Journal of Accounting, Finance & Management Strategy, Vol. 12, No. 2, Dec.

2017, pp97-122

Low-fare Airlines Service Quality, Customer Satisfaction

and Customer Loyalty

Fu-Ju Yang1*, Kuang-Hsun Shih2, Dinh Thanh Nha3, Yi-Hsien Wang4

Abstract

Accompanying with the huge potential growth, the aviation market of

Vietnam is becoming more severe because of the harsh competition
between domestic airlines as well as the rivalry of foreign rivals. It is
necessary for low-fare carriers to enhance their competitive ability.
However, the specific researches about this subject are still limited. This
study conducted an empirical investigation to identify which factors have
effect on service quality, customer satisfaction and customer loyalty within
Vietnam low-fare airlines. The conceptual framework is provided in which
customer expectation, perceived value, reliability and subjective norms are
tested if they have positively impacts on customer satisfaction. Similarity,
four variables including assurance, responsiveness, tangible and empathy
are considered as predictors of service quality. Subsequently, the
interrelationship between service quality, customer satisfaction and
customer loyalty is examined. The results showed that customer
satisfaction leads to customer loyalty, the offering service quality also help
upgrading customer loyalty. Besides, four suggested variables (except
customer expectation) and service quality have positively impact on
customer satisfaction. Service quality is able to be improved through
responsiveness and empathy - two variables have positively influence on

1
Department of Banking and Finance, Chinese Culture University, Taiwan.
*
Corresponding Author, E-mail: yangfuju@gmail.com
2
Graduate School of Banking and Finance, CTBC Business School, Taiwan.
3
Global Business Department, Chinese Culture University, Taiwan.
4
Department of Banking and Finance, Chinese Culture University, Taiwan.

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 F.-J. Yang, K.-H. Shih, Y.-H. Wang and D. T. Nha

it.

Keywords: Customer Loyalty, Customer Satisfaction, Service Quality,

Vietnam Low-Fare Airlines.

JEL Classification: D11, E21, N35, O53

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Low-fare Airlines Service Quality, Customer Satisfaction and Customer Loyalty

1. Introduction

Low Fare Airline (or Low Cost Airline or Budget Airline) is airline
offering lower fares in exchange for fewer comforts. In order to
compensate for the revenue lost in decreased ticket prices, the airline
might charge passengers for extra fees such as food, seat allocating,
baggage or priority boarding, etc.

In Vietnam, aviation industry is one of the leading priority sectors for

development because of its critical importance to the economic growth of
the country. According to the report of U.S Ambassies about Vietnam
aviation industry in 2015 (online posted on Export.gov), Vietnam has four
main passenger service airlines which are Vietnam Airlines, Vietjet Air,
Jetstar Pacific, and Sky Viet with more than 130 aircrafts are being
operated. Vietjet Air and Jetstar Pacific are determined as two low-fare
passenger carriers which are operating within Vietnam territory.

In terms of domestic market, Vietnam Airline dominated with 47%

market share, low-fare airlines including Vietjet Air accounted up to 36%
and Jetstar Pacific held 15%, the rest 2% belongs to Sky Viet. Thus, the
low-fare airlines already accounted more than 50% of domestic market
share (The statistical data from CAAV/ online posted by Tuoi Tre News,
2015). It is forecasted that the low-cost carriers will continue to increase
their market share up to 60% due to the highest competition in service
prices.

The statistical data of International Air Transport Association (IATA)

in 2015 (released by Vietnam Net Bridge, 2017) showed that Vietnam
aviation market was the seventh-fastest growing market around the globe
from 2014 to 2017. The reason is explained by various factors which
including the stable compete environment of domestic airlines and

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presence of low-fare carriers. Experts pointed out that the growth mostly
because domestic flights have not to compete with foreign rivals. In
addition, the domestic market is forecasted continuing to grow due to the
trend of using low-fare flights service. In addition to the participation of
Vietnam in Free Trade Agreement (FTAs) and the ASEAN Open Skies
policy, which has been effective since January 2015 allowing airlines to
fly freely throughout the ASEAN member territories in a unified air
transport market, the passenger air transport in Vietnam would have more
opportunities for development. In conjunction with the huge potential for
development, Vietnam aviation market also faces with the severe
competition between domestic airlines as well as the fierce rivalry with the
foreign rivals in international routes. Furthermore, experts revealed that
due to the safety hazards of overcrowding by airlines, it possibly causes an
increase in delayed and canceled flights. The domestic air transport
companies are facing strictly competitive pressure.

In term of the rapid growth of Vietnam aviation industry in general

and low-fare airline industry in particular, the competitive environment is
becoming harsher and fiercer. It is necessary for domestic low-fare airlines
to understand clearly about their passengers‘ attitude with the service they
provide. In Vietnam, however, the number of researches have been studied
about this subject is still limited or unpublished. The objectives of this
research are identifying and analyzing the factors that are able to influence
the service quality, satisfaction and loyalty of customer with Vietnam
low-fare airlines. Specifically, this research is going to:

1. Measure the level of satisfaction and loyalty of passengers about

Vietnam low-fare airlines.
2. Identify the antecedent dimensions of customer satisfaction and
examine their relative importance as perceived by customers of
Vietnam low-fare airlines.

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Low-fare Airlines Service Quality, Customer Satisfaction and Customer Loyalty

3. Identify the antecedent dimensions of service quality and examine

their relative importance as perceived by customers of Vietnam
low-fare airlines.
4. Investigate the interrelationship between customer satisfactions,
service quality and customer loyalty within Vietnam low-fare airline
industry.

2. Literature

2.1 Customer Loyalty

According to Zeithaml, Berry and Parasuraman (1996), customer

loyalty is a particular kind of customer behavior which is a prediction
about the intention of customers whether they continue doing business
with the firm in the future. Cronin and Taylor (1992) determined two
aspects of customer loyalty. The attitudinal aspects that representing the
admission could be listed as repurchase intention, willingness to
recommend the provider to other people, reluctance to change to another
alternative provider or readiness to pay a premium price. The behavioral
components of customer loyalty represented by the actual actions
including to repurchase the products or services, to purchase more and
different products or services from the same provider, and to recommend
the provider to other people through positive word-of-mouth
communication.

Binggeli, Gupta and Pommes (2002) stated that the airline‘s revenue
is able to be increased approximately as much as 2.4% per year by
customer loyalty. The reason is explained that it is difficult to obtain new
customers, and the expenditure used for reaching new passengers would
cost six times higher than maintaining the existing customers (Reichheld
and Sasser, 1990). Consequently, low-fare airline firms are capable of

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establishing long-term performance by developing the determinants of

passengers‘ loyalty (Klophaus, 2005). Despite a great number of studies
paying attention to customer loyalty, the key determinants of customer
loyalty in low-fare airline industry are recognized unclearly. It is necessary
to study further about customer loyalty and important antecedents
affecting to it since the survival of airline industry.

2.2 Customer Satisfaction Dimension

Customer satisfaction is a comprehensive concept representing the

overall evaluation of experience to the performance of products or services
after purchase and consumption, and it can range from the level of
dissatisfaction to satisfaction. Zinedlin (2000) stated that customer
satisfaction is an emotional difference between what customers anticipate
and what they receive. If customers are satisfied, they are in favor of
returning, while dissatisfied customers more likely to go elsewhere
(Heskett, Jones, Loveman, Sasser, and Schlesinger, 1994; Strauss,
Chojnacki, Decker, and Hoffman, 2001). In the context of low fare airline
industry, customer satisfaction is based on performance factors and the
overall experience (Ariffin, Salleh, Aziz and Asbudin, 2010). Passengers
probably consume similar services from different carriers, but the degree
of satisfaction and dissatisfaction varies among individuals. In this
research, these following variables are considered as antecedents of
customer satisfaction.

2.2.1 Customer Expectation

In service industry, customer expectation is defined as the

performance customers supposed that they would receive from the
services. Furthermore, the customer‘s service expectation is a model of
complex consideration, including past experiences, personal needs,

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advertisements and word of mouth communications (Zeithaml,

Parasuraman and Berry, 1990). There is a majority of literatures identify
that managing customer expectation is an important factor leading to
customer satisfaction. In low fare airline industry, however, there is no
proof to conclude that this influence is positive or negative. As an example,
a convey of Bamford and Xystouri (2005) demonstrates that in low fare
airline industry, if the service performance does not meet customer
expectation, such as long delays, flight schedule changes, or staff negative
attitudes, there will be more complaints even though these wrongdoings
that are not under the airlines‘ control (weather, air-traffic connection,
terrorism).

2.2.2 Perceived Value

Zeithaml (1988) defined that perceived value is the overall utilitarian

received from the services and this utilitarian is connected to prices. In the
term of utilitarian, perceived value is measured as value for money
(Kashyap and Bojanic, 2000). Ryu, Han, and Kim (2008) describe value
for money as the judgment of what customer have to give and what they
have been received. Price of service is one of the core factors in customer
perceived value level. In low fare airline industry, price of airfare is a
significant element among passengers because these travelers are price
sensitive or cannot afford to fly with full-service airlines.

2.2.3 Reliability

Reliability is determined as the degree to which provider is able to

perform precise and trustable services as their commitment at all time to
the customers (Leong, Hew, Lee, and Ooi, 2015). The reliability in low
fare airline industry could be listed as flight schedule punctuality, accurate
and up-to-date flight information, luggage safety, personal security,

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emergency plans, etc. (Yunus, Bojei, and Rashid, 2013).

2.2.4 Subjective Norms

Fishbein and Ajzen (1975) defined that subjective norm is the

person‘s perception that important people to him think that he should or
should not perform the behavior. Actually, customers are affected
significantly by their perceived opinions of referents such as family,
friends, colleagues, peers or anyone whose actions have directly or
indirectly influence on customers behavior. This influence varies from
products to brands (Ajzen and Driver, 1991). Subjective norm also
identified as one of the determinants of behavioral intention (Davis,
Bagozzi and Warshaw, 1989).

2.3 Service Quality Dimension

Service quality is the difference between the level of service that is

expected from consumers and the service that is actually received
(Caruana, 2002). Gronroos (1984) concluded that each individual
customer has its own perception of the quality of a service. The studies
from Cunningham, Young and Moonkyu (2002), Liou and Tzeng (2007)
also stated that service quality measurement based on performance and
there is a tested model applied to airline industry. In this research, four
variables including assurance, responsiveness, tangible and empathy is
considered as predictors of service quality.

2.3.1 Assurance

The dimension of assurance is connected to underlying attributes

such as trustworthiness among flight crew, knowledge and competence to
maintain the believable services from online system to the real life flight,
and the level of manners among the flight crew (Leong et al., 2015). The

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studies from Clemes, Gan, Kao, and Choong, (2008), Yi and La (2003)
determined that assurance represents a significant impact on service
quality. Under their perspective, the competency to exhibit credibility and
courtesy will play a significant role in building customers‘ credence.

2.3.2 Responsiveness

Responsiveness is related to the swiftness of solving reaction

whenever there are requests or complaints from the customers (Leong et
al., 2015). Lindstrom (2009) and Yunus et al. (2013) mentioned that the
responsiveness measurement also considers the factors of efficiency in
passenger guidance such as smooth seating, safety instructions, safety alert,
etc. It is necessary to provide the assistant and helpful service by
immediate respond.

2.3.3 Tangible

Under the perspective of airline industry, Yunus et al. (2013)

indicated that tangible is measured by in-flight physical conditions of the
carrier such as comfortable seats, the installed equipment and facilities,
cleanliness of aircraft interior, the appearance of cabin crews, the served
food and beverage or entertainment materials provided on the flight. If
these tangible dimensions are unavailable, unqualified or in poor
conditions, it is not surprised that customers feel unsatisfied with the
service quality of airline carrier (Aghdaie and Faghani, 2012).

2.3.4 Empathy

The study of Yunus et al. (2013) determined empathy is resulted by

individualized attention provided to customers. Empathy is considered as
an important component of in-flight service because of its capability to
covering the personal attention and understanding specific customer needs.

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Leong et al. (2015) also agreed that the carriers whose cabin crew
achieves the high level of empathy would have ability to recognize and
sympathize with feelings, requirements or demands of customers.
Apparently, passengers will definitely appreciate the service provided by
these carriers.

2.4 The consequence of service quality to customer satisfaction

Many researchers agreed that the high level of service quality causes
the increase in customer satisfaction (Parasuraman, Zeithaml and Berry,
1985; Woodside, Frey and Daly, 1989). If customer‘s evaluation of
experienced service quality is high, they tend to assess the most recent
service encounter as satisfactory. Within the empirical study of Cronin et
al. (1992), however, they conceded that the direct relationship between
quality and satisfaction was still in question. It is necessary to examine the
influence of service quality on customer satisfaction in low-fare airline
industry.

2.5 The consequence of customer satisfaction and service quality to

customer loyalty

Determining customer satisfaction is significantly essential in order

to distribute the services effectively. Customers who are satisfied with the
services bring the numerous benefits to the firm such as positive
word-of-mouth communications, increased brand retention or enhanced
reputation of the company (Cronin et al., 1992; Boulding, Kalra, Staelin
and Zeithaml, 1993; Reinartz and Kumar, 2003). Similar to the airline
industry, understanding passengers‘ need and provide the services meeting
their requirements are the key factors to achieve the competitive
advantages and create the success for company. Cronin et al. (1992) and
Fornell (1992) stressed the strong association between customer

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satisfaction and re-purchase intention. In terms of airline industry,

repurchase intention is related to the customers‘ intend to fly on their next
trip. Customer satisfaction is also known as an exit barrier which
supporting company to retain its customers (Fornell, 1992; Halstead and
Page, 1992).

Boulding et al. (1993) also indicated the positive relationships

between service quality and repurchase intentions. A number of
organizations which provide superior service quality have been found to
be market leaders in term of sales and long-term customer retention
(Anderson and Sullivan 1993; Boulding et al., 1993). The delivery of
high-quality service seems to be the reason causing the positive
word-of-mouth, lessening of complaint, reluctance to switch, willingness
to recommend to other people and increased probability of purchase. High
service quality seems to offer business firms opportunity to succeed in
competitive markets.

3. Methodology

3.1 Research Framework

Based on the literature above, there are eleven hypotheses are

provided and displayed on the framework as following:

H1: Customer Expectation has positively influence on Customer

Satisfaction
H2: Perceived Value has positively influence on Customer Satisfaction
H3: Reliability has positively influence on Customer Satisfaction
H4: Subjective Norms has positively affects overall Customer Satisfaction
H5: Assurance has positively influence on Service Quality
H6: Responsiveness has positively influence on Service Quality
H7: Tangibles has positively influence on Service Quality

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H8: Empathy has positively influence on Service Quality.

H9: Customer Satisfaction has positively influence on Customer Loyalty.
H10: Service Quality has positively influence on Customer Loyalty.
H11: Service Quality has positively influence on Customer Satisfaction.

Customer H1
Expectation

H2
Perceived Value Customer
H3 Satisfaction
Reliability H9
H4

Subjective Customer
Norms Loyalty
H11

Assurance H5

H10
H6 Service
Responssive-ness
Quality
H7
Tangible
H8
Empathy

Figure 1 Research Framework

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3.2 Research Methodology

This study would use quantitative research methodology for

analyzing the model of low-fare airline passenger satisfaction and loyalty.
Quantitative method is a type of research methodology that is used to
examine and measure the relationship between variables through statistical
analysis. The goal of this method is analyzing and representing the
variables‘ interrelationship mathematically. The data is produced by
numerical form collected through polls, questionnaires, surveys, or
pre-existing statistical data.

In order to collect necessary data for this research, the questionnaire

is designed and separated into two sections. The first part is questions
about characteristics of respondents that are (1) Gender, (2) Age, (3)
Education and (4) The frequency of using Vietnam low-fare airlines. The
second section is questions about passenger‘s experience and individual
opinion with service of these airlines. This includes 11 smaller structured
parts are (1) Customer Experience, (2) Perceived Value, (3) Reliability, (4)
Subjective Norms, (5) Assurance, (6) Responsiveness, (7) Tangible, (8)
Empathy, (9) Customer Satisfaction, (10) Service Quality and (11)
Customer Loyalty. Each part comprises several questions that established
and classified in advance by researcher. The answers are rated on the
five-point Likert scale, which is ranging from Strongly Disagree (equal to
1) to Strongly Agree (equal to 5).

The statistical techniques such as descriptive, factor analysis,

reliability test and multiple regression analysis would be applied into
corresponding respectively objectives of the study.

4.3.1 Descriptive Statistic Analysis

Descriptive statistics describes or summarizes quantitatively the

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features of collection data. In general, it provides the brief description

about the main characteristics of research variables and factors. This study
uses descriptive statistics such as mean and standard deviation in order to
measure the central position of a distribution for the data. Mean is the
same as the average or the typical score of a certain set of data. Standard
deviation indicates how the values of data set are different from the mean.

4.3.2 Factor Analysis and Reliability Test

Factor and reliability analyses are methods of reducing many

measured variables into the smaller and highly correlated number of
constructs. While factor analysis indicates which variables are strongly
correlated with each other and should be grouped together, reliability
analysis provides the measure of how well a group of variables goes
together. In this study, factor analysis is conducted first to classify and
group research variables. Subsequently, correlation analysis and
coefficient alpha are conducted in order to confirm the reliability of each
variable. In general, there are criteria required to be followed, such as:

(1) KMO > 0.5.

(2) Eigen Value > 1
(3) Factor Loading > 0.6
(4) Explained Variance > 0.5
(5) Item to Total Correlation > 0.4
(6) Cronbach‘s alpha > 0.6

4.3.3 Multiple Regressions Analysis

Multiple regression analysis is statistical method that can be used to

analyze the relationships between a single dependent variable and several
independent variables (Hair, Black, Babin, Anderson and Tatham, 2006).
Multiple regression formula is represented as follows:

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Y = β0 + β1X1 +β2X2 + . . . + βnXn + e (3-0)

where:

Y is dependent variable. X1, X2,…, Xn are independent variables. e

is random error. β0 is intercept (constant) and β1, β2,…, βn are regression
coefficients. These regression coefficients indicate how the dependent
variable Y will changes if the correspondent independent variable changes
1 unit. There are several principles that should be regarded:

(1) Coefficient of determination (R2) is used to measure the strength

of overall relationship and always positive between 0 and 1.
(2) The F statistic is used to determine if the overall regression model
is statistically significant. F value is required to greater than 4 with
significant level (p value) smaller than 0.5.
(3) Variance Inflation Factor (VIF) is used to measures the variance
of the regression coefficients is inflated by multicollinearity problems.
A maximum VIF value that is acceptable would be 10; anything
higher would indicate a problem with multicollinearity.
(4) Durbin-Watson Statistic (D-W) is used to observe the distribution
of the residuals and check if the residual is independent or not. In
practice, if D-W value exists between 1.5 and 2.5, it means there is no
autocorrelation.

In this research, regression analysis is applied to explore the

relationship between customer expectation, perceived value, reliability,
subjective norms, and customer satisfaction (Hypotheses 1,2,3,4); between
assurance, responsiveness, tangible, empathy, and service quality
(Hypothesis 5, 6, 7, 8). The equation of multiple regression models are:

CUS = β0+ β1CUE +β2PEV + β3REL + β4SUN + e (3-1)

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where:

CUS = Customer Satisfaction

CUE = Customer Expectation
PEV = Perceived Value
REL = Reliability
SUN = Subjective Norm

SEQ = β0 + β1ASS + β2RES + β3TAN+ β4EMP + e (3-2)

where:

SEQ = Service Quality

ASS = Assurance
RES = Responsiveness
TAN = Tangible
EMP = Empathy

Consequently, the relationship between service quality and customer

satisfaction (Hypothesis 11) is tested before checking their effects to
customer loyalty (Hypothesis 9, 10). The regression models are:

CUS = β0 + β1SEQ + e (3-3)

where:

CSA = Customer Satisfaction

SEQ = Service Quality

CUL = β0+ β1CUE + β2SEQ+ e (3-4)

where:

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CUS = Customer Loyalty

CUE = Customer Expectation
SEQ = Service Quality

4. Empirical results

4.1 Descriptive analysis

The respondents consist of 153 males and 198 females which account
for 45.6% and 54.4% respectively. The ages of participants are divided
into five groups that are: less than 20 years old (21.7%), 21-35 years old
(54.1%), 36-45 years old (13.4%), 46-60 years old (8.0%) and more than
60 years old (2.8%). Within education levels, 15.7% of the participants
accomplish Diploma degree, while 29.9% of them possess Undergraduate
degree, 46.4% respondents hold Graduate degree and 8.0% obtain
Doctorate degree. About the frequency of using, 67.5% of respondents
have been flying with Vietnam low-fare carriers 1-5 times per year;
participants who have been using this transport service 5-10 times a year
account for 18.8% and followed by more than 10 times each year with
13.7%.

The result about measurable variables indicated that mean scores

range from 2.95 to 4.11 along the five-point scale. Specifically, all the
items of customer expectation gain the relatively high mean score (from
3.79 to 4.11) with standard deviations are not exceed 1.00. It is not
surprised that all respondents look forward to receiving good service from
airline carriers. In the contrary, the mean scores of other items are slightly
lower: the lowest level of agreement (2.95) are held by two items of
service quality and customer loyalty, mean value of the rest items are just
pretty greater than 3.00 or almost reach 4.00. This also expresses that the
respondents tend to positively evaluate the service quality but they are not

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totally satisfied or strongly loyal with the service of Vietnam low-fare

airline.

4.2 Factor Analysis and Reliability Test

Table 1. Factor analysis and Reliability test results

Accumulative
Total Deleted Cronbachs‘
Variables Eigenvalue KMO Explanation
item item α
%
Customer
5 1 2.168 0.503 54.212 0.793
Expectation
Perceived Value 3 0 2.203 0.651 73.449 0.818
Reliability 3 0 1.836 0.661 61.193 0.682
Subjective Norms 4 1 2.536 0.638 63.398 0.846
Assurance 5 1 3.180 0.648 63.600 0.891
Responsiveness 4 0 3.195 0.552 79.872 0.915
Tangible 4 0 2.882 0.665 72.039 0.866
Empathy 3 0 2.383 0.690 79.435 0.869
Customer
4 0 2.934 0.753 73.353 0.876
Satisfaction
Service Quality 5 1 3.345 0.811 66.906 0.907
Customer Loyalty 4 0 3.169 0.629 79.225 0.905

After deleting the items do not belong to the each factor, all research
variables are well factor and highly internal consistency.

4.3 Multiple Regressions Analysis

4.3.1 The Effects of Customer Expectation, Perceived Value,

Reliability and Subjective Norms on Customer Satisfaction

The F value is 29.934 (p < 0.001) means that independent variables

have some significant influence on customer satisfaction. The R2 is 0.789
shows that the model fit and 78.9% of the variance in perceived customer
satisfaction is explained by the regression model 1. The coefficient for
customer expectation is significant at 1% level of significance (t = 4.004;
p < 0.01), but beta value show the negative sign (β < 0). Hence, customer
expectation has negatively effect on customer satisfaction. The hypothesis

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1 is not supported. However, the coefficients for perceived value,

reliability and subjective norms show the positive sign (β > 0) with 1%
level significance. These three variables can explain the variance in
customer satisfaction. The other values also meet the requirements.
Hypotheses 2, 3 and 4 are supported. The model (3-1) is written as:

CUS = -0.009 + 0.404 PEV + 0.340 REL + 0.424 SUN + e (4-1)

4.3.2 The Effects of Assurance, Responsiveness, Tangible and

Empathy on Service Quality

The coefficient for responsiveness is significant at 5% level of

significance (t = 6.837, p < 0.05) and beta value gain the positive level (β
> 0). Responsiveness help to explain some of the variation in perceived
service quality. Similarity, coefficient for empathy is significant at 1%
level of significance (t = 10.878, p < 0.01) and beta value shows the
positive sign. Empathy can explain some of the variance in service quality.
In the other hands, assurance shows the negatively effect on service
quality with negative beta sign. The p-value of the t-test for tangible is
also nor significant (t = 0.782, p-value = 0.170). The other values also
meet the principles. Hypotheses 5 and 7 are not supported, hypotheses 6
and 8 are strongly supported. The model (3-2) is written as:

SEQ = 0.888+ 0.378 RES + 0.527 EMP + e (4-2)

4.3.3 The Effects of Service Quality on Customer Satisfaction

The F value is 66.649 (p < 0.001) means service quality has

significant influence on customer satisfaction. The R2 is 0.706 shows that
the model fit and 70.6% of the variance in perceived customer satisfaction
is explained by the regression model 3. The coefficient for service quality
is significant at 1% level of significance (t = 28.984; p < 0.01), and beta

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value shows the positive sign. This proved that service quality has
positively effects on customer satisfaction. Hypothesis 11 is supported.
The model (3-3) is written as:

CUS = 0.309+ 0.901 SEQ + e (4-3)

4.3.4 The Effects of Customer Satisfaction and Service Quality on

Customer Loyalty

The F value is 192.617 and significant at 1% level. This means

customer satisfaction and service quality have influence to predict
customer loyalty of Vietnam low-fare carriers. The R2 is 0.873 also shows
the model fit and 87.3% of the variance of customer loyalty is able to be
explained by regression model 4. The coefficient for customer satisfaction
is significant at 1% level of significance (t = 20.790, p < 0.01) and beta
value shows the positive sign. It proved the positively influence of
customer satisfaction on customer loyalty. Similarity, the t-test of service
quality is also significant at 1% level (t = 6.532, p < 0.01). Service quality
helps to explain some of the variation in customer loyalty. Hence,
hypothesis 9 and hypothesis 10 are strongly supported. The regression
equation is:

CUL = -0.402+ 0.817 CUE + 0.275 SEQ+ e (4-4)

5. Conclusion

Firstly, the customers do not strongly satisfy with the service of

Vietnam low-fare carriers. They choose to fly with these carriers because
of its price. Hence, the loyalty of customers with Vietnam low-fare airlines
is also at average level. The analysis result stresses that customer is
expecting more diversification from the service of Vietnam low-cost
carriers. Passengers are not too regretful for using Vietnam low-fare

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airlines in the past. They even intend to continue using this service. Hence,
the managers of low-fare carriers have huge opportunity to enhance the
level of customer loyalty.

Secondly, there is an interrelationship between customer satisfactions,

service quality and customer loyalty within Vietnam low-fare aviation
industry. Customer satisfaction has the huge positively impact on the level
of customer loyalty while service quality has slighter influence on the
retention. On the other hands, service quality itself also has positively
effect on customer satisfaction. Consequently, managers should focus on
enhancing many aspects of service quality in order to increase both
customer satisfaction and loyalty.

Finally, the result confirms that three dimensions (perceived value,

reliability, subjective norms) have positively impact on customer
satisfaction and two dimensions (responsiveness and empathy) positively
influence to service quality in Vietnam low-fare airline industry. The
managers could take advantages of this result to figure out how
importance of each dimension, then facilitating the carriers to be aware
areas of service to improvement as expected by the customers.

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