Effect of Disruptions on Service Quality and Market Share

Abstract

The purpose of this study was to investigate the effect of disruptions on service quality and market share in the U.S. domestic airline industry. Structural equation modeling was used to empirically test the effect of disruptions on service quality and market share for the network and low-cost airlines. The findings suggested that network airlines could manage disruptions more effectively than low-cost airlines. Although disruptions had a negative effect on service quality for both network and low-cost airlines, their effect on airline market share was different. Disruptions had a significant (negative) effect on market share for the low-cost airlines, whereas they did appear to affect market share for the network airlines. Multigroup analysis of invariance was used to compare the effect of disruptions on service quality and market share between airlines. The analysis showed that the effect of disruptions on service quality and market share was different between airlines. On the basis of the findings of this study, recommendations for managers in the airline industry are provided.