ARTICLE IN PRESS

Journal of Air Transport Management 14 (2008) 4042

www.elsevier.com/locate/jairtraman

Airline brand equity, brand preference, and

purchase intentionsThe moderating effects of switching costs
Ching-Fu Chen, Yu-Ying Chang
Department of Transportation and Communication Management Science, National Cheng Kung University, 1, Ta-Hsueh Road, Tainan 701, Taiwan

Abstract
This study examines the relationships between brand equity, brand preference, and purchase intentions on international air passengers
decisions in Taiwan. The ndings indicate positive relationships between brand equity, brand preference, and purchase intentions with a
moderation effect of switching cost affecting the relationship between brand equity and purchase intentions. More specically, the effect
of brand equity on purchase intentions is not signicant for passengers with low switching costs.
r 2007 Elsevier Ltd. All rights reserved.
Keywords: Brand equity; Brand preference; Purchase intentions; Switching costs; Airlines

1. Introduction
Brand equity refers to the incremental utility or value
added to a product from its brand name. It is often
believed to contribute to a companys long-term protability. Despite airlines efforts to establish and maintain
their brand equity, a clear measurement of such equity is
still lacking. Because there are switching costs associated
changing airlines, for example, with frequent yer programs and other customer loyalty schemes, these need to be
considered when examining relationships between brand
equity and customer loyalty.
This study looks at relationships between airline brand
equity, brand preference, and purchase intentions for air
passengers, and at the potential moderating effects of
switching costs using a sample of Taiwanese air passengers
taking international ights.
2. Conceptual background
Brand equity has been deemed as primary capital for
many industries. Strong brands can increase customers
trust in the produce or service purchased and enabling
Corresponding author.

E-mail address: cfchen99@mail.ncku.edu.tw (C.-F. Chen).

0969-6997/$ - see front matter r 2007 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jairtraman.2007.11.003

them to better visualize and understand intangible factors.

According to Yoo and Donthu (2001), brand image can
inuence a companys future prots and long-term cash
ow, a consumers willingness to pay premium prices,
merger and acquisition decision making, stock prices,
sustainable competitive advantage, and marketing success.
Three main aspects of brand equity are usually considered:
i.e. the nancial perspective, the customer-based perspective,
and the combined perspective (Keller, 1993). Here we focus
on the customer-based perspective (Morgan, 2000). The
operationalizations of customer-based brand equity can be
divided into consumer perception (e.g. brand awareness,
brand associations, perceived quality) and customer behavior
(e.g. brand loyalty, willingness to pay a high price). CobbWalgren et al. (1993) develop a framework for studying
various antecedents and consequences of brand equity from
the customer perspective and suggest that consumers brand
perceptions contribute to the meaning or value of a brand.
Brand equity then inuences consumer preferences and
purchase intentions, and ultimately brand choice. Hence,
the causal relationship is identied: brand equity )
preferences ) purchase intentions.
Switching costs between different product or service can
act as moderating variable by signicantly inuence
customer loyalty through loyalty determinants such as
customer satisfaction and perceived value. From the brand

ARTICLE IN PRESS
C.-F. Chen, Y.-Y. Chang / Journal of Air Transport Management 14 (2008) 4042

management perspective, brand equity can be largely

deemed as a customers perceived value.
3. Methodology
Five hypotheses are examined (see Fig. 1).
H1. A customers purchase intention is positively inuenced by customer-based brand equity.
H2. A customers purchase intention is positively inuenced by the customers brand preference.
H3. A customers brand preference is positively inuenced
by customer-based brand equity.
H4. The higher the level of switching costs is, the greater
the likelihood will be that customer-based brand equity will
lead to a customers greater purchase intention.
H5. The higher the level of switching costs is, the greater
the likelihood will be that a customers brand preference
will lead to a greater purchase intention.
The framework embraces information on brand equity,
brand preference, purchase intentions, and switching costs.
Brand equity is taken to have four dimensions, including
brand loyalty (two items), brand awareness (ve items),
perceived quality (six items), and brand associations (ve
items) all measured by using a ve-point Likert-type scale.
Brand preference, with four elements, using a ve-point
semantic differential scale considers passengers brand
preferences. Purchase intentions, with two elements,
considers respondents likelihood of purchasing the brand
in question by using a seven-point Likert-type scale.
Switching costs with four elements looks at respondents
perceived costs when they are considering switching to
other airlines.
A self-administered questionnaire is used to collect data
from international airline passengers. The questions are
based on a review of the literature and specic airline
service contexts, and the questionnaire was pre-tested and
revised. The questionnaires were distributed based on a

Brand Pref.
H1
H3

Brand Equity

H2

H4
Switching cost

H5

Purchase
Intent

Direct effect
Moderating effect
Fig. 1. Conceptual model.

41

Table 1
Measurement scales and summary statistics
Brand equity
Mean 3.7
Reliability 0.817,
ave. 0.535

Brand awareness
Perceived quality
Brand association
Brand loyalty

Brand preference
Mean 3.6
Reliability 0.862,
ave. 0.611

I feel that this airlines name is appealing to me

I prefer this airline to other airlines of its type
If I was to buy an air travel product, I would
prefer this airline if everything else was equal
In total I prefer this airline

Purchase intentions

I am willing to recommend others to buy this

airlines products
I am willing to purchase this airlines products in
the future

Mean 3.5
Reliability 0.810,
ave. 0.680

With N 407, w2 114.85 (p 0.000), df 39, w2/df 2.93, CFI 0.95,

GFI 0.95, RMSEA 0.069.

convenience1 sampling method and collected at Taoyuan

International Airport in Taiwan during the month of
March 2007. Six hundred questionnaires were distributed
and 480 useable samples were obtained after excluding the
incomplete ones, yielding an 80% response rate from those
who agree to participate.
A conrmatory factor analysis was used to validate the
brand equity scale of four underlying dimensions.2 Two
items relating to brand awareness, two to perceived quality,
and one to brand association are removed to obtain
construct validity. Table 1 lists the remaining elements.

4. Results
The overall t of the model is reasonable.3 Simultaneous
maximum-likelihood-estimation procedures are used to
examine relationships among brand equity, brand preference, and purchase intentions (Table 2).
The three hypothesized relationships are supported in
the estimated structural model (Table 2). Brand equity has
signicantly positive effects on both brand preference and
loyalty, supporting H1 and H2. Furthermore, the effect of
brand equity on purchase intentions is also signicant,
supporting H3. In terms of the mediating effect, the effect
of brand equity on purchase intention is 0.68, including the
1
This was done for practical reasons and the sample may thus not be
random.
2
The results are available on request.
3
The ratio of the w2 value to degrees of freedom is less than the critical
cut-off point of 3, while the w2 statistic is signicant (Table 1).
Furthermore, the goodness-of-t index and comparative-t index are
greater than the recommended value of 0.9. The root-mean-square error of
approximation is 0.069, i.e. less than 0.10. In addition, the composite
reliabilities of the three constructs range from 0.81 to 0.86, well above the
recommended value of 0.7, and the average percentage of variance
extracted of each measure ranges are all over 0.5.

ARTICLE IN PRESS
C.-F. Chen, Y.-Y. Chang / Journal of Air Transport Management 14 (2008) 4042

42

Table 2
Structural parameter estimates and goodness-of-t indices
Hypothesized paths

Brand equity-brand preference (H1)

Brand equity-purchase intentions (H2)
Brand preference-purchase intentions (H3)
Fit statistics (N 407)

Standardized estimate
Total sample

High-switching cost

Low-switching cost

0.67 (12.06)a
0.28 (4.96)
0.60 (9.11)

0.61 (6.61)
0.35 (4.41)
0.57 (6.15)

w2 88.06 (p 0.000, df 29)

w2/df 3.09
GFI 0.965, CFI 0.988
RMSEA 0.0652

w2 43.37, po0.01, df 29
w2/df 1.49
GFI 0.948, CFI 0.991
RMSEA 0.0558

0.68 (6.19)
0.13 (1.10)
0.76 (5.32)
w2 52.31, po0.01, df 29
w2/df 1.74
GFI 0.921, CFI 0.921
RMSEA 0.0600

 Denotes pp0.05.
a

The value in the parenthesis is t Value.

direct effect of 0.28 and indirect effect of 0.40 mediated by

brand preference.
To examine the moderating effect of switching costs, the
sample is divided using the quartiles of the level of these
costs. The rst and last quartiles are dened as the high and
low switching cost groups, and are subsequently used for
testing the casual relationships. As seen in Table 2, for the
high switching cost group, all three hypothetical relationships are signicantly positive. For the low switching cost
group, the effect of brand equity on purchase intentions is
not signicant, while both the effects of brand equity on
brand preference and brand preference on purchase
intentions are positively signicant. Overall, H1 and H3
are supported for both groups, but H2 is only supported for
the high switching cost group. The results indicate that the
moderation effect of switching cost on the path of Brand
Equity ) Brand Preference does not existthat is, H5 is
not supported. However, the moderation effect of involvement on the path of Brand Equity ) Purchase Intentions
does exist, supporting H4.
5. Conclusions
This study not only reveals the effects of brand equity on
brand preference and purchased intentions, but also shows
moderating effects of switching cost on the relationship

between brand equity and purchase intentions. In addition

to recognizing the importance of brand equity on airline
protability, the ndings provide an implication on
branding strategies for airlines to build up their sustained
competitive advantages. In practice, switching costs are
increasingly recognized as a means for keeping customers
in relationships.
Acknowledgments
The authors are grateful to the National Science Council
(NSC), Taiwan, for nancial support (NSC 96-2416-H006-018), and Kenneth Button, Keith Mason and two
anonymous reviewers for their helpful comments on this
paper.
References
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preference and purchase intent. Journal of Advertising 24 (3), 2540.
Keller, K.L., 1993. Conceptualizing, measuring and managing customerbased brand equity. Journal of Marketing 57, 122.
Morgan, R.P., 2000. A customer-oriented framework of brand equity and
loyalty. International Journal of Market Research 42 (3), 65120.
Yoo, B., Donthu, N., 2001. Developing and validating a multidimensional
customer-based equity scale. Journal of Business Research 52 (1),
114.