Abstract
You have just arrived at the airport to find that your flight has been cancelled. The airline assures you that you will be put on a flight three hours later. Unfortunately, this is not an uncommon service failure scenario. The explanation provided for a service failure can be wide ranging. It can be due to factors the company is not responsible for (eg, in the case of a flight delay, weather conditions) or to factors which the company is responsible for (eg, mechanical difficulties). Furthermore, the explanation may indicate that the failure is an unstable event (eg, poor weather conditions occur infrequently) or a stable event (eg, poor weather conditions occur frequently). We demonstrate that, provided the explanation is believable, the explanation itself impacts how customers respond to the recovery effort. More specifically, we investigate whether customers require compensation in addition to the explanation, or whether the explanation alone is sufficient to positively impact repurchase intentions.