1.1 Research background
1.1.1 Aviation industry in Vietnam
Aviation industry is one of the major developing industries in the world. Coinciding with the explosive growth of the economic sector, the airline industry is becoming most important part in the economic development of a country. It plays an important role in transporting a lot of people and goods by air from one place to another, it makes the world a smaller place and brings nations as well as people closer to one another. According to the International Air Transport Association (IATA), everyday about 100,000 flights bring people and goods to their destination. In 2016, the world’s airlines carried +6.0% more passengers in 2016 to reach a total of 3.7 billion, according to the International Civil Aviation Organization (ICAO). Growth slowed from the +7.1% rate recorded in 2015.
In Vietnam, the aviation industry plays an important part due to the length of the country and the large distances between many of the country's tourist destinations. Vietnam is 1,650 kilometers in length and it has poor road and rail infrastructure. It is also within a few hours of Asia countries. Vietnam is one of developing country with a population of around 90 million people, it is expected to be one of the fastest developing aviation markets in Southeast Asia over the next 10-20 years. In 2016, Vietnam aviation market is one of the world's fastest-growing markets as it ranked third in the region and seventh in the world.
Particularly, with the ASEAN Open Skies policy coming into effect in 2015, and with Vietnam signing a number of free trade agreements, the airline industry in Vietnam will have more opportunities to grow. The growing of the airline industry will increase demand for the airline services. When there is high demand, the market is more competitive. It is required any airline company to focus on delivering high quality service to compete with other companies.
1.1.2 Vietjet Air
Vietjet Air (Vietjet) was created in 2011 in Vietnam as a private low-cost carrier. It first intention was to compete with state owned Vietnam Airlines to offer better prices and services to customers. Nowadays it is the leading domestic air carrier in Vietnam with 60 available routes including domestic and international routes across Asia. In 2016, the airline carried 14.05 million passengers with increase of 50.9% compare to 2015, with revenue of VND 27.499 billion (USD 1.209956 million), increases of 38.6% compared to the previous
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year. According to the Vietnam Aviation Business Association, budget airlines are rapidly increasing their market shares with an annual growth rate of 15-20 percent. Vietjet now is the dominant player in the low-cost market held a 41.5% aviation market share after Vietnam Airlines with 42.5% and will likely surpass state-owned Vietnam Airlines in the next few years as Vietnam’s largest domestic carrier. It is very dynamic with an increasingly high number of air routes which helps revenue increase sharply.
Many people tend to think that low-cost means low quality. However, with the rapid growth of many budget carriers, these airline companies have started to compete not only price but also service quality with others, it requires any company to further develop its service quality in order to gain new customers, together with to keep the old ones.
Thus, this research is aim to measure service quality for Vietjet. This research also provides a better understanding of customer satisfaction and loyalty towards airline service quality in order to help Vietjet’s managers in developing better service quality to satisfy customers and enhance their loyalty.
1.2 Research objectives
The overall purpose is to measure the airline service quality of Vietjet and to examine its influence on customer satisfaction and loyalty. The specific objectives are:
1) To identify and measure the main dimensions of airline service quality.
2) To explore the impact of airline service quality on customer satisfaction.
3) To explore the impact of airline service quality on customer loyalty.
4) To explore the impact of customer satisfaction on loyalty in aviation industry.
5) To examine the mediating role of customer satisfaction on airline service quality and customer loyalty.
6) To offer valuable suggestions for the company to better off its service quality.
1.3 Research questions
There are four main purposes have been conducted in this study. Firstly, exploring the impact of service quality on customer satisfaction. Secondly, examining the impact of customer satisfaction on loyalty. Thirdly, assessing the effect of service quality on passenger loyalty. Lastly, the researcher would like to explore the mediating role of customer
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satisfaction on airline service quality and customer loyalty. From these purposes, the questions to be addressed in this study are the following: “
1) What is the impact of airline service quality on customer satisfaction?
2) What is the impact of airline service quality on customer loyalty?
3) What is the impact of customer satisfaction on loyalty in the aviation industry?
4) What influence does the airline service quality have on customer satisfaction and loyalty?”
1.4 Research significance
Aviation industry plays a crucial part in the economy of a country. It is the center of globalization for other industries (Suhartanto and Noor, 2012). According to Archana and Subha (2012), as delivering service quality is vital for airline companies to survive in this fiercely competitive environment, the interest of researchers in service quality and satisfaction in aviation industry has been increasing. There are numerous past studies examine the effect of service quality on customer satisfaction and loyalty in the aviation industry. However, there is no prior study has been conducted on Vietjet yet. Therefore, this research is of special significance to Vietjet with the purpose is to assess how the service quality provided by Vietjet affects the level of customer satisfaction and loyalty.
Additionally, this research will provide practical contribution to Vietjet’s marketers in giving a better understanding of customer satisfaction and loyalty towards airline service quality. Therefrom, the marketers can develop and deliver better service quality to attain customers’ satisfaction and loyalty.
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