The Impact of Process Variation on Customer Dissatisfaction: Evidence from the U.S. Domestic Airline Industry

The empirical results show that the relationship between process variation and customer dissatisfaction is contingent upon a company's average performance with regard to each process, which is at least as important as average performance for high performers, while it has limited impact for low performers.

Abstract

ABSTRACT This paper investigates how process variation reduction affects customer dissatisfaction in the context of the U.S. domestic airline industry. We use quarterly data on all major carriers, available since the introduction of required reporting of service indicators to the U.S. Department of Transportation (DOT). Specifically, we investigate how both average performance and variation performance (consistency) of certain processes affect customer dissatisfaction. Our empirical results show that the relationship between process variation and customer dissatisfaction is contingent upon a company's average performance with regard to each process. Consistency is at least as important as average performance for high performers, while it has limited impact for low performers.