Assessing how service quality, airline image and customer value affect the intentions of passengers regarding low cost carriers

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Note

Assessing how service quality, airline image and customer value affect the

intentions of passengers regarding low cost carriers

Keng-Chieh Yang

a,*

_{, Tsui-Chuan Hsieh}

b

_{, Hendrik Li}

b

_{, Chyan Yang}

b a_{Hwa Hsia Institute of Technology, 111 Gong Jhuan Rd., Chung Ho, New Taipei City, 235, Taiwan, ROC}

b_{Institute of Information Management, National Chiao Tung University, Taiwan, ROC}

Keywords: Low cost airlines Airline service quality Airline image

a b s t r a c t

This paper uses simple structural equation modelling to investigate relationships between service quality, airline image, customer value and behavioural intentions for passengers tofly on low cost carriers. In particular it focuses onflier’s expectations of the types of services that they can enjoy. The analysis indicates that service quality has a significant positive effect on customer value, airline image and behavioural intentions, but that airline image does not itself significantly influence behavioural intentions. Crown CopyrightÓ 2011 Published by Elsevier Ltd. All rights reserved.

1. Introduction

Service quality is a measure of how well the service level delivered matches customer expectations; Gronroos (1984), for example, developed a model where customers compare the service they expect with perceptions of the service they receive to evaluate service quality. Furthermore, (Hensher et al., 2003) has shown that service quality focuses not only on outcomes but also on service processes. Compared to goods, however, service quality is more difﬁcult to measures because there are fewer cues for consumers to assess ex ante. This is why companies such as airlines seek to direct potential passengers to their services by providing cues that favour them, and these are the generally physical attributes of the carrier.

In this context, an airline has the possibility of attracting new customers and build a positive corporate image through its physical and behavioural attributes, such as reputation, type of aircraft, variety of services, and business ideology as well as the impression of quality communicated by its personnel interacting with its potential customers (Dodds et al., 1991). Corporate image in this sense has been found as an important factor in an evaluation of a company (Fombrun, 1996), inﬂuencing customers’ perceptions of the services offered and the companies they choose.

2. The approach

Here we look at the ways in which service quality may be perceived and acted upon by potential air travellers paying

particular attention to attitudes towards low cost carriers (LCC). There are a number of behavioural responses, for example that provide indications of whether consumers are becoming tied to afirm they are using, or “bonding” with its image. For example, when consumers express a preference for onefirm over others, or when they praise the firm or recommend it to others, they are becoming bonded to the firm (Park et al., 2004). Based on these ideas, a conceptual model (Fig. 1) is used to test five hypotheses:

H1. Service quality has a positive impact on customer value. H2. Service quality has a positive impact on airline image. H3. Customer value has a positive impact on behavioural

intentions.

H4. Airline image has a positive impact on behavioural intentions.

H5. Service quality has a positive impact on behavioural intentions. Customer Value Behavioural Intentions Airline Image H1 H2 Service Quality H3 H4 H5

Fig. 1. The conceptual model. * Corresponding author. Tel.: þ886 922741977.

E-mail address:andesyoung.tw@gmail.com(K.-C. Yang).

Contents lists available atSciVerse ScienceDirect

Journal of Air Transport Management

j o u r n a l h o m e p a g e : w w w . e l s e v i e r . c o m / l o c a t e /j a i r t r a m a n

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To this end we examine the attitudes of a group of Taiwanese air travellers towards service quality. Wefirst conducted a pilot test to ensure that our survey is reflective of relevant issues and is easily understood by respondents. We asked MBA students about their experiences of international travel and online ticket shopping, and to relate this to the length and sequence of items, format, scaling and wording of the questionnaire. Then, for the study proper, 482 people responded between 13 April 2009 and 7 May 2009 to a revised questionnaire administered through web sites used by business travellers, students and backpackers.1There were 458 valid responses (Table 1). There were 30 questions based on Likert five-point scales, grouped to give 15 possible service effects (the manifest variables).

3. Results

Table 2provides the result of the structural equation modelling analysis deploying path analysis using the LISREL 8.5 structure equation-modelling package (Joreskog and Sorbom, 1993).2We test the hypothesised relationships among the variables. In addition, to their direct effects, we include indirect effects representing those factors mediated by the intervening variables between the cause and effect of interest in a model (Alwin and Hauser, 1975). LISREL allows both the direct and indirect effects to be estimated simul-taneously. Technically, the model offers a goodﬁt to the data.

Table 3provides the results regarding the direct and indirect effects. We see that service quality has a direct effect on behavioural intentions to use of 0.56 and it indirect effects of 0.197 and 0.84. The resulting effect of expected service quality on behavioural inten-tions is thus 0.84.

We see fromTable 2that of theﬁve hypothesis postulated, “H3. Customer value has a positive impact on behavioural intentions”, however, is also at the margin of acceptable signiﬁcance. The effect on service quality to customer value wis

b

¼ 0.73 which supports Hypothesis 1. The path from service quality to customer value accounts for 43% of the variance in customer value. Hypothesis 2 is

supported indicating service quality affected airline image and the path accounts for 47% of the variance in airline image. Hypotheses 3 (although less strongly) and 5 are also supported with customer value and service quality having signiﬁcant effects on behavioural intentions with both paths accounting for 46% of the variance in behavioural intentions. Only H4 “Airline image has a positive impact on behavioural intentions” has no statistical support.

The results thus indicate that service quality has the greatest effect on behavioural intentions, especially in terms of reliability, tangibles, responsiveness and assurance, suggesting that customers care not only about low prices, but also about other service quality issues. But there is a caveat, customers_’ repurchase intentions are essentially determined by perceived value and thus their sources of information and prior experiences are important. It may well be, for example, that airline image has limited effect on the intention to use LCC because the majority of the Taiwanese market has only a few such carriers, and respondents are therefore not very familiar with them or their attributes.

Acknowledgements

The authors would like to thank the National Science Council of the Republic of China in Taiwan for partiallyﬁnancially supporting this research (NSC 99-2410-H-146-003).

References

Alwin, D., Hauser, R., 1975. The decomposition of effects in path analysis. American Sociological Review 40, 37e47.

Dodds, W., Monroe, K., Grewal, D., 1991. Effects of price, brand, and store infor-mation on buyers’ product evaluations. Journal of Marketing Research 28, 307e319.

Fombrun, C., 1996. Reputation: Realizing Value from the Corporate Image. Harvard Business Press.

Fornell, C., Larcker, D., 1981. Evaluating structural equation models with unob-servable variables and measurement error. Journal of Marketing Research, 39e50.

Gronroos, C., 1984. A service quality model and its marketing implications. European Journal of Marketing 18, 36e44.

Hensher, D., Stopher, P., Bullock, P., 2003. Service quality - developing a service quality index in the provision of commercial bus contracts. Transportation Research Part A: Policy and Practice 37, 499e517.

Joreskog, K., Sorbom, D., 1993. LISREL 8: Structural Equation Modeling with the SIMPLIS Command Language. Scientiﬁc Software.

Park, J., Robertson, R., Wu, C., 2004. The effect of airline service quality on passengers’ behavioural intentions: a Korean case study. Journal of Air Trans-port Management 10, 435e439.

Table 1

Respondents’ proﬁles.

Demographic characteristics Sample number Frequency (%)

Gender Male 231 50.4

Female 227 49.6

Age 20 or younger 35 7.6

21e40 399 87.2

41e60 24 5.2

Education High school or below 10 2.2

College 255 55.7

Graduate degree 193 42.1

Occupation Private sector 122 26.6

Government employee 23 5 Student 266 58.1 Other 47 10.3 Status Single 402 87.8 Married no child 42 9.2 Married w/child 14 3.1 Income 20,000 or below 289 63.1 20,001e40,000 77 16.8 40,001e60,000 56 12.2 60,001 or above 36 7.9 Table 2

Structural modelling analysis.

Hypothesis Path Path coefﬁcient

H1 ESQ➔ CV 0.73***

H2 ESQ➔ AI 0.67***

H3 CV➔ BI 0.27*

H4 AI➔ BI 0.12

H5 ESQ➔ BI 0.56**

Note:*denotes P < 0.05; **denotes P < 0.01; ***denotes P < 0.001.

Table 3

Effects on behavioural intentions.

Construct Direct effects Indirect effects Total effects Expected Service Quality 0.56** 0.197, 0.084 0.84

Customer Value 0.27* 0.27

Airline Image 0.12 0.12

Note:*denotes P < 0.05; **denotes P < 0.01.

1 _{Convenience sampling was used, which means our results must be treated with} extreme caution.

2 _{To conform to the needs of structure equation modelling, we checked for} composite reliability to ensure the internal consistency of the measurement model. The loading inTable 2show the coefﬁcients of all items are above the recom-mended threshold of 0.7 (Fornell and Larcker, 1981).