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Service quality, satisfaction, and

behavioural intentions
A study of low-cost airline carriers in Thailand
The Authors

Gour C. Saha, Pearl School of Business, Gurgaon, India

Theingi, School of Management, Assumption University, Bangkok, Thailand

Acknowledgements

The authors express their thanks to Dr Noppadon Kannika, Director, and Ms Pornpan
Jorraktrakul, researcher, of ABAC Poll Research for assistance with data collection, and
Dr Ashutosh Bhupatkar, Professor of Pearl School of Business, for his insightful advice
on the study.

Abstract

Purpose – The purpose of this paper is to examine the relationships among the constructs
of service quality, satisfaction, and behavioural intentions in passengers of three low-cost
carriers (LCCs) offering airline services in Thailand.

Design/methodology/approach – A large sample of 1,212 passengers who had travelled

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on LCCs in Thailand in the preceding 12 months is surveyed to test four hypothesised
relationships among the constructs of service quality, satisfaction, and behavioural
intentions using structural equation modelling (SEM).

Findings – The study finds that the order of importance of the dimensions of service
quality tested here is: flight schedules; flight attendants; tangibles; and ground staff.
Passenger satisfaction with these service-quality dimensions is found to be very
important in explaining behavioural intentions. Satisfied passengers are mostly
influenced by the schedule. Such customers engage in positive word-of-mouth
communication and have high repurchase intentions. Dissatisfied passengers prefer to
change airlines, rather than provide feedback to the LCCs.

Research limitations/implications – The study has not definitively established causality

among the constructs of service quality, satisfaction, and behavioural intentions.
Moreover, satisfaction is based only on service quality. Future research should examine
the causality and other possible satisfaction factors.

Practical implications – Managers of LCCs who have not traditionally placed a high
priority on quality should be aware of the importance of service quality and passenger
satisfaction in determining the behavioural intentions of passengers of LCCs.

Originality/value – The study provides an example of the use of a revised set of

SERVPERF service-quality dimensions. The study also posits passenger satisfaction and
behavioural intentions in a single model in the context of LCCs in Thailand.

1. Introduction

The behavioural intentions of customers are recognised in the literature as an important

predictor of the profitability of service firms (Reichheld and Sasser, 1990; Anderson et
al., 1994; Slater and Narver, 1995). Both the costs and the revenue of firms are affected
by repeat purchases, positive word-of-mouth recommendation, and customer feedback.
Moreover, there is strong evidence that service quality has either a direct influence on the
behavioural intentions of customers and/or an indirect influence on such intentions,
mediated through customer satisfaction (Zeithaml et al., 1996; Cronin et al., 2000).
Given these established relationships, it is imperative that service firms measure and
monitor service quality and satisfaction with a view to influencing the behavioural
intentions of their customers.

Many empirical studies have investigated the relationships among the constructs of
service quality, customer satisfaction, and behavioural intentions in a variety of industries
and cultures. These include studies of the lodging industry in the USA (Olorunniwo et
al., 2006), audit industry in Malaysia (Ismail et al., 2006), banking industry in Taiwan
(Lee and Hwan, 2005), recreation industry in the USA (Tian-Cole et al., 2002; Lee et al.,
2004), health-care industry in South Africa (Boshoff and Gray, 2004), and airline
industry in Korea (Park et al., 2004). One limitation of these studies is that the various
aspects of behavioural intentions were not examined separately with multiple constructs,

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which precluded a thorough examination of the impact of service quality on this multi-
faceted construct in various cultures. For example, although the role of such behavioural
intentions as word-of-mouth recommendation or feedback might seem to be important in
all cultures, the degree of importance of these behaviours might be amplified in certain
collectivist societies (Hofstede, 1980).

The present study of airline services in Thailand addresses this limitation by including
three constructs of behavioural intentions (word-of-mouth, intention to repurchase, and
feedback), together with service quality and satisfaction, in a single model. The study
chose to examine the relationships among these constructs in the context of low-cost
carriers (LCCs) in South-East Asia because service quality and customer satisfaction
have become increasingly important in the airline industry in this region (and especially
in Thailand) in recent years. LCCs emerged in the airline industry in the region following
deregulation in the early 2000s. Emulating the successful models of the United States and
Europe, these LCCs offered “no-frills” service at low prices. Initially, some LCCs in the
region performed extremely well. However, Thailand's three LCCs (Thai Air Asia, One-
Two-Go, and Nok Air) have presented a bleak picture since their emergence in the
market. Although a variety of factors (such as increases in fuel prices, an adverse tourism
environment, and fierce price-cutting competition) all played a part, Hanaoka and
Chiamsiri (2006) have noted that high passenger-defection rates experienced by these
airlines can be attributed, at least in part, to their failure to pursue a customer-focused
strategy.

In these challenging circumstances, a study of the behavioural intentions of Thai airline

customers is obviously pertinent and important. As previously noted, the profitability of
service firms (such as the Thai LCCs) is significantly influenced by behavioural
intentions (Reichheld and Sasser, 1990; Anderson et al., 1994; Slater and Narver, 1995),
and there are close relationships among service quality, behavioural intentions, and
satisfaction (Zeithaml et al., 1996; Cronin et al., 2000). The present study therefore
undertakes a comprehensive analytical study of these important constructs in the context
of the Thai LCC airline market.

The remainder of this paper is organised as follows. Following this introduction, the next
section of the paper presents a review of the relevant literature, followed by the
presentation of a conceptual model and hypothesised relationships among the constructs
of the model. An empirical study is then presented in which these hypothesised
relationships are tested in the context of LCCs in Thailand. The paper concludes with a
summary of the main findings, the managerial implications, the implications of the study,
and suggestions for future research.

2. Literature review

2.1 Airline service quality

Research into airline service quality has increased rapidly since its relationship with
passenger satisfaction and profitability has been established (Heskett et al., 1994). Much

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of the literature suggests that airline passengers perceive service quality as a multi-
dimensional construct, which is in accordance with the conception of service quality
proposed by Parasuraman et al. (1988) in their well-known service-quality measuring
instrument called SERVQUAL. This instrument, which measures service quality in terms
of five dimensions (reliability, assurance, tangibles, empathy, responsiveness) is based on
the premise that customers' assessments of overall service quality are determined by the
“gap” between their expectations of service and their perceptions of actual service
performance. The SERVQUAL instrument has been used by several researchers to
measure airline service quality (Fick and Ritchie, 1991; Sultan and Simpson, 2000).
Other multi-dimensional constructs of airline service quality include that of Zagat, an
aviation research firm, which rates airline service on the basis of five criteria:

1. overall performance;
2. comfort;
3. service;
4. food; and
5. web site (Rhoades, 2006).

The US Department of Transportation (DOT) also utilises a multidimensional conception

of service quality in its regular reports on airline service quality, which provide data on
the following operational measures:

 flight delays;
 mishandled baggage;
 oversold flights; and
 consumer complaints.

Rhoades and Waguespack (2005) compared the service quality of US airlines before and
after the terrorist attacks of 11 September 2001 and found that service quality was at its
optimum in 2002 as decreased utilisation of seats facilitated on-time performance,
reduced overbooking, and fewer customer complaints. Tiernan et al. (2008) offered a
wider perspective on service-quality measures on the basis of data from the Association
of European Airlines (AEA) when they found that important factors in determining
positive customer perceptions of the industry included on-time flight arrivals and an
absence of cancellations and baggage problems.

In the case of the Thai LCCs that are the subject of the present study, there was initial
uncertainty among practitioners as to whether the perceptions of a lower cost structure
would alter accepted measures of service quality or whether the conventional measures
continued to apply to the LCCs. It has subsequently become apparent to the LCCs that
their lower fares to passengers are perceived to be due to cost reductions through
efficiency in their operations, rather than to diminished service standards. As a result,
compliance with service-quality standards continues to be important for the LCCs.
Indeed, a comparative study of LCCs and FSCs found that service failures (such as flight
cancellations, diversions, delays, strikes, and negative staff attitudes) resulted in more
complaints for the LCCs than for the FSCs (Bamford and Xystouri, 2005).

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2.2 Perceived service quality and customer satisfaction

The constructs of perceived service quality and customer satisfaction have traditionally
been equated. Howat et al. (1996), for example, measured satisfaction by using indicators
based on the five dimensions of perceived service quality suggested by Parasuraman et
al. (1988). According to the expectancy-disconfirmation paradigm that formed the basis
of the SERVQUAL model, service quality was defined as the “gap” between expectation
and perception (Parasuraman et al., 1988), and customer satisfaction was understood in
terms of meeting or exceeding these expectations (Oliver, 1980).

In contrast to the traditional tendency to equate the two constructs, the notion that
perceived service quality and customer satisfaction are distinctive constructs has
subsequently achieved some degree of consensus among researchers. According to this
view, perceived service quality is evaluated by the actual performance of the service in
terms of particular service attributes in the specific context, whereas customer satisfaction
is assessed by the customers' overall experience of the service (of which service quality is
only one aspect) (Oliver, 1993). Customer satisfaction thus depends on a variety of
factors, including perceived service quality, customers' mood, emotions, social
interactions, and other experience-specific subjective factors (Rust and Oliver, 1994).
Crompton and Love (1995) asserted that the two constructs are likely to be positively
correlated, but unlikely to be linear. For example, high service quality in an airline (as
evaluated by timeliness of the flight schedule or individualised attention by the flight
attendants) might not necessarily produce high satisfaction if there are negative emotions
associated with the experience of the flight.

Although researchers now generally agree regarding the distinctiveness and definitions of
perceived service quality and satisfaction, their causal relationship is yet to be resolved.
There are two lines of arguments in this regard. Some researchers (Bitner, 1990; Bolton
and Drew, 1991) have suggested that customer satisfaction is an antecedent of perceived
service quality. These authors argue that satisfaction mediates a set of logical attributions
(explanations) regarding the expectations of service and customers' evaluations of
service. For example, an acceptable explanation for a delayed flight might create
satisfaction for passengers and not result in an evaluation of bad service quality for the
airline. In contrast to the view that customer satisfaction is an antecedent of perceived
service quality, other researchers (Oliver, 1997; Cronin and Taylor, 1992; Parasuraman et
al., 1988) have contended that the constructs are reciprocal. According to this view,
service quality is a cognitive assessment of services in each occurrence, whereas
satisfaction is the accumulated effect on the customers' evaluation of the services. In
support of this view, Brady and Robertson (2001) confirmed the antecedent role of
service quality with respect to customer satisfaction in a cross-national study of the fast-
food industry in the USA and a Latin American country.

2.3 Customer satisfaction and behavioural intentions

Behavioural intention has been defined as the customers' subjective probability of

performing a certain behavioural act (Fishbein and Ajzen, 1975). In this regard, three

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behaviours in particular have been associated with profitability and the market share of a
firm; these customer behaviours are:

1. word-of-mouth;
2. repurchase intention; and
3. feedback to the service provider.

Word-of-mouth refers to a flow of information about products, services, or companies

from one customer to another. As such, word-of-mouth represents a trusted external
source of information by which customers can evaluate a product or service. The
empirical research that has investigated the relationship between customer satisfaction
and word-of-mouth has not produced consistent findings. Some researchers have found a
direct positive relationship – with satisfied customers engaging in more word-of-mouth
(Holmes and Lett, 1977; Swan and Oliver, 1989; Brown et al., 2005; Babin et al., 2005).
Others have found a negative relationship – with dissatisfied customers engaging in more
word-of-mouth (Bearden and Teel, 1983; Westbrook, 1987; Hart et al., 1990). Other
studies have not found any significant direct relationship between the two constructs
(Engel et al., 1969; Bettencourt, 1997). Wirtz and Chew (2002) attempted to explain
these conflicting findings in terms of an asymmetric U-shaped pattern, according to
which extremely satisfied customers and extremely dissatisfied customers generate more
word-of-mouth, whereas moderately satisfied customers generate less word-of-mouth. In
contrast to these mixed findings about the details of the relationship, there is general
agreement about the valence (positive or negative) of the word-of-mouth: satisfied
customers generate positive word-of-mouth (Bitner, 1990), whereas dissatisfied
customers generate negative word-of-mouth (Richins, 1983). Although some studies have
concluded that satisfaction is a necessary but not sufficient condition for positive word-
of-mouth, it is agreed that positive feedback is always driven by satisfaction. However,
both the level and the valence of word-of-mouth are dependent on a range of other
factors, including culture, incentives, emotion, and perception of the fairness of the
encounter.

With regard to the second behaviour noted above, many researchers have found a positive
association between satisfaction and repurchase intention (Bitner et al., 1990; Jones and
Suh, 2000; Cronin and Taylor, 1992). However, other empirical studies have not
confirmed such a direct relationship (Sivadas and Baker-Prewitt, 2000). In attempting to
explain these conflicting findings, Rust and Zahorik (1993) suggested that a satisfied
customer might switch to an alternative supplier with a view to increasing the present
satisfaction level whereas a dissatisfied customer might remain with the existing supplier
because no better alternatives are available.

The third behaviour noted above – customer feedback – refers to the transmission of
negative information (complaints) or positive information (compliments) to providers
about the services used. Such information can be useful for providers in identifying areas
in which adjustments of performance are required. Very few researchers have examined
the relationship between feedback and satisfaction. In most studies, the samples of
feedback-providing customers have been small. Nevertheless, Söderlund (1998) did

6
conclude that dissatisfied customers are significantly more likely to provide negative
feedback than are satisfied customers to provide positive feedback. It is presumed that
customers who provide negative feedback are seeking to achieve some form of
compensation for unmet quality of services; in contrast, the provision of positive
feedback is often perceived by customers as not being rewarded.

2.3 Perceived service quality and behavioural intentions

Both Parasuraman et al. (1988) and Zeithaml et al. (1996) have reported that a positive
relationship exists between perceived service quality and behavioural intentions. In
particular, positive word-of-mouth has been clearly associated with superior service
quality. Bitner (1990) also found that perceived service quality influences behavioural
intentions in terms of word-of-mouth and repurchase intention. Similarly, Dabholkar et
al. (1996) reported a positive association between perceptions of service quality and the
likelihood of recommending a product or service.

3. Conceptual framework and research hypotheses

On the basis of the literature review presented above, a conceptual model for the present
research is presented in Figure 1. This model depicts certain hypothesised relationships
among the constructs of service quality, customer satisfaction, and behavioural intention.

3.1 Hypothesis regarding service quality and satisfaction

Although the causal relationship between service quality and satisfaction is debated in the
literature, it is likely in the context of the newly established Thai LCCs that satisfaction is
influenced by perceived service quality. Passengers of airlines gather a great deal of their
experience through direct experience (Powpaka, 1996). Tangible dimensions and service-
delivery practices are pivotal in this experience because airlines are characterised by
limited passenger interactions and customisation (Schmenner, 1986). The following
hypothesis is therefore proposed:

H1. Perceived service quality positively influences passengers' satisfaction.

3.2 Hypothesis regarding satisfaction and word-of-mouth

Although both satisfied and dissatisfied customers might engage in word-of-mouth

activities, the literature suggests that customers who are satisfied provide more frequent
and more positive word-of-mouth. The following hypothesis is therefore proposed:

H2. Passenger satisfaction positively influences positive word-of-mouth.

3.3 Hypothesis regarding satisfaction and repurchase intention

Satisfied customers are generally more loyal in terms of repurchase behaviour unless
switching costs are very high or better opportunities are available elsewhere. Anton

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(1996, p. 47) demonstrated that “customers switch suppliers because they are not satisfied
with the company's perceived value, relative to the competition”. The following
hypothesis is therefore proposed:

H3. Passenger satisfaction positively influences repurchase intention.

3.4 Hypothesis regarding satisfaction and feedback

Customers tend to provide negative feedback when they are dissatisfied with the service.
However, if customers recognise that the service provider has made an effort to improve
the poor services or if they attribute the poor service to an external cause, dissatisfaction
and negative feedback are less likely to occur. In the case of airline services, passengers
are often unable to identify the causes of poor services; for example, they might not be
able ascertain whether flight delays are due to bad weather or to maintenance failure on
the part of the airline. Consequently, customers might use expectation or satisfaction as a
proxy for the level of quality that they should receive.

On the basis of the above discussion, the following hypothesis is therefore proposed:

H4. Passenger satisfaction negatively influences level of feedback.

4. Empirical study

4.1 Background to the study

This empirical study examines the above hypotheses in the context of low-cost carriers
(LCCs) operating in the airline passenger market in Thailand. These LCCs offer low fares
in exchange for a “no-frills” service that eliminates many of the value-added services
(such as free meals and in-flight entertainment) that are routinely offered by full-service
carriers (FSCs).

There are nine LCCs in South-East Asia, including three (Thai Air Asia, One-Two-Go,
and Nok Air operating from Thailand on a point-to-point basis (Damuri and Anas, 2005).
Unlike the large markets in Europe and North America, the South-East Asian market
lacks a steady supply of well-off passengers (Fullbrook, 2003), and there is significant
competition from government-protected “flag carriers”. However, the relative lack of
land-transport infrastructure in South-East Asia offers opportunities to the LCCs.

The LCCs in South-East Asia have similar pricing and cost structures to European and
North American LCCs (Goh, 2005) – including high utilisation of fleets (consisting of
one aircraft type), fast turn-around times, point-to-point services from a hub, and low
fares (and “no-frills” service) (Mathews, 2004). However, for various reasons, few LCCs
in South-East Asia use secondary airports in the pattern of European and North American
LCCs (Damuri and Anas, 2005). Innovative marketing strategies (such as direct selling,
call centres, e-ticketing, e-payments, and bank and supermarket networks) are used by
most of the LCCs in South-East Asia.

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Table I provides details of the three LCCs operating in Thailand. It is apparent that the
three LCCs operate on the same general “no-frills” model described above, although
there are some differences at the margins – such as reduced prices for bookings made in
advance, business class seats for an additional charge, sizes of aircraft, and snacks on
flights. Rivalry among the three LCCs is intense, with each airline offering to match any
fare offered by another. High fuel prices in recent times have caused all three airlines to
curtail their operations in various ways (Kositchotethana, 2008; Sritama, 2008).

As previously noted, some LCCs in the South-East Asia region have performed
extremely well. For example, the Malaysian LCC Air Asia has recorded a huge increase
in patronage and consistent improvement in its financial performance (AirAsia Berhad,
2005). LCCs in Indonesia and the Philippines have also demonstrated successful
performance as they attracted passengers from deficient rail and sea transportation
services (Damuri and Anas, 2005). However, as noted above, Thailand's three LCCs have
presented a bleak picture since their emergence in the market. Despite growth in domestic
passenger numbers of about 40 per cent per annum since 2003 (Airport Authority of
Thailand, 2007), Thailand's three LCCs performed badly in comparison with the full-
service carriers (FSCs). The persistent increase in fuel prices and the adverse tourism
environment in the south of the country also reduced profitability. In response to these
developments, the three Thai LCCs engaged in a fierce price-cutting war, which led to
even worse results. According to the Economic Review (2005), One-Two-Go realised a
loss of about 100 million baht (approximately US$3 million) in 2005, and the other two
airlines were financially vulnerable.

When LCCs were first developed on a global scale, it was argued that they would open a
new market by converting non-customers to customers by attracting low-income
passengers who would not normally travel on FSCs. However, the Thai LCCs have failed
to do so. Indeed, most LCC passengers in Thailand are relatively high-income people
who are service sensitive. Moreover, successful LCCs in other parts of the world have
recognised the importance of service quality in achieving sustainable growth in their
respective markets. In view of Hanaoka and Chiamsiri's (2006) contention that the high
passenger-defection rates experienced by the Thai LCCs can be attributed, at least in part,
to their failure to pursue a customer-focused strategy, the present study set out to
investigate whether an improvement in service quality could be used by Thai LCCs as
means of getting their passengers back.

4.2 Sample and data collection

The sample for the study consisted of passengers who had flown on any of the three
LCCs in Thailand in 2006. The passengers for the sample were selected by a quota
sample to ensure proportionate representation of all LCCs in accordance with the size of
their operations in terms of flights per week – Air Asia 102 flights per week (45.9 per
cent), Nok Air 72 flights (32.4 per cent), and One-Two-Go 48 flights (21.6 per cent).

Questionnaires were distributed among passengers waiting in the departure lounge of the
domestic airport terminal in Bangkok. The survey was conducted during mid-June and

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July 2006. A total of 1,212 completed questionnaires were received from 554 passengers
of Air Asia, 385 of Nok Air, and 273 of One-Two-Go.

The mean age of respondents was 32 years, of whom 706 (58 per cent) were male. About
70 per cent were Thai nationals. The Thai respondents had an average monthly income of
40,000 Baht (approximately US$1,200), which indicates that they were more affluent
than the average resident of Bangkok, who had an average monthly income of 29,245
Baht (US$965) at the time that the study was conducted. The respondents had made, on
average, five airline trips (or 2.5 round trips) in the preceding twelve months.
Approximately one-third (35.1 per cent) had travelled for work purposes, another third
(33.3 per cent) for vacation purposes, and the remainder to visit family and relatives.

4.3 Measurements

4.3.1 Service quality. The service-quality dimensions used in the study were developed
on the basis of:

 a focus-group discussion with seven experienced customers of LCC services; and

 the SERVPERF instrument (Cronin and Taylor, 1992).

In the focus group, the traditional dimensions of reliability, assurance, tangibility,

empathy, and responsiveness were discussed to evaluate their appropriateness for
measurement of service quality in the context of LCC services. The discussion resulted in
a consensus with regard to four broad factors:

1. tangible factors: such as the newness of the plane, seats, and air conditioning;
2. flight schedule factors: such as convenience of schedule, on-time departure and
arrivals;
3. flight attendants: such as dress and appearance, knowledge in providing services,
and friendliness with the passengers; and
4. ground staff: identical items to those used for flight attendants.

In all, a total of 21 items were initially developed for the four constructs (three for
tangibles, four for schedule, and seven each for flight attendants and ground staff). All
items were measured on a seven-point Likert-type scale (1=“strongly disagree”;
7=“strongly agree”).

Exploratory factor analysis (EFA) using the principal component method of extraction
and varimax rotation was conducted with these items. Factor loadings were between 0.49
and 0.89, which indicated high correlations between the items and the corresponding
constructs. There were no substantial cross loadings, and all items were therefore
retained.

The set of items was then subjected to confirmatory factor analysis (CFA) to verify the
convergent and discriminant validity of the four constructs. The four constructs were

10
extracted on the basis of eigenvalues of 1.00, which explained 75.7 per cent of the total
variance.

4.3.2 Satisfaction. Passenger satisfaction was measured with three items:

1. satisfaction with fare;

2. satisfaction with services; and
3. overall satisfaction with the airline.

These items were developed from a value-based definition of customer satisfaction and
are widely used in the literature (Heskett et al. 1994; Schneider and Bowen, 1995). All
items were measured on a seven-point Likert-type scale (1=“strongly disagree”;
7=“strongly agree”).

4.3.3 Behavioural intention. Items for feedback, word-of-mouth, and repurchase intention
were adopted from Söderlund (1998). All items were measured on a seven-point Likert-
type scale (1=“strongly disagree”; 7=“strongly agree”).

The detailed specifications of the research model are shown in Figure 2.

4.3.4 Refinement of model. CFA was performed on two multi-factorial models: for
service quality; and for passenger satisfaction and behavioural intention (Tables II and
III).

Following this analysis, six items were deleted due to cross loadings, low loading, or
correlated error terms. Two items were deleted from the dimension of flight attendants,
two from ground staff, one from flight schedule, and one from repurchase intention. The
modified models then demonstrated a good fit.

Although the chi-square statistic of the CFA model for the service-quality dimension was
significant (χ2 (98)=669.76, p<0.001), the other fit indexes were within acceptable ranges:
normed fit index (NFI)=0.99; relative fit index (RFI)=0.99; Tucker-Lewis index
(TLI)=0.99; comparative fit index (CFI)=0.99; and root mean square error of
approximation (RMSEA)=0.07.

The CFA model for satisfaction and behavioural intentions also demonstrated a good
model fit (χ2 (8)=44.12, p<0.000; NFI=0.99, RFI=0.99, TLI=0.99, CFI=a 0.99,
RMSEA=0.06).

In both models there were significant t-statistics for each path, and the path loadings
(unstandardised coefficient) were greater than twice the standard error, which provided
some evidence of convergent validity among items (Anderson and Gerbing, 1988).
Moreover, inter-correlation values between 0.19 and 0.87 indicated discriminant validity
among the constructs (Kline, 1998).

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After performing CFA, all constructs demonstrated good reliability – ranging from 0.86
to 0.98, all of which were greater than the lower limit of 0.70 (Hair et al., 1998;
Nunnally, 1978).

4.4 Data analysis

Analysis of the model was conducted at two levels. First, for a descriptive analysis,
statistical means, standard deviations, and bivariate correlations were calculated for all
constructs. Second, structural equation modelling (SEM) by AMOS 6.0 was used to
verify multiple paths or relationships among the constructs of service quality,
satisfaction, and behavioural intentions. The structural model was initially tested using all
possible paths among the constructs. Following the elimination of insignificant paths, the
model was then tested and analysed in terms of the remaining paths.

Direct, indirect, and total effects were compared on the basis of the multiple relationships
among the dimensions. The direct effect of one dimension on another was specified by
the path coefficient, whereas the indirect effects were calculated by multiplying all the
path coefficients for each route of indirect influence (and taking the total of these if more
than one route existed) (Bollen, 1989). The total effect was taken to be the sum of direct
and indirect effects.

5. Results and discussion

5.1 Descriptive analysis

As shown in Table IV, the passengers were apparently content with the overall service of
the airlines, as evidenced by the mean satisfaction score of 5.1 and the mean service-
quality scores between 4.6 and 5.5 (all on a seven-point scale).

With regard to service quality, respondents were least satisfied with the dimension of
schedules (mean 4.6). The standard deviation on this dimension (1.4) was greater than
with other dimensions, which indicates that respondents tended to have extreme views
about the airlines' schedules, although lower satisfaction ratings were dominant.

Respondents generally gave a positive rating with respect to behavioural intentions. More
specifically, the provision of feedback to the service providers had a mean of 4.9, repeat
purchase had a mean of 5.2, and positive word-of-mouth communications to friends and
relatives had a mean of 5.2.

5.2 Correlations

Correlations among the service-quality dimensions revealed that the correlation between
the dimension of schedule and the other three dimensions (tangibles, ground staff, and
flight attendants) was relatively weak as compared with the correlations among all the
dimensions of service quality. This result indicates that positive reactions to the tangibles

12
of the flight or the service of staff were insufficient to compensate for negative reactions
to a delayed arrival at a destination.

The relationship between satisfaction and feedback was relatively weak; however, it was
found to be a positive relationship (contrary to the negative relationship commonly
reported in the literature). It is apparent in the present study that satisfied airline
passengers also provided feedback to the airlines, although at lower level of intensity.
The strongest relationship between satisfaction and behavioural intentions related to
word-of-mouth communication, which shows that passengers who were satisfied with the
services were more likely to provide positive word-of-mouth recommendations to their
families and friends.

The findings provide empirical support for the contention that passengers' judgments of
the service quality of domestic LCCs in Thailand influences their level of satisfaction,
and that this level of satisfaction, in turn, influences their behavioural intentions. The fit
indicators (NFI, RFI, TLI and CFI) were all greater than 0.95, which indicates a strong fit
of the model to the data. RMSEA was 0.06, which is also supportive to the model fit.
Although CMIN/DF was slightly greater at 4.6, this was within the range of 2 to 5, which
indicates a reasonable fit (Arbuckle and Wothke, 1999).

5.3 Testing of hypotheses

The first hypothesis (that service quality positively influences passengers' satisfaction) is
represented in Figure 3 by four paths – one from each of the dimensions of service
quality (flight attendants, ground staff, schedules, and tangibles) to the construct of
satisfaction. As shown in the diagram, the standardised coefficients (β) of these four
paths were 0.24, 0.13, 0.34, and 0.21 respectively. Critical ratios (t-values) for these paths
were 5.72, 2.95, 10.2, and 5.6 (which were all significant at α=0.001). These findings
provide support for H1. The dimension of flight schedule was the most important aspect
of service quality for passenger satisfaction, whereas the least important was the service
provided by the ground staff.

The second hypothesis (that passenger satisfaction positively influences word-of-mouth

communication) was supported. As shown in Figure 3, the path for this relationship was
significant (β=0.87, t-value=19.9). It is apparent that satisfied passengers responded
strongly in terms of positive word-of-mouth.

The third hypothesis (that passenger satisfaction positively influences intention to

repurchase) was also supported. This relationship was significant at an alpha level of
0.001 (β=0.38, t-value=8.3). It is apparent that the greater the level of satisfaction, the
more likely were customers to travel by the same airline.

The fourth hypothesis (that satisfaction has a negative influence on the level of feedback)
was not supported. The path from satisfaction to feedback had a positive coefficient that
was found to be significant at the 0.001 level (β=0.26, t-value=6.6). This result is
consistent with the descriptive findings reported above. In the context of Thai LCCs, it is

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apparent that passengers who were satisfied with the service quality were more likely to
provide feedback, which is contrary to the findings commonly reported in the literature.

In addition to the hypothesised relationships noted above, two other paths are worthy of
note in the model. Services provided by flight attendants tended to have a positive (albeit
weak) influence on the feedback of passengers (β=0.1, t-value=2.49), and word-of-mouth
communication had a positive influence on repurchase intention (β=0.5, t-value=12.4).

The results of the testing of the hypotheses in the context of Thai LCCs are summarised
in Table V.

The confirmation of the first hypothesis endorses the antecedent role of service quality in
the current context and is consistent with the findings of previous studies (Oliver, 1997;
Cronin and Taylor, 1992; Parasuraman et al., 1988). The confirmation of the second and
the third hypotheses in the current context, which is in accordance with the results of
Cronin and Taylor (1992), suggests that a high level of satisfaction fosters intentions to
use the service again and to engage in positive word-of-mouth communication with
others. The rejection of the fourth hypothesis should be assessed in the current context of
high levels of passenger defection from the Thai LCCs. It is apparent that dissatisfied
Thai passengers are less likely to provide feedback than simply change to another airline.

5.4 Direct and indirect relationships among constructs

Although the services provided by the flight attendants had a minor direct impact on
feedback (0.10), virtually all of the relationships between the dimensions of service
quality and those of behavioural intention were indirect (mediated through passenger
satisfaction) (see Table VI). Satisfaction had direct positive effects on word-of-mouth
(0.87) and feedback (0.26), and a strong total effect on repurchase intention (0.82).

Although the dimension of schedule was the lowest-rated dimension of service quality, it
nevertheless had the strongest positive impacts on satisfaction (0.34), word-of-mouth
(0.30), and repurchase intention (0.28). It is apparent that strict management of the
schedule is very important for LCCs. Satisfaction influenced repurchase intention both
directly and indirectly, with the indirect impact of satisfaction being effected through
strong positive word-of-mouth communication. This finding indicates that repurchase
intention was not only influenced by satisfaction; rather, passengers who were both
satisfied (mostly as a result of the schedule) and communicated this to others through
positive word-of-mouth were more likely to “convince themselves” that they should
repurchase from the airline.

Another service-quality dimension to influence repurchase intention was flight

attendants, which contributed to repurchase intention through passenger satisfaction and
word-of-mouth. This dimension received the highest mean rating (5.5), which indicates
that respondents were satisfied with the flight attendants' dress, sincerity, help,
friendliness, and knowledge. It is apparent that the quality of flight attendants must be
maintained or improved by the LCCs. This could be achieved by reviewing passengers'

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feedback – given that flight attendants represented the only dimension of service quality
about which respondents provided direct feedback to the LCCs.

Perception of tangibles should also be enhanced by ensuring satisfaction with regard to

the aircraft, air conditioners, and seats. Although this dimension has been regarded as
relatively unimportant in many studies of service quality (Zeithaml et al., 1990),
tangibles create word-of-mouth impact in the case of LCCs in Thailand. The least
important dimension of service quality identified in this study was the ground staff.

6. Conclusions, implications, and limitations

6.1 Main conclusions

The three low-cost carriers (LCCs) in Thailand have suffered persistent financial losses
since their inception. These losses have been attributed to a range of factors over which
LCCs have little control – such as high fuel prices, internal rivalry, and the entrenched
position of dominant full-service carriers (FSCs). However, despite evidence that
successful LCCs in other parts of the world have not only offered low fares to their
passengers but have also been sensitive to the quality of services they provide, the Thai
LCCs have rarely adopted measures to improve service quality and/or customer
satisfaction as a solution to their problems. The present study therefore investigated
whether service quality and satisfaction influence passengers' behavioural intentions
(word-of-mouth, repurchase intention, and provision of feedback) in the context of LCCs
in Thailand.

The findings of the study are consistent with those of prior research in concluding that:
service quality is a significant determinant of customer satisfaction; and quality and
satisfaction influence such behavioural intentions as word-of-mouth, repurchase
intention, and feedback. More specifically, passengers indicated overall satisfaction with
the four dimensions of service quality examined in the study (tangibles, schedule, ground
staff, and flight staff). In this regard it was interesting to note that the dimension of
schedule had the lowest mean rating (significantly different from the other dimensions);
however, the correlation between schedule and satisfaction was very strong, which
implies that improvement in flight schedules is an important issue that requires attention
from Thai LCCs. The dimensions of flight attendants and tangibles also had a significant
influence on the construct of satisfaction. In contrast, service offered by ground staff was
not found to be a significant influence on satisfaction in the present study.

Contrary to the findings commonly reported in the literature, the present study found a
positive (albeit weak) relationship between the level of satisfaction and feedback to the
service provider. This finding indicates that LCC passengers provide positive feedback if
their expectations are met (and negative feedback if unmet, at a very low level).
Moreover, the study finds that passengers who do not intend to provide negative feedback
are likely to remain silent and turn to other airlines.

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Analysis of the relationships among service quality, satisfaction, and behavioural
intention revealed that satisfaction plays a direct role in enhancing passengers' intentions
to become involved in word-of-mouth activities and repurchase. However, as noted
above, satisfaction had a weaker correlation with the provision of feedback; unsatisfied
customers tended to move to other airlines. Passengers who engaged in word-of-mouth
activities were found to become loyal customers subsequently. Having satisfied
passengers was thus shown to be important in developing loyal passengers.

6.2 Managerial implications

The findings of the study have important implications for managers of LCCs, especially
in terms of: the quality of services that could be provided; and the significant influence
that satisfaction has on the behavioural intentions of their customers.

In particular, managers should be aware that, among the various dimensions of service
quality, reliability of flight schedule was especially significant in fostering satisfaction for
the customers of Thai LCCs. It is apparent that timely operation of scheduled flights is
critical for customer satisfaction. In addition, the satisfaction of passengers was
significantly influenced by the performance of the flight attendants and the quality of the
interior of the aircraft. It is thus apparent that managers of LCCs in Thailand could
enhance customer satisfaction by maintaining or improving the quality of services offered
by their flight attendants and the quality of the tangibles associated with the service.

It is also apparent that the use of customer complaints (received through a web site or
other means) as a performance indicator is not supported by the present findings. The
satisfaction of passengers in this study did not have a significant relationship with
feedback.

6.3 Limitations and future research

The study has several acknowledged limitations. The first relates to the generalisibility of
the findings. Although the study utilised a large sample, it would be prudent to apply the
findings only in the context of Thai LCCs because: people who travel on LCCs in
Thailand represent a relatively high-income group of the population; and Thailand is
unlike other South-East Asian countries in offering good land transport to all parts of the
country.

Second, passenger satisfaction in this study was rather narrowly conceptualised in terms
of only four dimensions of service quality. Although 54.5 per cent of the variation in
passenger satisfaction was explained by the four service dimensions studied here, the
remaining 45.5 per cent is explained by other factors that were not examined in this
study. For example, passenger satisfaction might be influenced by such factors as
financial incentives for flight delays, the image of the LCC, and transparency in airfares.
It might be desirable for future studies to include these (and other) factors to assess their
explanatory power.

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The third limitation concerns the method of analysis of the study. Although SEM is a
powerful method for demonstrating several dependence relationships simultaneously, its
correlational nature prevents any definitive conclusions being drawn about the causal
relationships among the variables. The findings regarding the causal relationships among
service quality, passenger satisfaction, and behavioural intentions in this study are
therefore tentative. Further research should be conducted with panel study data to
investigate these causal relationships (Biddle and Martin, 1987).

Figure 1 Research model

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Figure 2 Model specifications with variables

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Figure 3 Direct and indirect effects of service quality on satisfaction and behavioural
intentions

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Table I Comparison of LCCs in Thailand

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Table II CFA model for perceived service quality

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Table III CFA model for satisfaction and behavioural intentions

Table IV Means, standard deviations and correlation matrix

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Table V Summary of testing of hypotheses

Table VI Direct and indirect effects of service quality on behavioural intentions

References

AirAsia Berhad (2005), Annual Report 2005, AirAsia Berhad, .

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