CHAPTER 1 INTRODUCTION

1.1. Company Overview PT. Kereta Api is a state-owned company that provides railroad transportation services in Indonesia. Starting in 1864 under the auspices of the General Governer of the , Mr. L.A.J Baron Sloet van de Beele, it started to begin railroad business by only opening the - Vorstenlanden (Solo-Yogyakarta) route. First established within the company of Nederlansch Indische Spoorweg Maatschappij (NISM), railroad transportation services in Indonesia continued to grow year by year until now it is a state-owned company under the name of PT. Kereta Api Indonesia by 1998.

Figure 1.1 Company’s Logo

(Source: https://id.wikipedia.org/wiki/Berkas:Logo_PT_KAI_(Persero)_(New_version_20 16).svg accessed on September 17th 2018)

The shape of the company logo symbolizes the dynamic movement of the company in achieving its vision and mission and is supported by the value of corporate integrity in providing excellent service to consumers. PT. Kereta Api Indonesia currently has seven subsidiaries / business groups namely; PT Reska Multi Usaha (2003), PT Railink (2006), PT Kereta Commuter Indonesia (2008), PT

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Kereta Api Pariwisata (2009), PT Kereta Api Logistik (2009), PT Kereta Api Properti Manajemen (2009), PT Pilar Sinergi BUMN Indonesia (2015).

Railway transportation services provided by the company cover the provinces of , , , , Bandar , and all provinces in . The overall length of the railroad provided is approximately 7 thousand kilometers. These main lines connect the city of with Rantauprapat, with Pariaman, Bandar Lampung with Lubuklinggau and Palembang. with through Cirebon, Semarang, and Yogyakarta. It also connects Surabaya to Malang and Banyuwangi (Wikipedia, Kereta Api Indonesia, accessed on Sep 17th 2018).

Figure 1.2 Train Railway Route in Java Island

(Source: https://id.wikipedia.org/wiki/Kereta_Api_Indonesia accessed on Sep 17th 2018)

PT. Kereta Api Indonesia provides passenger and goods train services. The capacity given per day for passenger trains is 106,638 seats for the Java and Sumatra regions. The ratio of train class distribution is 30% for executive class, 22% for business class and 58% for economy class. PT. Kereta Api Indonesia also provides railroad transportation for certain areas or can be referred to as Commuter trains such as Jabodetabek KRL managed by PT. Indonesian Commuter Trains, or Solo Express trains that pass through the Kutoarjo, Yogyakarta and Solo.

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Figure 1.3 Total Train Passanger till July 2018

(Source: https://www.bps.go.id/linkTableDinamis/view/id/815 accessed on Sep 17th 2018)

Reported from the Indonesian Central Bureau of Statistics (BPS), 36,800 passengers have used the services of PT. Kereta Api Indonesia in July 2018. It is shown from the data in Figure 1.3. that as many as 29,086 passengers use train services in the Greater Jakarta area, 7,003 passengers use trains outside the Jabodetabek area on the island of Java and as many as 711 passengers use rail services in the Sumatra region.

The use of railroad transportation services is obtained from train ticket bookings. Booking train tickets possibly done by buying tickets through offline or online channel. Booking offline train tickets can be done at the station counters of each city or buying at the nearest minimarket or post office. While booking tickets online can be accessed through the official website of PT. Kereta Api Indonesia, the company's external online channel or through a mobile application that has just been developed by PT. KAI namely KAI Access.

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Figure 1.4. KAI Access Interface

(Source: Author’s KAI Access on Sept 18th 2018)

As the name implies, this KAI Access application provides adequate access for train passenger. The application launched in 2014 presents facilities from purchasing train tickets online, ordering food before the trip, and access to customer service chat via the artificial intelligence provided by the company under the name of Chat with Loko. This application can also provide passenger e-tickets and provide new features called e-Boarding. This e-Boarding feature made it possible to passenger go directly to boarding gate by only showing the booking code in the form of a QR Code that will be scanned by the officer before entering the train platform area, so no need to reprint the ticket at check-in counter. By using KAI Access application, passengers will also get information about attractive promotions that can only be used when people ordering tickets through KAI Access. Later there will also be e-MODA and e-Porter features that are still under development.

1.2. Research Background Human life has the character to move places. Humans need to move from one place to another to carry out activities. As time goes by, people continue to innovate to make their lives easier. A transportation term appears. According to

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Salim (2000) transportation is the activity of moving goods or passengers from place to place. With that provisions applied, people can reduce the time and energy that they spent to move places. There are several transportation options that can be used according to the distance and the destination that they travel. According to Utomo (2010) transportation is divided into 3 types; land transportation, water transportation and air transportation. Land transportation is distinguished by factors such as vehicle type, specifications, distance, destination and availability. Examples of land transportation modes are motorized vehicles, carts and trains.

One of the land transportation that is commonly known by the public is train. The train began to enter in Indonesia during the Dutch colonial era in 1864. In 1998, a state-owned company that provided railroad services was inaugurated under the name PT. Kereta Api Indonesia. With the development of the era, especially technology that continues to innovate in Indonesia, PT. KAI continues to strive to provide services that can facilitate users to use the services offered by the company. Based on data taken from the BPS (Badan Pusat Statistik), the number of train passengers reached 393 million in 2017.

Table 1.1 Total number of KAI Passenger

Year Number of Passenger (Million) 2012 202 2013 216 2014 278 2015 326 2016 352 2017 393 (Source: https://www.bps.go.id/statictable/2009/03/06/1414/jumlah-penumpang- dan-barang-melalui-transportasi-kereta-api-indonesia-tahun-1987-2015.html accessed on Sep 17th 2018)

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For the sake of public convenience, some provinces in Indonesia have adopted the smart city concept. According to Frost & Sullivan smart city is built by at least 5 of 8 parameters, that are smart energy, smart building, , smart healthcare, smart infrastructure, smart technology, smart governance, smart citizen, and smart mobility (Indrawati, Nila & Husni, 2017). Frost & Sullivan stated that smart mobility enables intelligent mobility through the use of innovative and integrated technologies and solutions. Based on the concept of smart mobility, PT. Kereta Api Indonesia is implementing this concept for the advancement of the company and the convenience of customers. According to Griffinger, smart mobility must has four indicators such as a local accessibility, (inter-)national accessibility, availability of ICT-infrastructure, and sustainable, innovative and safe transport system (Indrawati, Nila & Husni, 2017). One of Griffinger's indicators that is being developed by PT. KAI is to provide ICT infrastructure for customers. Therefore, the company launched a new mobile application called KAI Access in 2016. Based on techopedia, mobile application is a type of application software designed to run on a mobile device, such as a smartphone or tablet. In mobile application provided by PT. KAI is fully equiped with mobile ticketing function. Mobile ticketing is the process whereby customers can order, pay for, obtain and/or validate tickets using mobile phones or other mobile handsets (Wikipedia on Mobile Ticketing, 2018). This function provides new experiences to passengers by providing new and simple ways to purchase tickets. These innovated system from traditional paper based ticketing channel to online ticketing require continuous introduction and socialization to the people.

According to Similiar Web, a site to traffic statistics of application or website, the KAI Access application has an average number of downloads of 171,800 users per month. The KAI Access application also gets a 3.7 / 5 rating from users whose download applications through Google Play. The total number of downloads had made KAI Access application get 13th place reported by Similiar Web on 18 September 2018. This ranking is sorted from all applications in the Travel & Local category in Indonesia in 2018, KAI Access placed themselves

6 below Traveloka, Ticket.com, and Pegipegi. The summary of data that author gathered is shown in Table 1.2 below:

Table 1.2. KAI Access Performance Report

KAI Access Average Monthly Download 171.800 users Playstore Rating 3.7/5 Ranked (in Indonesia) 13th (Source: Similiar Web for KAI Access, accessed on Sept 20 2018 and summarized by author)

The author also gathered data directly from the Humas KIP PT. KAI by requested data and collected by email that they have total users of KAI Access as many as 1.403.565 on October 2018. From 1.4 million users, it has recorded transaction as many as 2.188.184 order of train ticket. The overall data that author got from the company is shown in Figure 1.5 below which author captured from the email:

Figure 1.5 KAI Access Transaction Data

(Sources: Mailed by Humas KIP PT. KAI, captured by author)

PT. KAI has to innovate their business strategy in boosting up their train ticket sales. Following the technologies nowadays, the availability of ICT-based infrastructure is one of the most useful indicators to build up smart mobility stated

7 by Griffinger in (Indrawati et al., 2017). The company has possible chance to build up facilities that can help passenger to order and manage their services in their smartphone. By having 1.4 million user after 3 years running the application, PT. Kereta Api Indonesia needs to know what factors influence the user in deciding to continuously use KAI Access application as their primary choice in purchasing train tickets and feel the facilities that the company has provided through the features in KAI Access application. Therefore, the author would like to conduct research entitled “CUSTOMER CONTINUANCE INTENTION TOWARDS TRAVEL MOBILE APPLICATION (A CASE ON KAI ACCESS FROM PT. KERETA API INDONESIA)”. The author choose KAI Access as it is one of the official mobile applications launched by one of the state-owned companies in Indonesia. The author is also curious about the extent to which the public will use KAI Access application as their main medium in using railroad transportation services in Indonesia, wether it is purchasing tickets or other facilities provided in the application.

1.3. Problem Statement Currently the use of online business is growing rapidly in Indonesia. Many people prefer to use internet facilities to get something they need. The existence of this technology has become a natural thing among Indonesian people. A person can sell and buy a product or service through online, one that can be obtained online is train ticket. PT. Kereta Api Indonesia provides a mobile application called KAI Access that allows users to purchase train tickets, get e-boarding passes so there is no need to print CIC (Check-in Counter) tickets, choose passenger seats, order food and get attractive promotions directly from company.

From the data that author obtained from the company through email, KAI Access already has 1.4 million active users that have been ordered and manage the service from PT. KAI through the application. From 1.4 million active users, 2.18 million transaction were made from the application. Compare to the total passenger in 2017, which was 393 million passenger, these total of active user still cannot

8 represent the success of the application usage to the customer. Many of them still use another channel option to buy train ticket rather from its official channel KAI Access. This case is in line with the report by JPNN.com which stated KAI Access application that has been running so far is still lack of people attention. The author wants to analyze what factors can influence customer continuance intention towards the KAI Access application to these active users that choose KAI Access to order and manage their train ticket. This research is expected to find out which factor has been the consideration of user to use KAI Access. Therefore, the author would like to conduct this research.

1.4. Research Question Based on the literature review that has been done before, noted that UTAUT2 (Unified Theory of Acceptance and Use of Technology 2) is the most appropriate model to explain consumer continuance intention on the use of KAI Access mobile application services. Thus, the research questions are as follows:

1. How big is the consumer’s assesment of factor based on the modified UTAUT 2 model (Performance Expectancy, Effort Expectancy, Social Influence, Facilitating Condition, Hedonic Motivation, Price Saving, Habit and System Quality) towards Continuance Intention in terms of using KAI Access? 2. How strong is the continuance intention of consumer towards KAI Access in Indonesia? 3. Based on the modified UTAUT 2 model, which factors (Performance Expectancy, Effort Expectancy, Social Influence, Facilitating Condition, Hedonic Motivation, Price Saving, Habit & System Quality) influencing customer continuance intention in terms of using KAI Access in Indonesia? 4. Do age and gender differences affect the influence of the modified UTAUT 2 Model factors towards continuance intention in terms of using KAI Access in Indonesia?

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5. Can this proposed model be used for predicting the continuance intention in terms of using KAI Access in Indonesia?

1.5. Research Objectives The objectives of this research are:

1. To analyse consumer’s assessment of factors based on the modified UTAUT 2 Model towards continuance intention of using KAI Access. 2. To analyse the customer continuance intention to the use of KAI Access in Indonesia. 3. To test which factors based on the modified UTAUT 2 Model that influence the customer continuance intention in terms of using KAI Access in Indonesia 4. To test if age and gender differences affect the influence of the modified UTAUT 2 Model factors towards continuance intention of using KAI Access in Indonesia 5. To test wether this proposed model can be used for predicting the continuance intention of using KAI Access in Indonesia

1.6. Significance of Study Research conducted by author is expected to provide benefits to various parties in any aspect:

1.6.1. Academic Aspect The research conducted to bring significant value of applying modified UTAUT 2 model, by building System Quality as a new construct, adapt Price Value to Price Saving and removed Experience from moderate variable. Thus, modified UTAUT 2 model expected to beneficially useful in the presence of literature related to continuance intention of using KAI Access.

1.6.2. Business Aspect

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The result of this study is expected to be useful for an input or recommendation for PT. KAI to improve and to innovate the implication of KAI Access mobile application. This study can also be a further insight for industry that play roles in the field of marketing management which related to travel mobile application.

1.7. Scope of Study Location: The location of this research conducted in Indonesia, because KAI Access can be freely download by people all over Indonesia. Object Study: The object study of this research is consumer who use KAI Access for at least 3 times. Time and Period: This study starts from October 2018 – January 2019

1.8. Thesis Structure CHAPTER 1: INTRODUCTION In this chapter contains the company overview, research background, problem statement and research question, research objectives, and thesis structure. CHAPTER 2: LITERATURE REVIEW AND SCOPE OF RESEARCH In this chapter contains a general description of the theories related to research and supporting problem solving. CHAPTER 3: RESEARCH METHODOLOGY In this chapter contains the types of research method used, the variables used, research stages, population and sample, data collection and data analysis techniques. CHAPTER 4: ANALYSIS AND DISCUSSION In this chapter will be explained in detail about the discussion based on the calculations performed, and the results obtained more accurate. CHAPTER 5: CONCLUSION AND SUGGESTION

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