Service quality, customer satisfaction and behavioral intentions a study of international flights with low cost carriers in viet nam

dimensions of service quality, customer satisfaction, word-of-mouth and repurchase intentions from the customers‟ perspectives in case of international flights with low-cost carriers LCC

PHAN NGUYEN HOANG LY

SERVICE QUALITY, CUSTOMER SATISFACTION

AND BEHAVIORAL INTENTIONS:

A STUDY OF INTERNATIONAL FLIGHTS WITH LOW-COST CARRIERS IN VIET NAM

MASTER THESIS IN ECONOMICS

Ho Chi Minh City, 2019

PHAN NGUYEN HOANG LY

SERVICE QUALITY, CUSTOMER SATISFACTION

AND BEHAVIORAL INTENTIONS:

A STUDY OF INTERNATIONAL FLIGHTS WITH LOW-COST CARRIERS IN VIET NAM

Major: Business Administration

(Research)

Code: 8340101

MASTER THESIS IN ECONOMICS

Supervisor: Dr Dinh Thai Hoang

Ho Chi Minh City, 2019

DECLARATION

I commit that “Service quality, customer satisfaction and behavioral intentions: a study of international flights with low-cost carriers in Viet Nam” is my own research, which was based on the study and guidance of Dr Dinh Thai Hoang This thesis includes accurate referencing cited from the vast majority of research published on reputable journals in the world with detailed in-text citations The content and results of the analysis are honest and have not been published in any form before, so the comments, evaluations and conclusions are reliable

Ho Chi Minh City, 2019

Phan Nguyen Hoang Ly

Table of contents

List of tables

List of figures

Abstract

Chapter 1: INTRODUCTION 1

1.1 Research background 2

1.2 Problem statement 4

1.3 Research objectives 5

1.4 Subjects, implication and scope of research 7

1.5 Assumptions 8

1.6 Research structure 9

Chapter 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 11

2.1 Literature review 11

2.1.1 Low-cost carriers 11

2.1.2 Service quality 13

2.1.3 Customer satisfaction 15

2.1.4 Behavioral intentions 16

2.1.5 The relationship between service quality and customer satisfaction 17

2.1.6 The relationship between customer satisfaction and behavioral intentions 19

2.2 Conceptual framework and research hypotheses 21

Chapter 3: RESEARCH METHODOLOGY 23

3.1 Research strategy and design 23

3.2 Qualitative research 26

3.3 Quantitative research 27

3.3.4 Data analysis 33

Chapter 4: DATA ANALYSIS AND DISCUSSION 37

4.1 Respondent demographics 37

4.2 Descriptive statistics 39

4.3 Reliability and validity 41

4.3.1 Reliability test 41

4.3.2 Validity test 44

4.4 Hypotheses test 51

4.5 Summary of data analysis results 52

4.6 Discussion 55

Chapter 5: CONCLUSION 59

5.1 Summary of the research 59

5.2 Theoretical implication of study 60

5.3 Managerial implication of study 61

5.4 Limitation and future recommendation 63

5.4.1 Limitation 63

5.4.2 Recommendation 63

REFERENCES

APPENDIX

Table 3.1: Participants in a group discussion 26

Table 3.2: Research variables and measures 28

Table 4.1: Summary of respondent demographics 37

Table 4.2: A summary of variables‟ Mean and Standard deviation 40

Table 4.3: Cronbach‟s alpha test outcomes 42

Table 4.4: EFA results 45

Table 4.5: Factor structure based on factor analysis results 46

Table 4.6: Summary of CR and AVE 48

Table 4.7: The convergent coefficients of factors 48

Table 4.8: The discriminant coefficients of factors 50

Table 4.9: Standardized regresion weights 1 51

Table 4.10:Standardized regresion weights 2 52

Table 4.11: Factor structure after hypotheses test 53

Table 4.12: Hypotheses test summary 54

Figure 4.1: Direct effects of service quality on customer satisfaction

then behavioral intentions 55

dimensions of service quality, customer satisfaction, word-of-mouth and repurchase intentions from the customers‟ perspectives in case of international flights with low-cost carriers (LCCs) in Viet Nam

This research was undertaken with non-probability sampling 240 questionnaires were delivered and collected, and 238 of them were useful for data analysis The survey participants were the passengers who have flown abroad with LCCs at least 2 times within a year The data collected from this survey were utilized for statistical analysis to evaluate the seven hypotheses, the positive associations of five dimensions of service quality and customer satisfaction, then the positive linkage of customer satisfaction and two behavioral intentions (word-of-mouth and repurchase intentions) Both qualitative (focus group) and quantitative research (SPSS 22 and AMOS 20) were applied to find the results

Regarding to the findings, reliability and assurance were the most influencing on the customer satisfaction; responsiveness and empathy were also seen as a significance However, the performance of responsiveness is indeed not that good like the other dimensions Tangibles was the only factor that did not have

a great effect on customer satisfaction along with its not good performance of-mouth was found to be more affected by customer satisfaction than repurchase intentions

Word-từ phương diện của khách hàng trong trường hợp những chuyến bay quốc tế với các hãng hàng không giá rẻ tại Việt Nam

Nghiên cứu này được lấy mẫu theo phương pháp chọn mẫu thuận tiện Số lượng mẫu khảo sát phát ra là 240, và 238 mẫu thu về đủ điều kiện để phân tích dữ liệu Đối tượng khảo sát là những hành khách đã bay đi nước ngoài với các hãng hàng không giá rẻ ít nhất 2 lần trong vòng 1 năm Dữ liệu thu được từ cuộc khảo sát

đã được sử dụng để phân tích thống kê để kiểm tra 7 giả thuyết, mối quan hệ thuận chiều của 5 tiêu chí chất lượng dịch vụ và sự hài lòng của khách hàng, sự hài lòng của khách hàng và lời truyền miệng, ý định mua lại Nghiên cứu định tính (thảo luận nhóm) và nghiên cứu định lượng (SPSS 22 và AMOS 20) đã được áp dụng để tìm ra kết quả

Theo kết quả tìm được, sự tin cậy và độ an toàn là 2 yếu tố có tầm ảnh hưởng nhất đối với sự hài lòng của hành khách, sau đó là sự phản hồi và đồng cảm Tuy nhiên, trong thực tế thì việc phản hồi cho hành khách đang không được đánh giá cao như những yếu tố khác Yếu tố hữu hình là yếu tố duy nhất không có ảnh hưởng đáng kể đến sự hài lòng của hành khách cùng với thực trạng chưa tốt của nó Lời truyền miệng được tìm thấy là bị ảnh hưởng bởi sự hài lòng của khách hàng nhiều hơn là ý định mua lại

An increasing number of air travelers have become more demanding in the expectation of service quality offered by the airlines Hence, the delivery of high service quality has become a marketing priority for service companies as strength to get achievement (Hoffman & Bateson, 2002) It is especially true in the airline industry which has become extremely competitive so far particularly due to the emergence of Low-cost carriers (LCCs) The growing of the airline industry provides opportunities along with challenges to the business entities operating in this industry The opportunities arise due to the increasing demand for the airline service; however, air travelers are also increasingly demanding in terms of their expectations of the service quality offered by the airline carriers (Graham and Vowels, 2006) Meanwhile, the challenges arise not only because of the high level

of competition between the airlines, but also due to growing customer demands for the better service Therefore, managing quality of service has become the top priority in the airline industry (Wells & Wensveen, 2004)

LCCs compete on their low cost, point-to-point short-haul travel, no extra flight service, and direct sales etc., not using the service quality, but cost-conscious market segments for their competitive advantages (Graham & Vowels, 2006) However, airline managers need to know which factors affect customer satisfaction from passengers‟ perspective Airlines started to examine whether perceived service

in-quality is a prime driver for customer satisfaction and behavioral intentions (Ahn and Lee, 2011) and to know which attributes really do matter to satisfaction and behavioral intentions (Martin et al., 2008)

This research focused on examining how five dimensions of SEVRQUAL representing for the service quality influence on customer satisfaction and checking whether customer satisfaction can lead to customers‟ behavioral intentions in case

of international flights from Ho Chi Minh city with LCCs

1.1 Research background

Southeast Asia is a region of rapid growth and huge potential, reaches one of the world‟s highest LCC penetration rates Overall capacity growth in this region increased approximately by 7% in 2017 while passenger traffic here grew approximately by 10% in 2017 At least half of the region‟s 11 countries recorded double, or near double digit, passenger growth at least three years: Cambodia, Laos, Myanmar, Thailand, the Philippines and Vietnam From an economic and traffic growth perspective, Southeast Asia has been a very attractive market in spite of its intensifying competition and suffering from overcapacity As a result, Southeast Asia is a market of huge potential with rapid economic growth and a growing, larger middle class providing an ideal environment for airline expansion, particularly LCCs (CAPA, 2019)

The LCC business model is one of the most recent changes in the general business model of the airlines A low-cost carrier, or a no-frill carrier, is an airline that differentiates itself in the market through reducing ticket prices with their low cost, short-haul travel, no extra in-flight service These airlines do not use the service quality for their competitive advantages, but cost-conscious market segments (Graham & Vowels, 2006)

Vietnam was the fastest growing market in Southeast Asia in 2017, and has even been one of the fastest growing markets in the world in recent years in spite of

the slow rate of growth from a staggering 28% in 2016 Domestic growth in Vietnam slowed to the high single digits in 2017, compared to 25% growth in 2016, but international growth remained very strong, at approximately 30% Vietnam's LCCs have focused on international routes rather than regional domestic market Among several LCCs in Southeast Asia, thethree most well-known and huge LCCs flying from Tan Son Nhat International Airport, Viet Nam are Vietjet Air, Air Asia, and Jetstar Therefore, passengers flying abroad with these three LCCs would be aimed for the survey Vietnam is well connected to other countries in Asia with the support of a complex flight network Among destinations in Southeast Asia, Bangkok, Singapore and Kuala Lumpur are more attractive with most flight deals from Viet Nam (CAPA, 2018)

Table 1.1: Introduction of the three low-cost carriers

Flights

Over 20 stops across Asia, Southeast Asia

88 destinations across Southeast Asia, Australia, North Asia, and the Asia-Pacific

Over 20 stops across Asia, Australia, Southeast Asia, New Zealand

Booking

Official site, app, Facebook and Twitter pages

Official site, app, Facebook and Twitter pages

Official site, app, Facebook and Twitter pages, price watch alert

Source: Tripsavvy, 2019

Therefore, research in the airline industry in Viet Nam has become more and more favorable due to its significant growth speed in this sector Especially, this solid association of service quality, customer service and behavioral intentions has been more attractive to the scholars, but authors‟ research premises was just in domestic market such as Saha and Theingi (2009) with domestic Thai market, Ahn and Lee (2011) within Lon Don, U.K Therefore, the detection of relationships of these three terms with international flights is a good choice

1.2 Problem statement

This research studied the relationships between service quality applying SERVQUAL instrument, customer satisfaction, and behavioral intentions Specifically, it aimed to assess service quality (reliability, assurance, tangibles, empathy, and responsiveness) in the LCCs market from the customers‟ perspective, leading to exploring how perceived service quality affects customer satisfaction then behavioral intentions The price was thought to be more concerned by LCCs‟ customers while FSAs are more preferable by service quality which was studied to

be the most focused competitive variable to affect customer satisfaction in FSAs due to the increasing expectation of airline passengers It raised a question that if passengers of LCCs take consideration of flight fares rather than service quality all the time This study is meant to fulfil the understanding if passengers of LCCs consider service quality as a factor affecting satisfaction, leading to behavioral intentions The research was sampled from the three most well-known and huge LCCs (Vietjet Air, Air Asia, and Jetstar) flying from Tan Son Nhat International Airport, Viet Nam

Nowadays, LCCs have become more familiar with more people, bringing a great chance for middle-income people who might have high demand in air travel However, a potential market always accompanies with big challenges when more and more no-frill airlines have been established, which has made this case much more competitive The managers of these LCCs always have to do the task of cost

and service quality, how to minimize the operation expense and still to guarantee probably the best service, reaching to profitability On the basis of the theory and previous researches, this study aimed to examining how five dimensions of SEVRQUAL representing for the service quality influence on customer satisfaction and checking whether customer satisfaction can lead to customers‟ behavioral intentions in case of LCCs with international flights from Ho Chi Minh city The research used different research and analysis methods along with the theory as well

as findings of the previous related papers for the research procedure to attempt to understand these relationships As a result, the findings of this study would somehow show an overview of passengers‟ expectations, satisfaction, and reactions within Vietnamese LCC market, particularly in Ho Chi Minh city

Apart from good signals of the airline industry, 2018 was marked as a fatal year when plane crash deaths rose up to 556, compared to only 44 in the previous year It was reported a total of 15 fatal airline accidents in 2018, a half more compared with 10 in 2017 For example, the LCC Lion Air crash of Indonesia was highlighted with 189 dead people in October 2018, which was considered as the deadliest incident for the year (Smith and Spark, 2019) It has raised a thought that

if passengers in general, and LCC customers in particular, would rise perceptions of expectations from service quality for behavioral intentions

1.3 Research objectives

Referring to previous prescriptions, the objectives of this study were to:

1 Investigate how five dimensions of SERVQUAL influence on customer satisfaction

2 Figure out which factors among reliability, assurance, tangibles, empathy, and responsiveness are most significant on satisfaction

3 Detect if satisfied customers will create more positive word-of-mouth

4 Check if satisfied customers will engage to repurchase intentions

This research aimed to examine how five dimensions of SERVQUAL representing for service quality influence on customer satisfaction Customers would base on these five dimensions to evaluate their perceived service quality Then, figuring out which five factors among reliability, assurance, tangibles, empathy, and responsiveness having more importance on satisfaction from the customers‟ perspective was also expected in this study

Customer satisfaction here was understood in 3 aspects: Overall satisfaction

of the airline service, perceived reliability from passengers, and extent of airline customers' needs fulfilled This would show how customers evaluate the airline service through their perceptions if the airline meet or even extend their expectations or acquire their reliability for the service, becoming an ultimate goal of service operations (Ostrowski et al., 1993) Through this, people would be able to somehow realize which passengers expect the most from the LCCs and those might

be the decisive reasons for customers to choose an airline to fly with

Moreover, this study also aimed to consider if customer satisfaction would consequently lead to behavioral intentions in two aspects: word-of-mouth and repurchase intentions They would show if there would be any positive reactions after experiencing good services with LCCs and how they were affected by customer satisfaction, showing the consequences of customer satisfaction

These four research questions need to be answered in this study:

1 How do five dimensions of SERVQUAL influence on customer satisfaction when passengers take international flights with LCCs?

2 Which factors among reliability, assurance, tangibles, empathy, and responsiveness are the most significant on satisfaction?

3 Will satisfied customers create more word-of-mouth for LCCs after their experience?

4 Will satisfied customers engage their repurchase intentions for LCCs after their experience?

Answering the research questions was necessary to be performed Without this study, the airline service providers might not know the factors influencing their customer satisfaction and how they relate each other On the other hand, referring to this study, they would know what was actually needed by the passengers and what should be prioritized This study would somehow help the airline service providers reach to formulating appropriate strategies and policy for creating favorable airline passengers

1.4 Subjects, implication and scope of research

This study aimed to evaluate the dependent variables, behavioral intentions, with two constructs: word-of-mouth to others for this good airline service, repurchase intentions for the same LCCs next time if possible Moreover, customer satisfaction played a role as an intermediate variable; thus, it was also considered as

a subject of this research, which was observed through overall satisfaction of the airline service, perceived reliability from passengers, and extent of airline customers' needs fulfilled And these subjects were examined by evaluations of passengers who had straight international flights within Southeast Asia with the three LCCs chosen

LCC is a field catching the attention of the scholars, so some of its concerns were examined by the authors Specifically, the assumedly solid relationships between five factors of service quality, customer satisfaction and two popular factors of behavioral intentions (word-of-mouth and repurchase intentions) would

be considered in this thesis These findings would help LCC operators with perceptions of passengers about the service and their reactions Therefore, their managerial policies, marketing strategies as well as economic aspects would be modified and adjusted to reach both profit and sustainability in business In addition, the managers would know which factors that they should give priorities to

Tan Son Nhat International Airport was chosen for the survey due to its biggest capacity Three selected airlines were Vietjet Air, Air Asia and Jetstar due

to their frequent schedules to a variety of destinations The number of samples from each airline would be selected in correspondence with their number of flights per day This might be somehow more familiar with Vietnamese people thanks to its popularity, especially for those who have usually travelled with LCCs Definitely, passengers flying with these three airlines were aimed for samples; the meeting took place at the gates before boarding for more convenience

1.5 Assumptions

There were a variety of assumptions that were discussed when conducting this research Firstly, SERVQUAL instrument (reliability, assurance, tangibles, empathy, and responsiveness) is matching and suitable to consider the quality of the airline service on the five concerned aspects Thus, all of these five dimensions were chosen to evaluate the service quality and to see how they affect customer satisfaction

Secondly, customer satisfaction was assumed not only the normal overall satisfaction of the airline service but also perceived reliability from passengers and extent of airline customers' needs fulfilled To be more specific, with good service quality, the passengers should show how they are satisfied, reliable and fulfilled by the service offered

Thirdly, customer satisfaction was assumed to be the antecedent of behavioral intentions Word-of-mouth and repurchase intentions were chosen to evaluate this construct because they are thought to be the common reactions of the customers after enjoying a good service

Based on the academic and empirical review, all these there constructs and

30 indicators mentioned above were used to consider the relationships of service quality on customer satisfaction then behavioral intentions Moreover, another assumption was that passengers in Viet Nam have similar expectations for the LCC

airline service to other countries in Southeast Asia like Thailand or Malaysia Therefore, this study was based on some assumptions of the relevant researches of these countries Currently, Tan Son Nhat International Airport is the biggest airport

in Viet Nam, so choosing this as an sample for the survey was a choice with the most well-known and frequent airlines in South East Asia (e.g Vietjet Air, Air Asia, and Jetstar) In addition to mention above in the introduction, many researchers chose Ho Chi Minh city for their study delimitation because of the busy trade here, so this study is not exception, Tan Son Nhat was selected for this research

Chapter 2: Literature review and conceptual framework

Literature review ranging from the theories to the previous studies related to this research would be referred in this chapter to explain for the formulations of seven hypotheses with eight constructs Then, the research framework was proposed

to examine the seven relationships between five dimensions of service quality, customer satisfaction and behavioral intentions

Chapter 3: Research methodology

The research strategy and design would be performed with qualitative and quantitative research in details It would consist of the findings of qualitative

research, variables and measures, population and sampling, data collection and specific methods of data analysis

Chapter 4: Data analysis results

The results of data analysis would be shown into four separate parts, including respondent demographics, descriptive statistics, reliability and validity test, confirmatory factor analysis, and hypotheses test by SEM Then, these results would be discussed to detect and evaluate the associations of service quality, customer satisfaction and behavioral intentions

Chapter 5: Conclusion

A summary of the research would be presented in this chapter Theoretical as well as managerial implications would be then presented as contributions of this study Some limitations would be also mentioned, leading to recommendations for the next research

Chapter 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 2.1 Literature review

Indeed, a low-cost carrier has been defined rather ambiguously due to its numerous product differentiations within this sector They compete on their low fares with no extra in-flight service, direct sales and point-to-point or short-haul flights Therefore, these airlines do not consider service quality as their competitive advantages but appeal to cost sensitive market segments instead (Ahn and Lee, 2011)

Table 2.1 hereafter presents the comparison of full-service airlines and cost carriers While some elements appear to indicate the convergence of these two business models, their strategies are fundamentally different

low-Table 2.1: Comparison between low-cost carriers and full-service carriers

- More inclusions: Expect the fare to

include luggage allowance and inflight

meals, seat selection and insurance

- Ancillary fees: Expect to pay for

„extras‟ like luggage, meals, seat selection and insurance

- More extensive routes

- Hub-and-spoke network

- More popular leisure destinations

- Point-to-point short-haul flights

- Airport lounges: Corporate programs

often include lounge access which is

generally offered with premium fares

- No airport lounges: While the airlines don‟t have airport lounges, some travelers with memberships to lounges may be able to use those

- Loyalty programs: Your travelers will

earn points for each trip, which is useful to

reinforce compliance, but can be a

distraction if they are members of

different programs

- No loyalty program: Your travelers generally won‟t earn points for their trips

- Multi-class cabins: Travelers will have a

choice between economy, premium

economy and business class Some

airlines still have first class on some

routes

- Single-class cabins: While the original LCCs had only economy class seating, some airlines in this category now have a few „business class‟ seats or charge more for rows with extra leg room, like exit rows

- Alliances: Most legacy carriers belong to

one of the global alliances or have

codeshare arrangements with other legacy

carriers, ensuring a more seamless

experience when travelling internationally

- Limited interline arrangements, which make it less convenient when doing multi-stop trips on different carriers

- Special corporate deals, across the board

discounts and route deals, especially if

you can guarantee the airline the lion‟s

share of your bookings

- No corporate deals: not expect to

be able to negotiate incentives or discounts on published fares

- A customer service department that will

generally help and compensate you for

inconvenience in case of delay or lost

baggage

- Very limited customer services involving either expensive phone lines or impersonal e-mails

- More leg space and comfortable seats - Narrower leg space and less

comfortable seats

Source: Inter VISTAS for the Istanbul Technical University, 2004

2.1.2 Service quality

In service quality research, the first model to measure the conceptualization

of service quality declared by Gronroos (1984) stated that a service is an activity or

a series of activities of more or less intangible nature taking place in interactions between customers and service employees and/or systems of service providers, which are provided as solutions to customers‟ problems A two-dimensional model was used to study the quality of service, technical-quality (outcome) and functional-quality (process) The model of Gronroos compared the two dimensions of service performance with expectations of consumers It was generally concluded that each single customer had their own single perception of the service quality

Moreover, SERVQUAL is a multi-dimensional research instrument (i.e questionnaire or measurement scale) designed to capture consumer expectations and perceptions of a service along with five dimensions that were believed to represent service quality by Parasuraman et al (1988) The model identified the principal dimensions/components of the service quality, proposed a scale (SERVQUAL) to measure service quality and suggested possible causes of service quality problems Those five factors were reliability, assurance, tangibles, empathy and responsiveness, representing the dimensions of service quality ranging from industries to settings A breakthrough was represented in the measurement methods used for service quality research This instrument was widely applied in a variety of contexts and cultural settings, becoming the dominant measurement scale in terms

of service quality The five dimensions of SERVQUAL were defined as follows:

1 Tangibles: Physical facilities, equipment, and appearance of personnel

2 Reliability: Ability to perform the promised service dependably and

accurately

3 Responsiveness: Willingness to help customers and provide prompt

service

4 Assurance: Knowledge and courtesy of employees and their ability to

inspire trust and confidence

5 Empathy: Caring, individualized attention the firm provides its customers

Indeed, not all of these five dimensions are equally important to customers That why figuring out which factor has had a greater influence on customer satisfaction would be of a great importance on strategies makers‟ decisions, which would help the service providers to avoid majoring in minors However, they have

to try to take all these five under consideration, not just focus on some and let the others suffer

Airline service quality

An increase in air passengers has resulted in more demanding in terms of the service quality offered by airline carriers (Akpoyomare et al., 2016) For airline industry, a delivery of high service quality has become a marketing tactic to survive

in such fiercely competitive pressures (Doganis, 2006) Therefore, airline operators should create their own strategies to achieve the fulfilment of service expectation along with the service quality dimensions, the most considerable to air passengers to seize customer loyalty (Sultan and Simpson, 2000) Moreover, service quality is of great importance in aviation‟s competitive advantages by enhancing customer loyalty, coming to market share, creating profits (Morash & Ozment, 1994)

Among competitive factors of airline companies (Market presence, level of service, service quality, frequent flyer program, travelers‟ perceptions) (Proussaloglou and Koppelman, 1999) or (price, safety, frequent flyer, promotion, alliances and service quality) (Thanasupsin et al., 2010), service quality is one of the most focused competitive variables Moreover, this term of quality is an emphasized driver of customer engagement and loyalty to the airlines (Hapsari et al., 2017) It is the service quality offered to customers would differentiate an airline with its competitors, determining market share and ultimately profitability (Anderson et al., 1994) Therefore, to enhance the service offered, airline service suppliers pay to understand passengers‟ needs and expectations because they themselves reflect a standard against which they judge the performance (Sultan and Simpson, 2000)

2.1.3 Customer satisfaction

Customer satisfaction is one of the objectives of marketing activities connecting the process of purchases and consumptions with post-purchase phenomena Satisfying customers must be seen as an important element in marketing concept since it might affect consumers‟ purchase behaviors, profitability and shareholder surplus in the future (Anderson et al., 1994) Especially, in the global and fiercely competitive economy, it was fatal for an organization not to emphasize on customers Indeed, organizations to survive need to produce products

or services within very good quality, which highly yields satisfied and loyal customers Moreover, satisfied customers were less sensitive with prices and less influenced by competitors, purchasing additional goods or services and staying loyal (Thanasupsin et al., 2010)

There have been a variety of definitions given for the term of customer satisfaction, but almost all of those stressed on cognitive process For example, Oliver (1980) defined customer satisfaction as overall affective response to a perceived discrepancy between prior expectation and perceived performance after consumption Later, customer satisfaction was redefined as an emotional post-consumption response for comparing expected and actual performance In addition, Rust and Oliver (1994) defined this satisfaction as customers‟ fulfillment responses which are evaluations as well as emotion-based responses to products or services

Theories like Expectation – Disconfirmation Theory (Oliver, 1980) attempted to explain customer satisfaction Then, Expectancy – Disconfirmation Theory was argued as the most influential and received the widest acceptance (Ekinci et al., 2008) Expectancy – Disconfirmation Theory examined the formation

of expectations and disconfirmations of these expectations through performance comparison Expectations reflect customers‟ pre-consumption perceptions of products or services whereas performance is the basis of customers‟ perceptions of

those Disconfirmations arise from the discrepancy between the prior expectations and the actual performance of the goods or services

2.1.4 Behavioral intentions

The concept of behavioral intentions was first introduced by Fishbein and Ajzen (1975) to solve the contradictive relationship between attitudes and behaviors It was stated that attitudes affect behaviors through a mediator called behavioral intentions In marketing, the term of behavioral intentions has been widely used to prove the main predictor of customer loyalty behavior (Widianti et al., 2013)

Behavioral intentions could be seen as the customers‟ subjective probability

of performing a certain behavioral reaction To this regard, Parasuraman et al (1988) detected that willingness to revisit reflected a reaction to repurchase, recommend, and give positive feedback to others Moreover, Saha and Theingi (2009) suggested that three behaviors in particular have referred to profitability and the market share of a company were word-of-mouth, repurchase intentions, and feedback

Word-of-mouth is known as a flow of a trustable external source of information about products, services, or companies from one customer to another,

by which customers can show their personal evaluation on products or services externally in positive or negative way (Saha and Theingi, 2009) Moreover, this term was simply defined to be an activity generated when it came to an increase in either satisfaction or dissatisfaction (Anderson, 1998) And it was believed to perfectly increase due to the growth of electronic communication via the internet, becoming a critically important factor (Babin et al., 2005)

Repurchase intention has been defined in different terms For example, it was implied as a process of a person to buy goods or services from the same suppliers (Hellier et al., 2003) Moreover, it was explained as being loyal to a particular product or service when it came to a demand in the future (Harris et al., 2010)

Customer feedback refers to the transmission of negative information (complaints) or positive information (compliments) to providers about the services

or products they used Such information might be useful for providers in identifying areas where adjustments of performance would be required (Saha and Theingi, 2009) However, due to the lack of previous researches for reference, this factor of behavioral intentions would not be mention in this study

2.1.5 The relationship between service quality and customer satisfaction

The relationship between service quality and customer satisfaction has been popularly researched in different sectors for a long time due to its importance of

recognition (ElBassiouni et al., 2012; Yuen and Thai, 2015; Tan et al., 2016)

Anderson et al (1994) asserted a widespread belief into the relationship between quality and customer satisfaction due to the fact that an increase in understanding customer satisfaction would lead to superior economic return Therefore, attempting

to improve quality of some factors was one of the broad strategic implications to achieve the long-term economic returns through customer satisfaction

Heskett et al (1994) pioneered for a research into the relationship between airline service quality, passenger satisfaction and profitability Many of authors perceived airline service quality as a multi-dimensional construct (Frost and Kumar, 2001; Ahn and Lee, 2011) in accordance with the conception of service quality proposed by Parasuraman et al (1988) in SERVQUAL, becoming well-known service quality measuring instrument This instrument, which measures service quality with five dimensions (reliability, assurance, tangibles, empathy, responsiveness), relied on the premises that customers‟ assessments of overall service quality determined by the gap between their expectation for a service and perception of its practical performance Parasuraman et al (1988); Cronin and Taylor (1992); Oliver (1997) asserted that these two constructs were reciprocal According to this point, service quality was seen as a cognitive assessment of service in every single occurrence while satisfaction was affected by the accumulation of customers‟ evaluation for services (Saha and Theingi, 2009)

Many other researchers applied different measures for the concept of quality service For example, Saha and Theingi (2009) used tangibles, schedule, flight attendants and ground staff decribing service quality to affect to customer service While Ali et al (2014) investigated the relationships between five dimensions of service quality (airlines tangibles, terminal tangibles, personnel quality, empathy and airline image) and customer satisfaction Or tangibility, information quality, responsiveness, trust, and personalization were examined to have influence on E-Satisfaction by Elias et al (2015) In addition, Kos Koklic et al (2017) simply considered airline tangibles and quality of personnel affecting customer satisfaction

Or Chaniotakis and Lymperopoulos (2009) inpected the relationship between service quality and overall satisfaction; service quality was a multidimensional variable using Servqual dimensions Ahn and Lee (2011) also applied five dimensions of Servqual to check the relationship of service quality and customer satisfaction indirectly

On the basis of the relationship between service quality and customer satisfaction, the constructs in terms of service quality were different according to other scholars‟ inference In this research, it was assumed that five dimensions of Servqual (reliability, assurance, tangibles, empathy, responsiveness) directly positively influenced on customer satisfaction because the author thought that this scale of Servqual could somehow fully describe the airline service offered The five hypotheses are hereafter proposed:

H1: Service quality dimension “Tangibles” has a positive influence on

H4: Service quality dimension “Assurance” has a positive influence on customer satisfaction

H5: Service quality dimension “Empathy” has a positive influence on customer satisfaction

2.1.6 The relationship between customer satisfaction and behavioral intentions

Customer satisfaction has been become one of the most importance in marketing; every company has set it an ultimate goal of service operations and considered it as the top priority High satisfaction is closely related to customer attitudes which might directly influence cosumers‟ positive behavioral intentions such as repurchase or word-of-mouth interactions (Jung and Seock, 2017) Many scholars assumed that there existed to be a consistent association between customer satisfaction and behavioral intentions (Soderlund, 1998; Saha and Theingi, 2009; Ahn and Lee, 2011; Kos Koklic et al, 2017)

Soderlund (1998); Saha and Theingi (2009) considered the positive relationships between customer satisfaction and all three behavioral intentions (word-of-mouth, repurchase intentions and feedback) Meanwhile, Widianti et al (2013) examined the positive influence of satisfaction on repurchase intention and word of mouth Behavioral intentions were considered in two factors (reuse and recommend) by Ahn and Lee (2011) Intention to repurchase and to recommend was evaluated as subsequences of customer satisfaction by Kos Koklic et al (2017) Lastly, Chaniotakis and Lymperopoulos (2009) examined the direct positive influence of word-of-mouth on overall satisfaction

A variety of empirical researches investigated the association of customer satisfaction and word-of-mouth did not detect consistent findings Some scholars found that dissatisfied customers were more likely to engage to word-of-mouth than the others (Anderson, 1998) Meanwhile, many others proved that satisfied customers would have more engagement with word-of-mouth after satisfaction perceived (Soderlund, 1998; Saha and Theingi, 2009; Chaniotakis and

Lymperopoulos, 2009; Widianti et al., 2013; Kos Koklic et al., 2017) In addition, the relationship between customer satisfaction and word-of-mouth was detected not

to be significant in the findings of Widianti et al (2013) Moreover, Saha and Theingi (2009) suggested that satisfaction was a necessary but not sufficient condition for positive word-of-mouth; but it was agreed that positive review was always driven by satisfaction Overall, both the level and valence of word-of-mouth were dependent on a range of other factors (culture, incentives, emotion and perception of the fairness of the encounter) (Saha and Theingi, 2009)

With regard to the second behavior mentioned above, Hellier et al (2003) stated that the satisfaction level perceived by customers after experiencing a service would influence their willingness to repurchase a product or service Many researchers found a positive association between satisfactions and repurchase intention (Saha and Theingi, 2009, Kos Koklic et al, 2017) Specifically, customer satisfaction was found to have influence on repurchase intentions in the researches

of Saha and Theingi (2009) and much more strongly from Kos Koklic et al (2017) However, the relationship between customer satisfaction and repurchase intentions was detected not to be significant in the findings of Ahn and Lee (2011); Widianti et

al (2013)

Most of researches which presented the significant positive relationships between customer satisfaction and feedback were more concerned to other sectors like healthcare (Yarris et al., 2009) Very few studies have evaluated this association between satisfaction and feedback due to the fact that the samples of review-giving customers were very small (Saha and Theingi, 2009) However, some others had some findings about this relationship For example, Saha and Theingi (2009) detected that satisfied passengers provided positive feedback, and dissatisfied customers were not like to give negative feedback By contrast, Soderlund (1998) concluded that dissatisfied customers were more likely to send negative feedback rather than satisfied customers to provide positive feedback Nevertheless, due to a lack of the previous papers, the relationship between customer satisfaction and feedback would not be addressed in this study

On the basis of most literature review, the last two hypotheses related to the influence of customer satisfaction on word-of-mouth and repurchase intentions were formulated as follows:

H6: Customer satisfaction has a positive influence on word-of-mouth

H7: Customer satisfaction has a positive influence on repurchase intentions

2.2 Conceptual framework and research hypotheses

On the basis of the literature review and conceptual assumption, the proposed research framework in Figure 2.1 depicts certain hypothesized relationships among the constructs of five dimensions of service quality (Servqual), customer satisfaction, word-of-mouth and repurchases intentions

Figure 2.1: Proposed research framework

Source: Proposed by the author

Customer satisfaction

Word-of-Repurchase intentions

H1

H2

H1

1 H3

H2

H1

H1

1 H4

7

H1: Service quality dimension “Tangibles” has a positive influence on

H6: Customer satisfaction has a positive influence on word-of-mouth

H7: Customer satisfaction has a positive influence on repurchase intentions

Chapter 3: RESEARCH METHODOLOGY

Based on the review of the research literature with regard to service quality using SERVQUAL, customer satisfaction and behavioral intentions, a structural equation model has been developed to study related to effects simultaneously in this article This research aims to apply existing theory and literature to a novel situation (LCCs flying from Tan Son Nhat International Airport) According to the literature review, a research framework existing would be able to be constructed and applied

to the research situation The variables and measurements, sampling and data analysis in this research are discussed below

3.1 Research strategy and design

The research strategy is used as an approach to collect and analyze data This article aimed to investigate the relationships between service quality and customer satisfaction, then on behavioral intentions To test of hypothesized relationships, the research strategy and design was formulated The proposed research model presented in Figure 2.1 was based on the conceptual frameworks of the previous researches, and it would consider how independent variables, five service quality dimensions of SERVQUAL have influenced on customer satisfaction then behavioral intentions (word-of-mouth and repurchase intentions) As a result, the formulated research hypotheses were addressed

After a research model revealed, a qualitative research was conducted to figure out suitable indicators or scales for the eight variables on the basis of the available measurement scales of the previous researches (Parasuraman et al., 1988; Molinari et al., 2008; Ahn and Lee, 2011; Taghizadeh et al., 2013; Narteh, 2017) Adoptions, modifications and add-in would be made to select indicators and survey questions In conclusion, the design of the survey questionnaire would be formulated on multiple item measurement scale (five-point Likert scale) for the survey and data collection

Then, this research used a quantitative research design, which was appropriate for hypotheses testing that could not be completed qualitatively Quantitative research utilized data collection techniques, established statistical analysis tools and standardized instrumentation for the test, including demographic statistics, descriptive statistics, reliability and validity test by SPSS 22, confirmatory factor analysis (CFA) and hypotheses testing with SEM by AMOS 20 Although the choice of quantitative research design imposed some limitations, it would help to ensure the research could be numerically completed

Based on the found results, discussion, conclusion and recommendation would be drawn

To summarize the research strategy and design for this study, the research process is presented in Figure 3.1:

Figure 3.1: Research process

Source: Proposed by the author

Statement of the problem

Literature review

Proposed hypotheses and research framework

(7 hypotheses with 8 constructs)

Draft questionnaire questionnaire

Qualitative analysis (focus group)

questionnaire

Official questionnaire (30 survey questions)

Survey and data collection (Non-probability sampling)

Quantitative analysis (Data analysis and discussion)

Conclusion and implications

Limitations and recommendations

3.2 Qualitative research

The qualitative research was conducted via phenomenological qualitative research with a group of 8 travelers (shown in Table 3.1) aged from 25 to 42 who have flown abroad with LCCs at least 6 times each year in 3 consecutive years, included the author This qualitative research was to discuss, modify and figure out the measurement scales (indicators) of the eight constructs in the proposed research framework to be more suitable with the LCCs market in Viet Nam

Table 3.1: Participants in a group discussion

Source: Summarized by the author

Focus group (a group discussion) was chosen for 8 participants staying in Ho Chi Minh city to share many common features with less structured interviews On the basis of the available indicators of the previous researches and the participants‟ perceptions and experiences, the modification of the indicators as well as questions for the survey would be undertaken (Appendix 2) To be more specific, the discussion took place in Ho Chi Minh city for two hours to consider scales of SERVQUAL dimension scale (Parasuraman et al., 1988) and scales in the studies of

Molinari et al (2008); Ahn and Lee (2011); Taghizadeh et al (2013); Narteh (2017) with contents:

- Firstly, author introduced about the reason of the discussion and what we needed to discuss about

- Four scales (Appendix 1) of the previous studies were performed as a foundation to give everyone a structure to evaluate

- Based on the shown scales, participants discussed if what they experienced during their flights with LCCs met the items in those scales

- An agreement of a proposed 30 item scale for this study was formulated by all of the participants

The group discussion was guided, monitored and recorded by the researcher, and an ultimate measurement scale was completed Modifications and adaptions were made to select suitable questions and dimensions with airline service In conclusion, four, five, four, four and four indicators were agreed for respectively tangibles, reliability, responsiveness, assurance, and empathy Customer satisfaction will be observed by three indicators and the same was for both word-of-mouth and repurchase intentions As a result, a refined 30-question questionnaire was consented for this study on the basis of the previous researches The specific indicators in details are shown in Table 3.2

3.3 Quantitative research

3.3.1 Variables and measures

This study consisted of eight variables, namely tangibles, reliability, responsiveness, assurance, empathy, customer satisfaction, word-of-mouth and repurchase intentions Among them, the first five variables are independent then intermediate and finally 2 dependent variables These variables are measured by using multiple indicators These indicators of the variables were obtained from both

the literature review and discussion in focus group Specifically, the scale of this research was based on the basis of scales of Parasuraman et al (1988); Molinari et

al (2008); Ahn and Lee (2011); Taghizadeh et al (2013); Narteh (2017) (Appendix 1) Table 3.2 shows the research variables and the number of the items of the eight variables

Furthermore, five-point Likert scale ranging from strongly disagree (1) to strongly agree (5) was employed to measure the responses of each respondent In the questionnaire, all of the indicators were created by using positive statements To

be more specific, the higher the indicators were assigned by the respondents, the higher they perceived the service quality, customer satisfaction The same for the dependent variable, it was assumed that the customers would have high behavioral intentions when they scored for 4 or 5

Table 3.2: Research variables and measures

1

Tangibles

5

Reliability

18

Empathy

Employees' attention and willingness for help Emp 1

20

Employees' understanding customers' specific

22

Customer

satisfaction

25

Word-of-mouth

28

Repurchase

intentions

Source: Summarized by the author

3.3.2 Population and sampling

The target population was those who have travelled abroad with LCCs The survey was held for passengers flying abroad with LCCs at least 2 times within one year because they were more likely to remember their perceptions of service quality and airline experience Passengers of Vietjet Air, Air Asia and Jetstar departing at international terminal of Tan Son Nhat Airport were aimed for the survey sampling right before their flights in their leisure waiting time We chose this airport as well

as these three LCCs for several reasons Firstly, Tan Son Nhat is the largest airport located in the biggest city of Viet Nam with the capacity of 8-10 million passengers per year and even more in deed Moreover, Vietjet Air, Air Asia and Jetstar are the three of the biggest LCCs in the South East Asia and well-known in Viet Nam with

a lot of flights to different destinations every day from Tan Son Nhat airport

Hair et al (1998) indicated that the suitable sample size for Exploratory factor analysis (EFA) reaching the minimum is five times more than the number of the questions in the research Meanwhile, Tabachnick & Fidell (1996) stated that the optimal sample size for multiple regression analysis is more than the sum of 50 and 8*m (m: the number of independent variables) Therefore, the suitable sample

size for this study is at least 30 * 5 = 150 and 5 * 8 + 50 = 90; finally, 240 were delivered and collected, 238 of them were useful

The survey was conducted to collect data directly from respondents using brief responses with a five-point Likert-type scale To develop the sampling, quick interviews and questionnaires were delivered to the passengers mentioned above waiting for the boarding time at gates in international terminal of Tan Son Nhat International Airport To ensure for the quality of data collected, the survey was undertaken according to following three steps:

- These passengers were asked if they have travelled at least 2 times within a year first to check if they are eligible to become respondents

- If yes, those passengers then would be asked for help to complete the questionnaires It was due to the fact that they were more likely to remember their perceptions of service quality and airline experience

- Finally, the questionnaires were collected for the data The report of data collection each day was conducted (Appendix 4)

Non-probability sampling for convenient sampling was chosen since it is less time-consuming and convenient for both as directed by Ahn and Lee (2011), Widianti et al (2013)

3.3.3 Data collection

The survey time was conducted from mid-December, 2018 to mid-January,

2019 because this was the peak time of the year when people had a high demand in travelling 240 questionnaires were delivered to passengers of these three LCCs within twelves times during 4 weeks in accordance with the number of flights of each airline by the author and one more person Specifically, the survey took place three times a week in business hours at the waiting gates in international terminal of Tan Son Nhat International Airport 2 of 240 returned questionnaires were double checked for some items, so a total of 238 papers were useful for data analysis