AB, Sweden, we can recommend the service standards design, service guarantee and complaint handling system that need to be adjusted with the interest of consumer. The data was collected via field survey in the station that located in Jakarta, Yogyakarta and Pekalongan. This research shows several findings. First, there are six factors of service quality attributes that have significant influences to customer satisfaction towards PT KAI services for commuter class (Information, Appearances, Service coverage, Tangible, Safety & security, and Cost), seven factors for business class (Travel time, Information, Scheduling, Comfort, Tangible, Safety & security, and Service coverage), and also seven factor for executive class (Appearances, Safety & security, Information, Comfort, Tangible, Travel time, and Cost). Second, while the commuter class passengers complain on the Safety & security attribute, for business class it is the information that influence the desire to complain. Meanwhile for executive class, passengers are mostly satisfied with the service given by PT KAI. Third, to decrease the number of complaints, some effective mechanisms to handle those complaints and learning from Statens Järnvägar (SJ) AB are necessary to take. Fourth, the service standards for PT KAI can be classified into 6 details of service, (safety and security attributes; comfort and appearances attributes; availability of information aspect attributes; tangible attributes; service coverage attributes; and the operations of train). For service guarantee design, this research focus on travel time guarantee. Learning from Statens Järnvägar (SJ) AB on Sweden service guarantee, PT KAI can adopt and use their system to increase customer satisfaction. Keyword: service standard, service guarantee, customer satisfaction, customer complaint handling, PT Kereta Api Indonesia, Statens Järnvägar (SJ) AB i

3 TABLE OF CONTENTS Abstract... i Table of Contents... ii List of Table... iv List of Figures... v CHAPTER I. INTRODUCTION Background Problem Statement Research Question Purpose of Research Limitation Methodological Discussion Quantitative Research Approach Case Study Research Data Collection Primary & Secondary Data Data Analysis Thesis Outline... 8 CHAPTER II. THEORETICAL BACKGROUND Public Transportation Classification of Rail Transport services Service Quality Service Quality in Railway Transportation Customer Complaint Behavior Complaint Management Customer Satisfaction Service Standards Service Guarantee Analysis Factor Regression Analysis CHAPTER III. EMPIRICAL STUDIES PT Kereta Api Indonesia Introduction Indonesian Railway Organizations Project Description in PT Kereta Api Indonesia Customer Satisfaction Index in PT KAI Complaint Handling System in PT KAI Service Guarantee in PT KAI Statens Järnvägar (SJ) AB, Sweden Introduction ii

4 3.5.2 Sweden Railway Organization Project Description in Statens Järnvägar (SJ) AB, Sweden Customer Satisfaction Index in SJ, AB Complaint handling System in SJ, AB Service Guarantee in SJ, AB CHAPTER IV. RESEARCH METODOLOGY Research Flowchart Research Design & Questionnaire Respondent Sample Size Study Area Research Tool Procedure Type of Data Data Analysis Validity & Reliability CHAPTER V. ANALYSIS & RECOMENDATION Research Result Steps of Analysis Demographic Data Analysis Service Performance Analysis Customer Satisfaction Analysis Analysis Factor Interpretation of Factor Comparison of Factor Customer Complaint Analysis Recommendation Complaint Handling System Service Standard Design Service Guarantee Design CHAPTER VI. CONCLUSION Conclusion Future Studies REFERENCES APPENDIX iii

5 LIST OF TABLES Table 3.1 Track and Length Table 3.2 Passenger Data (000 people) Table 3.3 Railway Station in Java Table 3.4 Performance Report of PT KAI Table 3.5 Railway Station in Sweden Table 3.6 Customer Satisfaction Index in SJ AB, Sweden Table 3.7 Punctuality in SJ AB, Sweden Table 5.1 The Number of Respondent Based on Gender Table 5.2 The Number of Respondent Based on Age Table 5.3 The Number of Respondent Based on Educational Level Table 5.4 The Number of Respondent Based on Occupation Table 5.5 The Number of Respondent Based on Frequently Using Train Table 5.6 The Number of Respondent Based on Level of Income Table 5.7 Distribution of Satisfaction Responses Table 5.8 Comparison in Services Table 5.9 KMO and Bartlett's Test (Commuter Class) Table 5.10 Rotated Component Matrix a,b (Commuter Class) Table 5.11 KMO and Bartlett's Test (Business Class) Table 5.12 Rotated Component Matrix a,b (Business Class) Table 5.13 KMO and Bartlett's Test (Executive Class) Table 5.14 Rotated Component Matrix a,b (Executive Class) Table 5.15 Service attribute that use in factor analysis Table 5.16 Comparison Results Table 5.17 ANOVA b Table (Commuter Class) Table 5.18 ANOVA b Table (Business Class) Table 5.19 ANOVA b Table (Executive Class) Table 5.20 Customer Complaint Policy Table 5.21 Customer Responses and Real Condition on Field Towards Provided Service iv

6 LISTS OF FIGURES Figure 2.1 Service Quality Model Figure 2.2 Gap 2 : Between Management s perceptions of customer expectations and Service Quality Specifications Figure 2.3 Gap 3 : Between Service Quality Specifications and Service Delivery Figure 2.4 The expectancy disconfirmation with performance model Figure 3.1 Coordination Structure of Directorate General of Railway Figure 3.2 Organization Hierarchy of PT Kereta Api Indonesia Figure 3.3 Railway map in Java (total length route, 2005: km) Figure 3.4 Railway Map in Sumatera (total length route, 2005: km) Figure 3.5 Railway Map in Jabodetabek Area Figure 3.6 Complaint Form in KCJ website Figure 3.7 Customer complaint Figure 3.8 Organization Hierarchy of Statens Järnvägar (SJ) AB, Sweden Figure 3.9 Railway Map of Sweden (source: 46 Figure 4.1 Research Flowchart Figure 5.1 Steps of Analysis Figure 5.2 Seating Configurations Figure 5.3 Windows Designs v

7 CHAPTER 1 INTRODUCTION The introductory section gives a picture of the incitements for this thesis. In this section, a brief introduction is given as well as the objectives of this master thesis together with its limitations. The final section will present an outline of the master thesis. 1.1 Background Transport or transportation is the movement of people and goods from one location to another. A transport is the solution of displacements of individuals and goods in both time and space. Transports create time utility as well as place utility. Transport is performed by modes, such as air, rail, road, water, cable, pipeline and space. The field can be divided into infrastructure, vehicles, and operations. Transportation as a public service has an important role in the people s society; but in fact most of public transport companies in Indonesia only care about the service as an output. It means that the purpose of their activities are simply transporting somebody or providing transportation capacities. The customer only like the recipient of the service, they do not care about the customer needs (customer oriented). In this situation many problems occurred such as: queuing time for ticket, waiting time, punctuality (on time departure & on time arrival), fleet capacity, physical condition of the fleet, services provided by service personnel, safety information passenger, readiness of staff to help passengers, cleanliness, convenient station, security on board, availability of media of suggestion and complaint, unfriendly service personnel, information availability, availability of trash bin on board and off board, and appearance service personnel. Based on the explanation of the problem, there are so many complaints from customer about performance of public transport industry in Indonesia, the performance is far from expectation. Although complaint information that was received will be very useful for the company to improve the service standards or to take necessary steps in the improvement of internal company in the future, in fact 1

8 there are no good system for handling the complaints from the customers which adopted by public transport operators in Indonesia. Customer satisfaction is a key to the future development of public transport, both in theory and practice. Customer satisfaction has the potential to highlight and explain the link between what a government and company does (in terms of the products and services it offers) and the customer reactions to that. Customer satisfaction relate to how passengers respond to the quality of service that the operator gives them. 1.2 Problem Statement Railway is one of public transport mode of land transportation. Railways have a key position in society. They are a very old and important phenomenon in the transport system. They also played an important role in the industrialization and development of the modern world. Railways as mass public transport mode have unique characteristics. It can carry passengers in the amount of mass at a relatively less expensive cost. It is also energy efficient, land saving, high safety level, environmentally friendly, comfortable, adaptive to technology development, and free from traffic jam. Those characteristic makes railway primary public transportation. In Indonesia, railways cover about 3,362 km in Java and 1,314 km in Sumatra with only 10% of this being double-track railway. There is one railway company monopoly in Indonesia: the state-owned Kereta Api Indonesia. The most common problem of railways in Indonesia is the lack of finance that causes deterioration of infrastructure quality. This influences the quality of service; as a result the number of customers gradually decreases. Finally, that condition will influence company s revenue and cause accumulation of finance problem which is identified as a causal loop problem. Railway is different from the development and maintenance of road, including bridge, terminal and road sign, which are implemented by the government (except toll road). Indonesia railway should manage all of them by themselves. Road users only pay vehicle based on the ownership rather than the used of the road infrastructure. The costs for investment and railway facility maintenance are very expensive, much more expensive than that of road transport modes. However, for the 2

9 government organization, this is not a proper measurement the worthwhileness scheme. Government can also expect to consider other (social) benefits, such as: 2. Reduction of accidents that usually occur when the traffics shift from road to railway modes which is relatively safer. 2. Time saving for passengers if they use railway mode compared to road mode. 2. Reduction of traffic congestion that is able to avoid the cost requirement for new road construction. The external benefit of railway mode is very significant, for example, the fuel consumption per train passenger is only liters per kilometer, Compared to the two passengers car that consumes 0,25 liter per passenger kilometer or bus 0,01 liter per passenger kilometer. With an assumption that commercial passengers use cars and economic passengers use buses, the railway mode will be able to save about 200 million litre of fuel yearly. If diesel fuel subsidy is Rp 1000 then PT Kereta Api, the state owned company, as single authority of Indonesian railway will save the subsidies about Rp 200 billion yearly. Other externality is the loss of society because of road congestion, for instance if urban railroad in Jakarta stop the operation and about 350,000 passengers of the train use bus. In this case, there are other external benefits such as pollution reduction and land saving. According to the authorities, the railways' share of passenger transportation is stagnant, at 7% of total passenger transport, and the share of cargo transportation is under 1%. This low level of performance is attributed to the poor condition of the railway infrastructure and facilities, inadequate application of technology, and the poor quality of management, reflected in the declining performance of the railways and in particular, the advanced age of locomotives, coaches, and rolling stock (WTO Trade Policy Review on Indonesia, May 2007). In fact even railway transportation has a lot of benefits for society life but they still faced by the problem. Service quality level of Railways transportation is still low compared to other transportation modes. At present, railway operation is still colored with delay, limited-condition vehicle, and unclear train travel information that often disadvantage passengers, and many of services offered fail to attract passengers. These conditions result in decreasing the quality of services and insufficient railway 3

10 operation. This is caused by infrastructure and rail facilities that have not been adequate to serve demand of railway transportation services, in addition to quality services that are still not satisfactory to service users. Base on the facts, we know that Indonesian railways have a lot of problems. There are many complains from the customers about railway services. It shows that people have big expectation on railway but the service has not fulfilled their needs yet. The operator of Indonesian railway (PT Kereta Api Indonesia) cannot understand the overall expectation of users of railway service. These conditions result in decreasing the quality of services and insufficient railway operation. This will be a barrier to Indonesian railways accomplishment in making it to be a reliable and sustainable transport mode. 1.3 Research Question The research presented in this thesis explores the following questions: 1. What are the service quality attributes that have significant influences to customer satisfaction towards PT KAI Services for short distance train (Commuter class), and long distance train (Business class, and Executive class)? 2. Are there influences between customer satisfactions towards provided services and the desire to make a complaint? 3. What is the effective mechanism to handle passenger s complaints for PT KAI? 4. What kind of service standards and service guarantee that can be recommended to PT Kereta Api Indonesia in order to improve their services? 1.4 Purpose of Research The objective of this thesis is to analyze the relationship between customer satisfaction towards provided service with the desire to make a complaint and to find factors from service quality that have significant influences to customer satisfaction towards PT KAI services. From the data, and also the comparison study between PT KAI and SJ AB, Sweden, we can recommend the service standards design, service guarantee and complaint handling system that need to be adjusted with the interest of customer, so it is expected to obtain service standards that can meet the needs of users in the use of Train transportation. 4

11 1.5 Limitation This research is a comparison study between PT Kereta Api Indonesia and Statens Järnvägar (SJ) AB, Sweden. It concerns with customer complaint handling, service guarantee and service standards based on customer data survey. This thesis also limits the coverage area only to passenger railway service. The case study in Indonesia will be assumed in Jakarta City for commuter class (short distance train), Pekalongan and Yogyakarta city for business and executive class (long distance train). For case study in Sweden is taken from annual report, previous study, literature review, interview with related authority and field observation. Due to some differences in service standards, service guarantee and complaint handling system of Statens Järnvägar (SJ) AB, Sweden with the type of the service of PT KAI, the researchers carried out the adjustments service with the real condition for the operation of PT KAI. 1.6 Methodological Discussion The methodological discussion of this research is to describe the approach applied in order to answer the research questions stated above. The methods and data used in the study are briefly presented Quantitative Research Approach The functional or positivist paradigm that guides the quantitative mode of inquiry is based on the assumption that social reality has an objective ontological structure and that individuals are responding agents to this objective environment (Morgan & Smircich, 1980). Quantitative research involves counting and measuring of events and performing the statistical analysis of a body of numerical data (Smith, 1988). The assumption behind the positivist paradigm is that there is an objective truth existing in the world that can be measured and explained scientifically. The main concerns of the quantitative paradigm are that measurement is reliable, valid, and generalizable in its clear prediction of cause and effect (Cassell & Symon, 1994). Being deductive and particularistic, quantitative research is based upon formulating the research hypotheses and verifying them empirically on a specific set of data (Frankfort-Nachmias & Nachmias, 1992). Scientific hypotheses are valuefree; the researcher's own values, biases, and subjective preferences have no place in 5

12 the quantitative approach. Researchers can view the communication process as concrete and tangible and can analyze it without contacting actual people involved in communication (Ting-Toomey, 1984). The strengths of the quantitative method include: Stating the research problem in very specific and set terms (Frankfort-Nachmias & Nachmias, 1992); Clearly and precisely specifying both the independent and the dependent variables under investigation; Following firmly the original set of research goals, arriving at more objective conclusions, testing hypothesis, determining the issues of causality; Achieving high levels of reliability of gathered data due to controlled observations, laboratory experiments, mass surveys, or other form of research manipulations (Balsley, 1970); Eliminating or minimizing subjectivity of judgment (Kealey & Protheroe, 1996); Allowing for longitudinal measures of subsequent performance of research subjects. The weaknesses of the quantitative method include: Failure to provide the researcher with information on the context of the situation where the studied phenomenon occurs; Inability to control the environment where the respondents provide the answers to the questions in the survey; Limited outcomes to only those outlined in the original research proposal due to closed type questions and the structured format; Not encouraging the evolving and continuous investigation of a research phenomenon Case Study Research A case study is an empirical inquiry that investigates a contemporary phenomenon within its real life context, especially when the boundaries between phenomenon and context are not clearly evident. The case study inquiry copes with technically distinctive situation in which there will be many more variables of interest than data points, and as one result relies on multiple sources of evidence, with data needing to converge in a triangulating fashion, and as another result 6

13 benefits from the prior development of theoretical proposition to guide data collection and analysis (Yin 2003). Denscombe (2007) argues that the real value of a case study is that it offers the opportunity to explain why certain outcomes might happen - more than just find out what those outcomes are. The thesis is a case study about railway as public transport between PT Kereta Api Indonesia and Statens Järnvägar (SJ) AB, Sweden. The result of analysis chapter will be applied in pilot case study of Indonesian railways system Data Collection After deciding the method, the next step is collecting data stage to support this thesis. In this data thesis, both primary and secondary data are used Primary and Secondary Data In this research, the data were divided into secondary data and primary data. 1. Secondary Data The secondary data is data which is collected to support the primary data and as comparison to other studies. The secondary data in this research are obtained from the institution or organizations associated with the research object such as Directorate General of Railways (DGR) Ministry of Transportation, PT. KAI, PT. KA Commuter Jabodetabek (PT. KCJ), Banverket and Statens Järnvägar (SJ) AB, Sweden, both directly go to those offices or through the official website. Secondary data required are as follows: a. Complaint handling management system, service guarantee policies, and service standards associated with the railways services b. Other supporting data about characteristic of service operation such as: railway network, the number of users, the number of stations and fleets, the fare structure, and customer satisfaction index 2. Primary Data The primary data is data which are collected in the field based on the existing and reality condition. This data were conducted by questionnaire survey. 7

14 Data Analysis Further analysis will be done, after data collecting. In this thesis, researcher using factor analysis for finding the service quality attributes that has significant influences to customer satisfaction towards PT KAI Services for Commuter, Economy class, Business class, and Executive class, and regression analysis for finding where there is influence between customer satisfactions with the desire to do a complaint. 1.7 Thesis Outline The thesis outline is presented in order to guide readers through this thesis and to give a quick overview of the different chapters. Introduction, in chapter 1, contains background why writer choose this thesis topic. Theoretical Framework, in chapter 2, contains about basic theory that suitable to use to analyses the problem. Empirical Study, chapter 3 is a description of the case of thesis studies there are PT Kereta Api Indonesia and Statens Järnvägar AB Sweden Research methodology, in chapter 4 presents the research approach used in this study Analysis & Recommendation, in chapter 5, presents analysis and recommendation Conclusions, chapter 6 presents the conclusion and suggestion for future research. 8

15 CHAPTER 2 THEORETHICAL FRAMEWORK This chapter will give an overview of literature that is related to the research problems. This chapter will introduce the concept of public transportation, classification of rail transport services, service quality, service quality in railway transportation, customer complaint behavior, complaint management, customer satisfaction, service standard, and service guarantee, factor analysis and regression analysis. 2.1 Public Transportation Public Transportation is mass transportation from the government or private company that can carry many people to their destination on time with cheap fares, comfortable and safe vehicles. This sector is based on public-private business to business (B2B) relationship and the system can be seen as a value network (Enquist, 1999; 2003). All business activities are principally a matter of meeting and satisfying customers needs (Johansson, 2001). An increasingly important task in transportation is the improvement of public transportation services as customer appeal to make them more useful so they can solve transportation problem. One of public transportation in land area is railway (train). According to Indonesia Railways Law No , Railway is a united system that consists of infrastructure, vehicle, and human resources, also norm, criteria, requirement, and procedure in order to operate railway as transportation mode. Railway operation consists of infrastructure and vehicle (freight and passenger train) operations. Railway infrastructure covers all the fixed installations on routes and stations that are required for the running of trains. The activities inside the infrastructure area are infrastructure operational, construction, maintenance, and management. Railway operation consists of vehicles steered by a track on a dedicated area, which are governed by a signaling system. The activities inside vehicle operation are vehicle availabilities, vehicle operation, vehicle maintenance, and vehicle cultivation. 9

16 2.2 Classification of Rail Transport Services In the Services Sectoral Classification List (MTN.GNS/W/120), which was drawn up during the Uruguay Round based on the United Nations Provisional Central Product Classifications (UNCPC), rail transport services is listed as a subsector of transport services and includes five sub-categories namely, passenger transportation, freight transportation, pushing and towing services, maintenance and repair of rail transport equipment, and supporting services for rail transport services. A brief description of each of these sub-categories is given below: (a) Passenger Transportation (CPC 7111): This sub-sector includes two kind of services: (i) Interurban passenger transportation (CPC 71111)- This refers to interurban passenger transportation provided by railway, regardless of the distance covered and the class used. (ii) Urban and suburban passenger transportation (CPC 71112)- This refers to transportation of passengers between two urban areas or between an urban and a suburban area. Services provided by urban mass transit railways, i.e., underground and elevated railway, are included in this category.2 (b) Freight Transportation (CPC 7112): This sub-sector includes the following services: (i) Transportation of frozen or refrigerated goods (CPC 71121)- This refers to the transportation of frozen or refrigerated goods (e.g. perishable food products in special refrigerated cars) by railway. (ii) Transportation of bulk liquids of gases (CPC 71122)- This refers to transportation of bulk liquids of gases in special tank cars by railway. These cars may also be refrigerated. (iii) Transportation of containerised freight (CPC 71123)- This refers to transportation by railway of individual articles and packages assembled and shipped in specially constructed shipping containers designed for ease of handling in transport. (iv) Mail transportation (CPC 71124)- This refers to transportation of mail by railway on account of national and foreign postal authorities. 10

17 (v) Transportation of other freight (CPC 71129)- This refers to transportation by railway of freight, not included elsewhere. (c) Pushing and Towing Services (CPC 7113): This sub-sector includes railway pushing or towing services, on a fee or contract basis, e.g. the movement of wagons between terminal yards, industrial sidings, etc. (d) Maintenance and Repair of Rail Transport Equipment (CPC 8868): Maintenance and repair activities in this sub-sector cover repair services of transport equipment, on a fee or a contractual basis and do not include maintenance and repair of railway infrastructure, which is covered under the Construction and Related Engineering services sector (CPC and CPC 51320). (e) Supporting Services for Rail Transport Services (CPC 743): This sub-sector includes railway passenger terminal services, except cargo handling, and other supporting services for railway transport, not classified elsewhere. This subcategory excludes shunting services (classified in CPC under Pushing or Towing Services); railway freight cargo handling services [classified in the subclass CPC under Container Handling Services, if for containerised freight, and in CPC (Other Cargo Handling Services), if for noncontainerised freight or passenger baggage. 2.3 Service Quality Before defining service quality, it is important to know the characteristic of service quality. Zeithaml (1990) acknowledges the characteristics of service quality which is more on the subjectivity of customers. Zeithaml describes it as follow: a. Service quality is more difficult to evaluate than goods. b. Customers do not evaluate service quality solely on the outcome of a service, they also consider the process of service delivery. c. The only criteria that count in evaluating service quality are defined by customers. Only customers judge service quality. Specifically, service quality perception stem from how well a provider performs vis-à-vis customers expectations about how the provider should perform. 11

18 American Society of Quality (ASQ) defines quality as The totality of features and characteristics of a product or service that bears on its ability to satisfy given needs. (Haksever et al. 2000). Park, Robertson and Wu (2004) define service quality and service value as: service quality can be defined as a customer s overall impression of the relative efficiency of the organization and its service, and service value can be defined as customer s overall assessment of the utility of a product base on perceptions of what is received and what is given. Parasuraman (1985) defines service quality as a measure of how well the service level delivered matches customer expectation. While Edvardsson (1997) acknowledges that service quality is that the service should correspond to the customers expectations and satisfy their needs and requirements. Moreover, Lewis and Booms declare that service quality is matching service and expectations. Parasuraman et al. (1988) argued that SERVQUAL is multiple-item instrument for assessing customer perception of service quality in service and retailing organization. They also declare that their research showed criteria used by customer to assess service quality fitting 10 dimensions: tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding/knowing the customer, and access. After further examination, they proposed five dimensions of SERVQUAL, there are: 1. Reliability is the ability to provide services promised to the right (accurately) and the ability to be trusted (dependably), mainly to provide services in a timely manner (on time), in the same manner in accordance with the schedule that has been promised, and without making mistakes each time. The attributes in this dimension are: a. Ability to perform the promised service dependably and accurately b. Providing services as promised c. Dependability in handling customers service problems d. Performing services right at the first time e. Providing services at the promised time f. Keeping customers informed about when services will be performed 12

19 2. Responsiveness, that is the will or desire to help employees and provides services that customers needed. Leaving the customer to wait, especially without a clear base, will cause a negative impression that should not happen. Unless this error was responded quickly, it can be a good expression and a pleasant experience. The attributes that exist in this dimension are: a. Willingness to help customers and provide prompt service b. Readiness to respond to customers requests 3. Assurance, including knowledge, skills, hospitality, courteous, and trustworthy nature of the contact personnel to the nature of customer skepticism, and feel free from danger and risk. The attributes that exist in this dimension are: a. Knowledge and courtesy of employees and their ability to inspire trust and confidence b. Employees who instill confidence in customers c. Making customers feel safe in their transactions d. Employees who are consistently courteous e. Employees who have the knowledge to answer customer questions 4. Empathy, include attitude contact and company personnel to understand customer needs and difficulties, good communication, personal attention, ease of communication or conduct in the relationship. The attributes that exist in this dimension are: a. Caring, individualized attention the firm provides its customers b. Giving customers individual attention c. Employees who deal with customers in a caring fashion d. Having the customer s best interest at heart e. Employees who understand the needs of their customers 5. Tangibles, availability of physical facilities, equipment, and communication facilities and the other that can or should be in the process of services. The attributes that exist in this dimension are: a. Appearance of physical facilities, modern equipment b. Employees who have a neat, professional appearance c. Visually appealing materials associated with the service d. Convenient business hours 13

20 Parasuraman (1991) also divides the five dimensions into two main categories considering which part of the service they are more involved in; process or outcome. While reliability dimension is mainly concerned with the service outcome, other dimensions of service are more concerned with the service process. Then it can demonstrate the whole dimension of service again. The following are two categories discussed above: Service Outcome Reliability Service Process Tangibles Responsiveness Assurance Empathy The reliability, which includes the accuracy and dependability determinants of service, can be judged after the service was delivered to customers, but the other dimensions must be judged when the service is being delivered. Parasuraman (1991) states, Although reliability is the most important dimension in meeting customer expectations, the process dimensions (especially assurance, responsiveness, and empathy) are most important in exceeding customer expectations. They also state that in their study in 1991 when we asked our respondents to discuss what companies could do to exceed their expectations, they invariably answered in term of the process dimensions. In general, companies are supposed to be accurate and dependable and provide the service they promised to provide, in other words, meeting the reliability dimension. However, to go beyond what is expected and provide the excellence of service to customers, the providers need to surprise customers with uncommon swiftness, grace, courtesy, competence, commitment, or understanding. (Parasuraman, 1991) That is, in other words, meeting the tangibles, responsiveness, assurance and empathy dimensions. In practical implementation, Parasuraman et al. (1985) finds missing link between service quality perspectives owned by the producers with service quality perceived by the customers. Parasuraman et al. models the missing link with gap between the perception of service quality from the producer and customer. 14

21 Word of mouth Communication Personal needs Past experience Customer Expected Service Gap 5 Perceived Service Provider Service delivery Gap 4 External communications to Customer Gap 1 Gap 3 Service Quality Specifications Gap 2 Management Perception of Consumer expectation Figure 2.1 Service Quality Model Source: Conceptual Model of Service Quality (Zeithmal et al., 1990) Briefly, the gap model in the above can be summarized as follows: to close the gaps, the company must identify what customers expect (gap 1 understanding gap ), then the organization has to design the service accordingly (gap 2 design gap ), and assure that the service is delivered as it was designed (gap 3 delivery gap ). At the same time, they must communicate to customer precisely what the services contain (gap 4 communication gap ). When this is done, the company has done what it can to design, to deliver, and to communicate the service to customers, and thereby increases the chance that customer expectations of the service and their experience of it match (gap 5 service quality gap ). Based on the Service Quality Model, this research focus on gap 2 design gap and gap 3 delivery gap. 15

22 Figure 2.2 Gap 2: Between Management s perceptions of customer expectations and Service Quality Specifications Gap 2 or design gaps occur due to differences between management perceptions of customer expectations and service quality specifications. The design of service standards aims to find out what benchmark the quality of service standard that is applied by the management service providers. If the management does not have service standards, they need to make the design standard of service quality. Figure 2.3 Gap 3: Between Service Quality Specifications and Service Delivery In gap 3, the role in standard delivery of the service also must be paid attention to. The service standards are made as the guide in the operation of a service that is the realization from hope of the customer on this service. If this customer expectation is different from the application of the service standard, then complaints from the customers on the dissatisfaction of the services emerge. 16

23 2.4 Service Quality in Railway Transportation The importance concern in transit service quality is passengers point of view. TRB (2003a) groups those categories into two main groups, those are: availability, and convenience & comfort. 1. Availability a. Service Coverage. Service coverage is an important factor for choosing transit. The route of service should ease one to mobile, from origin to destination. For examples, train station should be easy to access by walking or bike and easy to access to bus shelter even for those disabled people. b. Scheduling. Scheduling is related with how easy the passengers get service by the train with short waiting time in the station. This condition is related with many operated fleets and high frequency of the train. c. Capacity. Capacity can impact train service availability. During rush hours or holiday, trains often experience overload in capacity. It means, for people who have not get in the train, the service is not available. d. Information. Information is a vital factor. Passengers need information in order to get reliable service. Operator should inform any information to the passengers through any possibilities (TRB 2003a). 2. Comfort and Convenience a. Passenger Load. Passenger load can reduce the added value compared to private vehicles. These factors need more attention as operator should be smart to adjust load factor, based on supply and demand. When demand is low, operator will set frequencies to become low, vice versa. b. Reliability. Reliability in transit service is the matters of time that are on-time performance and regularity of headway. These problems could be influenced by internal and external operator s management, such as traffic condition, road construction, vehicle and maintenance quality, transit preferential treatments, schedule achievability, evenness of passenger demand, etc. c. Travel Time. Travel time is one of a consideration factor for choosing modes. If travel time of public transit is less than private vehicle, one will choose public transit. Thus, public transit should have added value to become people reference. 17

24 d. Safety and Security. Safety and security in transit is whole parts from step on the station until travel with the train safely and secure from criminal action. e. Cost. When passenger has plans to mobile somewhere, one will compare cost out-of-pocket and value of each mode. f. Appearance and Comfort. Appearance includes cleanliness and neatness of vehicle and station. Appearance condition can either attract customer or instead unwilling to use transit. Appearance is reflection of management concern to transit service. Comfort is related with personal comfort feeling, such as appropriate climate control (air conditioner, heater), comfort of seat, and comfort of ride. The more comfort they feel, the more consideration to use public transit (TRB 2003a). 2.5 Customer Complaint Behavior Complaints are a vital form of customer feedback that provides unique and valuable information to an organization concerned with quality improvement and risk management. Customer complaint behavior is a complex construction although three factors are commonly mentioned in different definitions of the phenomenon, either separately or in combination. The definitions either describe the complaining customer s state of mind, a behavioral, and/or a communicational act (Tronvoll 2008). London (1980) defines customer complaint behavior as an expression of dissatisfaction by individual customers (or on a customer s behalf) to a responsible party in either the distribution channel or a complaint handling agency. Oliver (1980) notes that complaint behavior is dissatisfaction which is caused by negative disconfirmation of purchase expectations. Singh and Howell (1985), define customer complaint behavior as a set of multiple (behavioral and non behavioral) responses, some or all of which are triggered by perceived dissatisfaction with a purchase episode. Knowledge about complaint behavior gives the service provider valuable insight into many areas such as identifying common service problems, improving service design and delivery, understanding the customer s perceived service quality and helping strategic planning (Tronvoll 2008). There are five behaviors common complaint: 18

25 1. Facing companies/retailer in a certain way. 2. Avoiding the same company/retailer and persuading friends and family, to avoid the same company/retailer. 3. Doing open action involving third parties (for example, launched a formal action to obtain compensation). 4. Boycotting a company or organization. 5. Creating an alternative organization to provide goods or services. The first three behaviors - related to the retailer, rather than degrading the brand or store and asking friends to avoid too, and complained through a third party - is an open response to the problem of product or service which customers claim, both personally punish retailers through business withdrawal or by demanding some kinds of replacement. This replacement can be in the form of money or replacement product. Two last behaviors are more far-reaching: pulling their own business (hope not from your friends and family) to launch a customer boycott of a general attempt to change the marketing practices and / or promoting social change. Perhaps the most drastic behavior is the last: creating a new organization to provide goods or services. Singh (1988) suggests that customer complain behavior could be classified into three major categories: (1) voice response to the party directly involved in the complaint; (2) private response (e.g. negative word-of-mouth and/or switching); and (3) a third party response (e.g. legal action). From the customers perspective it is important to complaint after encountering an unfavorable service experience because it gives the customer an opportunity to (i) receive an apology for the inconvenience, (ii) be offered a fair solution of the problem, (iii) be treated in a manner where the service company appreciates the customer s problem (including fixing it), and (iv) be offered some value-added atonement for the inconvenience (Zemke and Bell, 1990). From the transportation company s perspective, complaint behavior is important because it, (i) helps the provider to develop a sustainable business, (ii) may reduce the effect of the negative word-of-mouth, and (iii) influences the profitability in the future. A complaint provides an opportunity for service recovery which, in turn, has the potential to educate the customer, strengthen loyalty, and induce positive word-of-mouth comments (Edvardsson and Roos 2003; Friman and 19

26 Edvardsson 2003). Although attracting new customers is vital, successful service companies recognize that retaining current customers and building loyalty are even more important for profitability; as such, successful service companies actually encourage dissatisfied customer to complain (Tax et al. 1998). 2.6 Complaint management Complaints are valuable source of information. Every complaint is an inside look into a customer s mind, provided at no cost to company. Complaints tell company why customers are dissatisfied and what company can do about it. An effective complaint management process can be an important quality improvement tool. Many studies that emphasize that customer feedback and complaint should be welcomed and encouraged by the service provider because they generate valuable information (Nyer and Gopinath 2005; Reynolds and Harris 2006; Tax and Brown 1998). Customer complaints may be useful in many ways: providing marketing intelligence data (Harrison-Walker 2001), identifying common service problems (Harari 1992; Johnston and Mehra 2002; Richins and Verhage 1985; Tax and Brown1998), learning about organizations (Hoch and Deighton 1989; Johnston and Mahra 2002; Tax and Brown 1998), improving service design and delivery (East 2000; Marquis and Filiatrault 2002; Tax and Brown 1998), measuring and enhancing the perception of service quality (Edvardsoon 1992; Harrison-Walker 2001; Marquis and Filiatrault 2002) and helping strategic planning (Droge and Halstead 1991; Johnston and Mehra 2002). According to Schnaars there are four important aspect for handling customer complaint, there are: 1. Empathy with the customer Empathy with the customer anger is essential in handling customer complaints. Management can gain empathy from customers by providing more time to listen to customer complaints. 2. Speed of response The speed is crucial in handling customer complaints. When customers make a complaint and did not get the right handling, then customers would likely not satisfied and can not be converted into satisfied with the service company. 20

27 3. Balance of response The company can handle the customer complaint in three ways: a. Ignore b. Giving a lot of compensation c. Equally compensate the customer dissatisfaction The best response to customer complaints is to improve the quality of the product to the expected level of quality customer before making a purchase so that customers get the satisfaction of the original satisfaction. 4. Ease to contact the company In the era of globalization, communication is an absolute requirement. By opening a channel of communication, customers can easily contact the company. Although in reality a large cost element, but it would be very beneficial for companies to create goodwill in the eyes of customers in the long term. According to Davidow (2000), there are six different dimensions of organizational responses to complaint that affect postcomplaint customer behavior. There are: 1. Timeliness. The perceived speed with which an organization responds to or handles a complaint. 2. Facilitation. The policies, procedures, and structure that a company has in place to support customers engaging in complaints and communications. 3. Redress. The benefits or response outcome that a customer receives from the organization in response to the complaint. 4. Apology. An acknowledgement by the organization of the complainant s distress. 5. Credibility. The organization s willingness to present an explanation or account for the problem. Attentiveness. The interpersonal communication and interaction between the organizational representative and the customer. 2.7 Customer Satisfaction Customer satisfaction is the collective outcome of the customer s perception, evaluation, and psychological reaction to the consumption experience with a product or service (Khalifa & Liu, 2003). It leads to repeat purchase, loyalty, positive word of mouth, and increased long term profitability for the organization (Wirtz, 2003). 21

28 Customer satisfaction thus highlight and explains the link between what a company does (in terms of the products and service offered) and its customers reaction for that. Attributes like reliability, frequency, comfort, information, driver behavior, and cleanliness are shown to be key elements of public transport user satisfaction (Bates et al. 2001, Beirao & Cabral 2007, Friman & Garling 2001, Hencher et al. 2003). According to Oliver (1997), customer satisfaction is defined as the customer s fulfillment. It is a judgment that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, including levels of under- or over-fulfillment. Need fulfillment is a comparative processes giving rise to the satisfaction responses. Any gaps lead to disconfirmation; i.e., Positive disconfirmations increases or maintain satisfaction and negative disconfirmation create dissatisfaction. The Expectancy Disconfirmation with Performance (EDP) framework (Oliver, 1997) is one the most common theories of customer satisfaction. A basic assumption is that satisfaction or dissatisfaction results from a comparison of expectations with actual performance. Figure 2.4 The expectancy disconfirmation with performance model Source: Satisfaction: A behavioral perspective on the customer (Oliver, 1997) The EDP model is applicable to explaining why people feel dissatisfied or satisfied with public transport. The satisfaction judgment seems to originate in a comparison of the level of performance perceived by the person using an evaluative standard. Typically, this standard is formed by people expectations. Consequently, disconfirmation may function as a process of change in the overall evaluation processes. 22