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1. Introduction
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
current atmosphere of increased global competition, there is a continuous increase
in customers‟ expectations and subsequent demands for improved service quality
(Chou, Liu, Huang, Yih, & Han, 2011; Kim & Lee, 2011; Lin, Chan, & Tsai, 2009).
This article aims to improve our understanding of passenger loyalty and identify the
role of customer satisfaction, service quality, perceived value and brand image in
building customer loyalty. In this article, we develop a structural equation model to
study the effect of customer satisfaction, service quality, perceived value and brand
image on brand loyalty and examine a research measurement model suggested in
this study.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
2. Literature review
Customer loyalty has become a key element in the development and implementation
of airlines‟ strategies in the competitive milieu in which they operate (Forgas,
Moliner, Sánchez, & Palau, 2010).According to Oliver (1999), brand loyalty is a
deeply held psychological commitment to re-buy or re-patronize a preferred
product/service consistently in the future, thereby causing repetitive same-brand or
same brand-set purchasing . Oliver (1999) claimed that there are three conditions
where true loyalty will occur: (1) “The brand attribute ratings (beliefs) must be
preferable to competitive offering; (2) this „‟information‟ (point 1) must coincide with
an affective preference (attitude) for the brand, and; (3) the consumer must have a
higher intention (conation) to buy the brand compared with that for alternatives”.
Further, the author suggested that the loyalty-building process starts from some
cognitive beliefs (cognitive loyalty), followed by affective loyalty (i.e., “I buy it
because I like it”), to conative loyalty (i.e., “I‟m committed to buying it”), and finally
actual purchase behaviours (action loyalty, or “action inertia”).
Service quality is a critical factor for developing and sustaining relationship with
customer (Park et al., 2006). Since it has a significant impact on customer
satisfaction and customer loyalty to service firms, this construct became a major
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
determinant of firm‟s success or failure in a competitive environment (Lin et al.,
2009). Service quality is the discrepancy between consumer‟s perceptions of service
offered by a particular firm and their expectations about firms offering such services
(Chou et al., 2011).It is widely acknowledged as one of the important determinants of
brand loyalty(Chen & Hu, 2012) .
Passenger perception of airline service quality is one of the key drivers of passenger
satisfaction and perceived value (Park et al., 2006). This finding suggests that airline
service quality influences passenger repurchase intentions and the intention to
recommend the airline to others indirectly by means of perceived value and
passenger satisfaction. Likewise, P.-T. Chen and Hu (2012) provide additional
evidence of this significant effect and argued that service quality has positive impacts
on customer loyalty in the context of airline industry. Accordingly, the following
hypotheses are proposed:
Customers choose one product or service over another because they believe it
provides better value (Zeithaml, Bitner, & Gremler, 2006). Customer perceived value
is the difference between the benefits and the cost of obtaining a product or services
(Kotler, Bowen, & Makens, 2010).
Brand image has been recognized as one of the central tenets of marketing
research, not only because of its role as a foundation for tactical marketing-mix but
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
also its role in building long-term brand equity (Keller, 1993).Brand image is defined
as the Perception about a brand as reflected by the brand associations held in
consumer memory. The purpose of image for airlines , is to reveal a distinctive
identity in order to allow the airline name, symbol and logo to differentiate the airline
brand from those of competitors (Park et al., 2006).Thus, having a strong and
positive brand image will strengthen perceived quality and assist in the development
of brand loyalty (Cretu & Brodie, 2007). Moreover, according to Signalling Theory, a
brand becomes a signal by symbolising a firm„s past and present marketing
strategies (Cretu & Brodie, 2007). This signal transmits information to customers
mind depending on the clarity of the message and the credibility of the product and
the provider. Gronroos (2007) suggested that if image is good then it shelters the
delivery of services.
3. Conceptual framework
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
4. Methodology
Based on the review of the research literature with regard to brand loyalty, customer
satisfaction service quality, perceived value, and airline image, a structural equation
model has been developed to examine the measurement model in this study. The
structural equation model, measurements, and samples used in this article are
discussed below.
4.1 Measures
The design of the survey questionnaire was based on multiple item measurement
scales adopted from previous researches. The measurement items were designed
for the airline setting and used a seven-point Likert scale. Five marketing constructs
were included in the measurement model are tested: brand loyalty, customer
satisfaction, service quality, perceived value and airline image.
Service quality was measured using 12 measurement items adopted from Park et
al. (2006). Based on SERVQUAL (Parasuraman et al., 1988) ,Park et al. (2006) has
developed specific dimensions for airlines by modifying and adding new items to the
SERVQUAL measure. This measurement consists of three sub- dimensions which
are: (1) reliability and customer service, (2) convenience and accessibility and (3) in-
flight service. The questionnaire also included five items on customer satisfaction
adopted from Park et al. (2006) and Han, Kwortnik, and Wang (2008). Brand loyalty
section draws on Han et al. (2008), Forgas et al. (2010) and Li and Petrick (2008b),
this scale measurement includes 11 items reflecting both attitudinal and behavioural
dimensions. Furthermore, four items for measuring Perceived value were adopted
from Park et al. (2006) and Kuo et al. (2012). Finally, airline image was measured by
five observed variables adopted from Chen and Tseng (2010).
4.2 Sample
In order to achieve the aim of this paper, we performed a quantitative analysis
through personal survey of passengers. The survey was conducted at the KLIA
airport in November and December 2012. The data were gathered from international
passengers who had admitted to having been on at least one international flight in
the previous three years.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
To identify the factors influencing brand loyalty and identify the relationships between
these constructs, various statistical tools were employed. First descriptive analysis
was used to get the demographic information about the sample as shown in Table 1.
Second, reliability and exploratory factor analyses (EFA) were performed to identify
the factors that influence brand loyalty and finally, confirmatory factor (CFA) analysis
was used to test the measurement research model.
From the 327 useable questionnaires collected, only 18.3% of respondents were
subscribers in airline frequent flyer programs, while 81.7% were not participants in
FFPs. In addition, 51.7% of responses were from male respondents, while 48 %
were from females. A substantial majority of the respondents were below 35 years
of age (82.6%). The majority of the respondents were students (77.1%) and more
than half of sample respondents hold at least a bachelor degree (55%). The detailed
demographic profile is shown in Table 1.
Sample
Attributes Distribution number Frequency (%)
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Diploma 28 8.6
Bachelor 180 55.0
Master 71 21.7
PhD 21 6.4
Others 6 1.8
5.1 Reliability
Reliability refers to the extent to which a scale produces consistent results if
repeated measurements are made (Malhotra & Birks, 2007). To assess reliability,
internal consistency methods are widely used and generally Cronbach‟s alpha is
used to assess internal consistency. The Cronbach‟s alpha of each measure is
presented in Table 2. The internal consistency reliability of each measure was more
than .80 which indicates the reliability of the instruments used in this study is very
high.
Exploratory factor analysis was used for all measures included in this study. In the
factor analysis, principal components analysis with VARIMAX rotation was utilized as
suggested by Malhotra (2007). Only factors with eigenvalues greater than 1 were
retained. The overall pattern of rotated factor loadings suggested three sub-
dimensions were extracted for the construct of airline service quality. The
dimensions were labelled as follows: (1) Reliability and customer service, (2)
Convenience and accessibility and (3) in-flight service. The results of exploratory
factor analysis are given in Table 2.
Kline (2005) maintains that testing the measurement model needs to be conducted
because all of the correlations between constructs must be estimated before testing
the structural model. In addition, the measurement model can assess whether the
constructs meet the requirements of validity and reliability (Byrne, 2010). The
measurement of proposed research model was assessed using confirmatory factor
analysis (CFA), where all constructs involved were assumed to covariate with each
other (Kline, 2005).The measurement of proposed research model, including brand
loyalty, customer satisfaction, service quality, perceived value, and brand image was
conducted by using CFA. Figure 2 presents the result of testing the CFA on the
measurement research model.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Table 2. Exploratory Factor Analysis
Cumulative Cronbach’s
Constructs Items Loadings % KMO alpha
Reliability and SQ02 0.901
customer service SQ04 0.871
SQ01 0.87 51.673
SQ03 0.863
SQ05 .833
Convenience and SQ06 .832 62.189
accessibility SQ07 .798
SQ08 .772 0.902 0.912
SQ09 .845
SQ10 .822 71.113
SQ12 .818
In-flight service SQ11 .806
Sat04 0.891
Sat03 0.89
Sat02 0.826 88.517 0.87 0.881
Customer satisfaction
Sat01 0.805
Sat05 0.728
BL07 .875
BL08 .862
BL05 .833
BL04 .825 65.604 0.905 0.885
Brand Loyalty BL06 .819
BL02 .734
BL01 .727
BL03 .692
BL09 .669
BL10 .622
PV03 .881
PV02 .838 65.604 0.762 0.823
Perceived value
PV04 .790
PV01 .723
BI03 .897
BI01 .868
Airline image 71.228 0.886 0.891
BI02 .867
BI05 .840
BI04 .740
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Figure 2. Hypothesised Measurement Model
Figure 2 demonstrates that the goodness-of-fit indices of the model were misfit
although the normed Chi-square index =2.88 and RMSEA=0.076 which indicate
that cmin/df and RMSEA were relatively fit, as it is shown in figure 2, CFI and TLI
indices were below the threshold of 0. 90. In addition, some of the coefficient
correlations between constructs such as between service quality and brand image
was very high (>0.85), indicating a lack of discriminant validity and the presence of
multicollinearity. Thus, the measurement model requires revision due to lack of fit
indices and the presence of multicollinearity.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Figure 3. Revised Model.
The results indicate that the revised measurement model was consistent with the
data. The overall goodness-of-fit of the model was adequate, the normed Chi-
square = 2.62; RMSEA = 0.071; CFI =0.918; TLI = 0.908. Further, the
measurement model criteria did produce the observed covariance matrix; there
was no evidence that the measurement model is incorrect. Moreover, the
direction and magnitude of factor loadings were substantial and statistically
significant. The interrelationships among the constructs were statistically significant,
except the relationship between service quality and brand image which is 0.89 as it
is shown in Figure3.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
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