The Impact of Airport Terminal Expansion on Customer Services at the Incheon Airport

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Type of Academic Paper – Research Proposal
Word Count – 5476 words
Academic Subject: Marketing

Abstract

The Incheon Airport in South Korea is expanding its terminal, which is in the third development phase. The airport will be officially open in January 2018 to address users’ convenience at the main gateway of South Korea. This thesis aims to analyse the impact of airport terminal expansion on customer services at Incheon Airport. To study this, primary data is collected from people visiting Incheon Airport in Korea, analysed using regression analysis. The results showed that airport terminal expansion has a significant positive impact on customer services at Incheon Airport. The thesis also provides recommendations to airport authorities to better improve customer experience by delivering modified airport services.

Introduction

Background on the topic

According to Jahanshani et al. (2014), customer service in any business forms the key to success while determining the organisation’s overall sales and profits. Like other sectors, Jahanshani et al. (2014) opined that airports also require focusing on their customer services to improve their service quality. On the other hand, the airport’s infrastructure is the most important point of contact for tourists in their country’s trip. As a result, services need processing at airports efficiently to maximise the time to travel while allowing leisure time in the commercial areas of airports (Martín-Cejas, 2006, p.874).

In the 2015 rankings of ACI Airport Quality Service Award, more than 550,000 tourists worldwide saw their travel experience. They ranked airports ranging from check-in and on-site security and food, beverages and retail. Airports have evolved into complex business initiatives that take place on their own and, in many cases, compete with each other for passenger transport. From dining and duty-free shops to the environment, cleanliness, staff courtesy, convenience, efficiency and more, passengers expect big things from the airports they travel with.

The Incheon Airport in South Korea has started to expand as it invested $4.6 billion in increasing the capacity to handle passengers by 41% in 2017 (Casemiro and Kim, 2015). This effort is made for better competing in the Asian race for becoming an important regional hub. The Incheon Airport has joined its competitors, such as Changi Airport in Singapore, expanding to capitalise on improved traffic in the Asian region. As a result, the Incheon Airport is also searching for accommodating an increased influx of travellers for the Winter Olympic Games in South Korea during 2018.

The rationale for conducting the Study

Arif, Gupta and Williams (2013, p.5) stated that customer services had played an essential role in airport management as it forms the core of airport services. Hence, meeting and understanding customers’ varying needs and expectations form a significant part of successfully managing and operating airports. In addition to this, the new perspectives of carrying out business in this century need airport authorities to think holistically regarding the various services offered to customers. This is why customers have increased expectations about the service standard, where they expect that their airport experience is as enjoyable and effortless as possible.

In this regard, the expansion of airports plays an essential role in offering good and quality customer services. The large the airport, the wide range of services customers are likely to enjoy to make their travelling memorable and exciting. South Korea’s Incheon Airport is at its third phase of construction. The aim is to answer the steady increase demand for airlines from metropolitan areas while reinforcing regional competitiveness with other airlines. For this expansion, nearly five trillion were invested from 2009-2017 to construct the airport’s infrastructure, such as all transportation facilities will be connected (Airport. kr, 2017).

Based on this premise, there is a need to study how this expansion of Incheon Airport will impact customer services where customers travel through this airport. Also, previous studies have mostly focused on the expansion effect of Heathrow airport (Redondi and Gudmundsson, 2016, p.287; Smith, 2017, p.4). Hence, this study focuses on airport expansion impact at Incheon’s airport customer services.

Research objectives

To study the impact of airport terminal expansion on customer services at the Incheon Airport, the following research objectives are proposed for this study:

• To understand the concept of customer services in the airport context
• To evaluate the factors impacting customer services at airports.
• To determine the impact of airport expansion in providing good customer service at Incheon Airport.
• To provide recommendations to airport authorities of Incheon Airport for offering improved customer services through expansion.

Research Hypothesis

To study the impact of airport terminal expansion on customer services at the Incheon Airport, the following research hypothesis is proposed for this study:

H_o: There is no impact on airport terminal expansion on customer services at Incheon Airport

H₁: There is a significant positive impact of airport terminal expansion on customer services at Incheon Airport.

 

Literature Review

Overview of Airport industry

In the travel and transportation industry, airports have been experiencing continuous growth. The study of Fu and Oum (2014, p.11) argued that the global aviation industry had maintained yearly growth rates of 6-7% over the last few decades where greater than 3 billion passengers have passed through the world’s different airports during 2010. On the other hand, the region of Asia has appeared to be the leading region in the generation of aviation traffic in recent decades that accounted for nearly 30% of the total revenue passenger kilometres globally (Poole, 2015) was previously recorded at 24% during 2004. As the fastest-growing region of the world, Asia must consider its growth to become resilient at more than 6% yearly for the next decades. In contrast to this, Fu and Yang (2017, p.97) argued that airports in more developed regions, such as North America and Europe, are perceived to expect slow growth relatively while having scarce opportunities because of the maturity of the market, the concerns related to the environment, and the increased availability of substitutes including high-speed rail transport.

Therefore, researchers opined that the increase in demand for airport infrastructure in Asia could be explained by three factors (Hirsh, 2016; Hakim and Merkert, 2016, p.120). These include the lack of alternative modes of transport in Asia (Hirsh, 2016), liberalisation of Asian markets (Adler et al., 2014), and increased growth in size and wealth of middle classes in Asia (Ping, 2017). In addition to this, the opening of formally closed countries in Asia since the 1980s to worldwide trade has increased the movement of people and goods in Asia. Not only this, Kim (2015, p.134) further highlighted that FTAs (free-trade agreements) have effectively driven the integration and convergence of economies within the Asian region that has improved trade between regions. Parallel to this, visa requirements is also liberalised by Asian countries liberalising the agreements of air travel. Gootiiz and Mattoo (2017, p.574), for instance, discussed that the continuous program of liberalisation of ASEAN air services had ensued significant increases in flights between capital cities, and it has allowed the development of secondary airports to ASEAN flight during the year 2015 (Kim, 2015, p.134). In addition, the increased liberalisation of travel restrictions in Asian economies has effectively supported the opportunities to travel to new segments of the population where many people were not previously capable of travelling by air.

The study carried out by Sarker, Khan, and Mannan (2016, p.64) highlighted that Asia has already one of the largest shares of the total urban population in its cities that has unleashed the wave of travelling in this region. This might be because people could easily travel because of proximity to airport availability in these cities. They could migrate to centres where they can get high salaries (Sarker, Khan and Mannan. 2016, p.65). These findings supported that the Asian region has become a higher-income region where approximately 41% of the world’s middle-class lives. Such a proportion of the middle-class in Asia is based on the prediction that there will be an increase in the world’s middle class to 68% in 2033 (Birdsall, 2015, p.217).
On the other hand, scientific studies also depicted that the consumer’s inclination for travelling increases with the country’s improved economic well-being (Lamsfus, 2015, p.217; Horner and Swarbrooke, 2016). This was also supported by Van De Vijver, Derudder, and Witlox (2014, p.142), as it stated that there is a more compelling case for air travel growth in Asia. Asians, as compared to North Americans and Europeans, take more trips at the same levels of economic well-being.

One of the important reasons for the above-stated notion could be the lack or absence of alternative transportation modes. Compared with North America and Europe, larger parts of the Asian region could be reached just by air. V Van De Vijver, Derudder, and Witlox (2014, p.142) also found that geographical barriers, such as the island nature of Southeast Asia, mountainous regions, and increased distance between major cities of Asia, also contributed to airports development in the area. Although high-speed rail is well-developed in North Asia, China, travelling by air remained a viable option for time and cost shortly. To fully respond to this demand, the current fleet of aircraft in Asia requires growing rapidly. This would be equalled to nearly new deliveries of 13000 aircraft in the next twenty years, double the size of the current fleet (Lee, 2016, p.217).

Customer Service at Airports

For airports, customer service is the core value concerning passengers and airport organisations, the airport staff, the non-travelling public, and others that make airports’ customer base. Vasigh and Fleming (2016) argued that meeting and understanding airport customers’ different needs are a major part of running airports successfully. On the other hand, Misopoulos et al. (2014, p.705) opined that airlines until recently were held responsible for most of the customer services during the passenger flight period. However, this trend has shifted to a great extent in recent years. This is because more and more airports have effectively realised the significance to offer the best possible experience of flight for their customers who travel through their terminals as a result of which they have been making efforts to provide a comfortable experience to travellers waiting for a flight (Misopoulos et al., 2014, p.705).

The global economy and improved living conditions have reduced demand for business and leisure. Low-cost airlines have made flights more accessible and cost-effective than before. These passenger services are expected to double in 2025 but without a corresponding increase in airports (David, 2013, p.67). Thus, airports need to deal with increasing numbers of passengers, who also have growing expectations about services and service sites that the airport should provide. There are also statutory protocols, immigration, quarantine, and aviation security requirements and processes that become more complicated and harder. Some countries also enforce strict security measures, complicating the passenger process (David, 2013, p.67). Thus, there is a great challenge to deal with the passenger process and service quality at airports.
On the other hand, Kramer, Bothner, and Spiro (2013) discussed that air travel worldwide has tremendously grown in the past few years, where airports have played an essential role. A customer or traveller’s experience at the airport with the airline was directly related to the airport experience (Kramer, Bothner, and Spiro, 2013). Hence, to enhance customer service at airports for passengers and other customers while ensuring a comfortable experience, it becomes significant that these airports offer quality services to these customers.

Airport Service Quality

According to Bogicevic et al. (2013, p.7), the place airport reflects an area where service providers tend to interact with the customers for delivering customer service. On the other hand, Pabedinskaitė and Akstinaitė (2014, p.398) opined that services at the airport which the customer experiences could be categorised into freight disposition and passenger services, mobile facility within the airport, place of passenger waiting, secondary facilities such as salon and spa, and available equipment of traffic for evaluating the services at the airport. However, Kurniawan, Sebhatu, and Davoudi (2017, p.22) discussed the influential factors to airport passenger terminals’ service level, where researchers categorised them into airport systems and airport facilities. Also, Kurniawan, Sebhatu, and Davoudi (2017, p.23) constructed and evaluated these factors based on the airport process, such as connection, arrival, transit, and passing. On the other hand, Chen and Chang (2005, p.79) opined that airports’ service quality had been categorised into time to check-in, convenience, employee’s kindness, serviceableness, security, and information visibility, an important system for contributing to the activation of quality control. Regarding the overall facility, the airport service quality has been categorised into twelve zones where they were assessed qualitatively and quantitatively.

The study conducted by Brady and Cronin (2001, p.35) focused on the significance of the convenience and departure gate facility, which passengers use. On the other hand, the study of Brady and Cronin (2001, p.35) stated that facility convenience, cleanliness, and atmospheric conditions might significantly impact consumers. Not only this, Callan and Kyndt (2001, p.313) argued that FIDS (flight information display system) should display exact information, and the decorations at the airport serve as symbolic icons that tend to reflect on the country’s local culture. Situations, such as flight delays or cancellations at airports, might contribute to the passenger’s prolonged time at an airport. Hence, Stergianos et al. (2016) opined that it becomes significant to identify when customers or passengers usually stay at airports. In a survey conducted by ACI (Airports Council International) and IATA (International Aviation Transportation Association), the evaluation items for airport service helps in understanding the customer-facing methods for managers at the airport (Bomenblit, 2002).

Airport Expansion of Incheon Airport  

With the increased passenger demands aligned with the requirement of keeping up the Winter Olympics in South Korea in 2018, Incheon Airport’s expansion plans were announced in 2013. According to In, Casemiro, and Kim (2015), there are three primary phases to these expansion plans. The first phase is constructing the terminal, which will be open for travelling passengers in 2018. The second phase consisted of expanding the new terminal, while the third phase was related to increasing passenger capacity and terminal size. In addition to this, the airport will be officially open in January 2018 to address users’ convenience at the main gateway of South Korea. The expansion of the new terminal would help relieve the workload from current facilities while speeding up the processing time per passenger. In addition to this, the expansion of the new terminal will cover nearly 384,336 sq. meters for handling approximately 18 million passengers a year.  The expansion of the terminal comprises five stories and two underground floors while having check-in desks, customs, security, and isolated infrastructure that would allow carrying out all work related to immigration in an independent manner (Casemiro and Kim, 2015).

On the other hand, the airport terminal expansion would support the flag carrier of Korea, Korean Air, and other airlines operated by Air France, KLM, and Delta. With the help of this expansion, Airport Technology (2017) stated that the facility would be capable of processing more than 72 million customers or passengers and 5 million tons of cargo yearly. South Korea’s status will be solidified as an essential transportation hub in Northeast Asia by this terminal expansion. The expansion work related to the second terminal was started in 2013, where South Korea’s government has invested nearly $4.5 billion in the project. With such a huge investment, it is expected that new jobs of nearly 8000 will be created. In addition to this, the airport’s official authorities have been undertaking the 4^th phase of the airport’s expansion, which is expected to be completed by 2023 (Airport Technology, 2017). The development of this phase includes building the fourth runway and expanding the overall space that will strengthen the infrastructure of communication technology and overall information at the airport as a transportation hub. Also, Park and Se-Yeon (2011, p.75) discussed that South Korea’s development of a third passenger terminal would enable the airport to handle greater than 130 million individuals annually effectively. Conclusively looking at the development phases of Incheon Airport, it can be argued that the terminal would be built in four phases of construction. Currently, the third phase is going on, which will be completed by the end of 2017. The different preparations for its construction of the third phase started in 2009 after the previous two phases were completed in 2008. The additional runway was also developed where the airport currently has three runways and a single terminal. Although the Incheon Airport already claimed to have the eight highest global traffic from the world, the airport authorities are still making efforts to catch up to other famous airports’ capacity and size in the world.

 

Methodology

Research Philosophy

In research studies, research philosophies tend to represent the notion of the views of the world. Hence, research philosophy on studies is related to conceptions about how the world works whose primary focus is on the existence of reality and knowledge. As the research is quantitative, positivist research philosophy has been chosen for this study. This is because positivism philosophy relies upon quantifiable observations, which ultimately lead to statistical analysis. Also, positivism research philosophy is selected because it believes that only factual knowledge gathered through observations can be trusted. Hence, an objective approach is followed using this research philosophy in current research where findings are quantifiable.

Research Approach

There are two most commonly used research approaches in social science research: deductive research approach and inductive research approach. Deductive reasoning and inductive reasoning are two different methods of conducting scientific research. The deductive research approach researches theory by collecting and viewing empirical evidence to see if it is true. With inductive reasoning, research first collects and analyses data, then builds a theory to explain its findings. In the current study, the deductive research approach is chosen. The researcher has developed a set of hypotheses during the study after selecting suitable research methods, which are implemented to assess the developed hypothesis and prove them wrong or right.

Research Design

Among the qualitative and quantitative research design, the current study uses quantitative research design as it was best suited based on this research’s goals. The quantitative research design relates to the design of a research project using quantitative research methods. The design varies according to the method used, such as face-to-face interviews, online surveys, or surveys by mail. Other methods include SMS / Test Message polls or physical number. In this study, surveys have been used to gather quantitative data because they are useful and easiest to get information coded into quantitative terms regarding their interpretation and analysis.

Research Strategy

As the research is quantitative; therefore, four types of research strategies used in this design include descriptive, correlational, quasi-experimental, and experimental (Bryman and Bell, 2015). The variation between these strategies is related to the extent the researcher designs to control variables in the research. Defining the descriptive research strategy, data collection is primarily observational, and the researcher seeks to discuss the status of the phenomenon or variable. In correlational design, the relationship between different variables is explored in the study using statistical analysis.  The correlational design fails to look for cause and effect factors; hence, it is observational (Bryman and Bell, 2015). The quasi-experimental research design focuses on establishing a cause and effect relationship between variables. There are two groups, i.e. control group and the experiment group on which the researcher experiments. Finally, the experimental design uses a scientific method to develop cause and effect relationships among study variables (Bryman and Bell, 2015).

This study will use an experimental research strategy because the study aims to determine the impact of airport expansion on customer service where the cause and effect relationship between the variables will be identified. Among these, airport expansion will be the cause variable, and customer service will be the effect variable.

Data Collection Method

The data collection method is an orderly way to collect information from resources (Hussein, 2015). There are two main types of data collection ways, i.e. primary and secondary data. The primary sources are sources that provide first-hand data collected by accessing respondents directly. The primary key sources are survey interviews, survey questionnaires, focus groups, and others. On the other hand, secondary sources of data collection are current data that has been used by the authors (Yin, 2013). The main secondary data collection methods are research papers, magazines, articles, books, and online sources. Secondary data are also used to understand the various ideas and theories related to the field of study.

This study has used the primary data collection method, where the survey questionnaire is used to gather data from respondents. These questionnaires will be distributed online (using Naver Form that Korea’s largest search portal site) and offline (survey in Incheon airport) to the Korean customers of Incheon Airport. Questionnaires are used for primary data collection as they will make it easy for the researcher to codify the findings while testing the research hypothesis.

Sampling Method

In research studies, sampling methods have been categorized into probability sampling and non-probability sampling. In case when there is a known non-zero probability for each member of the population, then the sampling is probability sampling. Sampling error can be calculated if the researcher uses probability sampling, which is its advantage (Yin, 2013). However, the extent to which the sample varies from the population is unknown to non-probability sampling.

In this study, non-probability sampling is chosen, where the research selects a quota sampling method in the current study. Quota sampling will be used because it will improve the representation of particular groups within a population.

Sample Size

Busk and Marascuilo (2015, p.159) showed that a research study’s sample size is based on the data collected and assuming appropriate statistical methods. Busk and Marascuilo (2015, p.159) showed that a research study’s sample size is based on the data collected and assuming appropriate statistical methods. The researchers need to select the right sample size for their respective research. According to Marshall et al. (2013, p.11), to choose an appropriate sample size for the research, the researcher has to consider statistical and non-statistical elements.  Busk and Marascuilo (2015, p.159) have stated that the accuracy which the researcher expects plays an important role in terms of depicting the sample size of the research. The present study is quantitative, and hence 200 Korean people were selected who have visited Incheon Airport.

 

Data Analysis Technique

The use of relevant statistical tools in research is also an important factor in ensuring that participants’ results and information are analyzed appropriately. Using relevant and appropriate statistical methods and analytical tools is considered at the heart of the organization, collecting and analyzing the data to ensure and understand the study’s interpretation and reporting. Ambos and Håkanson (2014, p.8) argue that valuable statistical devices give sense to meaningless numbers.

In this study, the investigator has used SPSS to analyze the results statistically. Since this study involves collecting primary data, the researcher used SPSS to interpret and analyze the data collected from the survey. The SPSS tool is used to analyze and interpret the feedback of selected participants. The answer collected was placed in an MS Excel sheet as the data was copied to the SPSS file to create a frequency. In SPSS, regression is used as a statistical test to determine whether the study’s hypothesis is rejected or approved. Apart from a regression test, descriptive statistics are also used to describe each section’s answers in the questionnaire to determine participants’ views related to the research area.

Ethical Considerations

In the current quantitative research, the researcher aimed to follow the possible ethical guidelines by following some principles. First, the full rights to participation were guaranteed where the researcher designed a consent form to be signed by respondents for their voluntary participation. The consent forms also informed participants regarding the objectives and purpose of the study. Hence, the right to participation was well communicated. Also, participants’ anonymity was ensured as the researcher gives them pseudo names so that their identity can be kept confidential. In this manner, the researcher collects data ethically from research participants.

Research Limitations

During this study, the methodology was chosen to carry out this study also had some limitations. The following are some of the limitations of the research method:

1. The study was limited to a particular area because of a limited time period. The researcher had to get the best results within a certain period of time.
2. Due to the limited budget, research had only received the questionnaires filled through the internet.

iii. The methodology is only limited to quantitative data collection. If interviews were also done, detailed results would be collected.

Research Plan

The following research is based on the limited time frame and the time allocated for the research is illustrated in the table below:

 

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