AN INSIGHT INTO RISKS IN TRAVELLING AGENCIES

(A STUDY OF WAKANOW.COM LIMITED PLC, LEKKI, LAGOS)

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 CHAPTER ONE

INTRODUCTION

 1.1 Background to the Study

Travel agencies are crossing difficult times these days. In the past most of their revenues was  generated via commissions they earned by selling airline tickets. Nowadays they must rely on other sources of income in order to survive: the generally adopted pricing scheme is a single fee charged with no link to the service provided to the client. We believe that this single fee approach does not reflect the true value of a typical knowledge-based service.

Travel services encompass the characteristics of typical service activities which are traditionally described with the help of the IHIP paradigm (Intangibility, Heterogeneity, Instantaneity and Perishability). According to the lit erature, consumers perceive services as riskier than products (Guseman, 1981; Mitchell and Greatorex, 1993; Murray and Schlacter, 1990). Research has shown that intangibility is positively correlated with perceived risk (Finn, 1985; Zeithaml and Bitner, 2000).

Mitchell and Greatorex (1993) states that intangibility greatly increases the degree of perceived risk in the purchase of services by decreasing the certainty with which services can be made. Mitchell (1999) affirms that the properties of services may lower consumer confidence and increase perceived risk, mainly by augmenting the degree of uncertainty in the decision. As fairly intangible services, travel services need to be experienced before they can truly be assessed (Parasuraman, Zeithaml &Berry, 1985; Zeithaml & Bitner, 2003). They are usually sold without guarantees.

The travel agent purchases travel components in favor of the client. Nor the customers neither the travel agent control most of the risks associated to the various ingredients. The travel agent’s adequate counseling may help the customer to minimize the risk of travel annoyances. For instance, the expertise of the travel agent could be crucial when determining the convenient connecting times or  picking the right hotel. When participating to the design and delivery process, the customer may increase the level of risk if he does not behave appropriately (e.g. not being on time at the airport to catch the plane). Nowadays, a typical client can assemble for free a trip using tools available on the Internet, which puts cost pressure on travel agencies. In such environment we wondered whether travel agencies can remain retailers as they used to be and go on selling pre-designed services, or whether they should change the nature of service delivered to the customer.

1.2 Statement of the Problems

Perceived risk has been extensively studied in the field of Marketing Services. The effect of perceived risk is believed to have a greater effect on the consumer for services. Perceived risk is a two-dimensional construct comprising the uncertainty involved in a purchase decision and the consequences of taking an unfavorable action.

The perception of risk has been found as totally subjective (Havlena and DeSarbo, 1990; Ross, 1975). Perceived risk was considered as a subjective expectation of loss  (Mitchell and Greatorex, 1993; Peter and Ryan, 1976). Jacoby and Kaplan (1972) identified five independent types of risk: financial, performance, physical, psychological and social. Some authors recommended later to combine social and psychological types of risk as consumers felt as difficult to make the difference between them and use instead the psychosocial type of risk. Roselius (1971) added a sixth type of risk: time loss. An example often used is that car accidents kill many more people per year than airplane crashes.

However, people tend to fear airplanes more than cars. A basic two-component model of the risk perception measure was developed by Cunningham (1967). Mitchell (1998) revealed that consumers judging low probability/high consequences risks, e.g. purchasing an airline ticket, are affected more by the consequence size than by the probability, and many appear to disregard the probability altogether (Mitchell, 1998).

Slovic and Lichtenstein (1968) and Horton (1976) also found that the degree of negative consequences was much more important in determining risk than the probability of their occurrence. For this reason, risk perception is the result of the probability plus the consequence as opposed to the definition of risk which is the result of the occurrence multiplied by the consequences:

 1.3 Aim and Objectives of the Study

The aim of this research work is to study the insight to risks in travelling agencies and the objectives of this study include:

1. To examine how travelling risk affect operation of travelling agencies.
2. To examine the causes of risk during travelling.

3. To review the strategic steps taken by government in resolving the travelling risk.
4. To examine the effectiveness of agencies in protecting passengers’ properties.

1.4   Relevant Research Questions

The research questions are tailored to suit the aim and objective of the study. The study is guided by the following research questions:

1. How does the risk of travelling affect the operation of travelling agencies?
2. What are the causes of risk during travelling?

3. What are the strategic steps taken by government in resolving travelling risk?
4. How effective are the agencies in protecting passengers’ properties?

1.5   Relevant Research Hypotheses

The following hypothetical statements were developed for the study. It will be either accepted or rejected after the analyses of the respondents view have been done. They are buttressed below:

 Hypothesis One

H_o: Travelling risk does not have any effect on the operation of travelling agencies.

H₁: Travelling risk does have any effect on the operation of travelling agencies.

 1.6 Significance of the Study

The findings of the study will help travelling agencies to develop mechanisms that will aid the protection of travelers. The study will help travelers to be more informed during travelling, increasing their insight about safety issues and what to watch out for when on transit.  Finally, the study forms a basis for future researchers and academicians who may be conducting research on an insight to risks in travelling agencies.

 1.7 Scope and Limitation of the Study

The study examines an insight into risks in travelling agencies with a view to explore Wakano.com limited Plc, Lagos. The study is limited to air transportation.

Some perceived constraints may be encounter by the researcher in the course of carrying out the research work. The limitations are as follows:

1. Inadequate material: Inadequate material constituted one of the limitations of the research work. The non-availability of materials like journals, textbooks etc the research study.
2. Finance: The researcher also may encounter some financial constraints which will contribute in limiting the work in the sense that fund available was not enough to carry out the research to a logical conclusion.

iii. Time: Time is also another factor or limitation that may affect the research work. The limited time may not give the researcher enough opportunity to do more rigorous work.

1.8 Definition of Terms

Risk: A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.

Travelling: This is the movement of people between relatively distant geographicallocations, and can involve travel by foot, bicycle, automobile, train, boat, airplane, or other means, with or without luggage, and can be one way or round trip.

Travelling Agencies: A travel agency is a private retailer or public service that providestourism related services to the public on behalf of suppliers such as airlines, car rentals,cruise lines, hotels, railways, and package tours.

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