MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY PHAN NGUYEN HOANG LY SERVICE QUALITY, CUSTOMER SATISFACTION AND BEHAVIORAL INTENTIONS: A STUDY OF INTERNATIONAL FLIGHTS WITH LOW-COST CARRIERS IN VIET NAM. MASTER THESIS IN ECONOMICS Ho Chi Minh City, 2019 Bảo mật MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY PHAN NGUYEN HOANG LY SERVICE QUALITY, CUSTOMER SATISFACTION AND BEHAVIORAL INTENTIONS: A STUDY OF INTERNATIONAL FLIGHTS WITH LOW-COST CARRIERS IN VIET NAM Major: Business Administration (Research) Code: 8340101 MASTER THESIS IN ECONOMICS Supervisor: Dr. Dinh Thai Hoang Ho Chi Minh City, 2019 Bảo mật DECLARATION I commit that “Service quality, customer satisfaction and behavioral intentions: a study of international flights with low-cost carriers in Viet Nam” is my own research, which was based on the study and guidance of Dr. Dinh Thai Hoang.
This thesis includes accurate referencing cited from the vast majority of research published on reputable journals in the world with detailed in-text citations. The content and results of the analysis are honest and have not been published in any form before, so the comments, evaluations and conclusions are reliable. Ho Chi Minh City, 2019 Phan Nguyen Hoang Ly Bảo mật Table of Contents Cover page Declaration Table of contents List of tables List of figures Abstract Chapter 1: INTRODUCTION. Subjects, implication and scope of research.
9 Chapter 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK. Low-cost carriers. The relationship between service quality and customer satisfaction. The relationship between customer satisfaction and behavioral intentions.
Conceptual framework and research hypotheses. 21 Chapter 3: RESEARCH METHODOLOGY. Research strategy and design. Variables and measures.
Population and sampling. 33 Chapter 4: DATA ANALYSIS AND DISCUSSION. Reliability and validity. Summary of data analysis results.
Summary of the research. Theoretical implication of study. Managerial implication of study. Limitation and future recommendation.
63 REFERENCES APPENDIX Bảo mật List of tables Table 1.1: Introduction of the three low-cost carriers .1: Comparison between low-cost carriers and full-service carriers .1: Participants in a group discussion .2: Research variables and measures .1: Summary of respondent demographics .2: A summary of variables‟ Mean and Standard deviation .3: Cronbach‟s alpha test outcomes .5: Factor structure based on factor analysis results .6: Summary of CR and AVE .7: The convergent coefficients of factors .8: The discriminant coefficients of factors .9: Standardized regresion weights 1 .10:Standardized regresion weights 2 .11: Factor structure after hypotheses test .12: Hypotheses test summary. 54 Bảo mật List of figures Figure 2.1: Proposed research framework .1: Direct effects of service quality on customer satisfaction then behavioral intentions. 55 Bảo mật ABSTRACT The main purpose of this research is to examine the relationships between dimensions of service quality, customer satisfaction, word-of-mouth and repurchase intentions from the customers‟ perspectives in case of international flights with low- cost carriers (LCCs) in Viet Nam. This research was undertaken with non-probability sampling.
240 questionnaires were delivered and collected, and 238 of them were useful for data analysis. The survey participants were the passengers who have flown abroad with LCCs at least 2 times within a year. The data collected from this survey were utilized for statistical analysis to evaluate the seven hypotheses, the positive associations of five dimensions of service quality and customer satisfaction, then the positive linkage of customer satisfaction and two behavioral intentions (word- of-mouth and repurchase intentions). Both qualitative (focus group) and quantitative research (SPSS 22 and AMOS 20) were applied to find the results.
Regarding to the findings, reliability and assurance were the most influencing on the customer satisfaction; responsiveness and empathy were also seen as a significance. However, the performance of responsiveness is indeed not that good like the other dimensions. Tangibles was the only factor that did not have a great effect on customer satisfaction along with its not good performance. Word- of-mouth was found to be more affected by customer satisfaction than repurchase intentions.
Bảo mật TÓM TẮT Mục tiêu chính của nghiên cứu này là xem xét mối quan hệ giữa các tiêu chí chất lượng dịch vụ, sự hài lòng của khách hàng, lời truyền miệng và ý định mua lại từ phương diện của khách hàng trong trường hợp những chuyến bay quốc tế với các hãng hàng không giá rẻ tại Việt Nam. Nghiên cứu này được lấy mẫu theo phương pháp chọn mẫu thuận tiện. Số lượng mẫu khảo sát phát ra là 240, và 238 mẫu thu về đủ điều kiện để phân tích dữ liệu. Đối tượng khảo sát là những hành khách đã bay đi nước ngoài với các hãng hàng không giá rẻ ít nhất 2 lần trong vòng 1 năm.
Dữ liệu thu được từ cuộc khảo sát đã được sử dụng để phân tích thống kê để kiểm tra 7 giả thuyết, mối quan hệ thuận chiều của 5 tiêu chí chất lượng dịch vụ và sự hài lòng của khách hàng, sự hài lòng của khách hàng và lời truyền miệng, ý định mua lại. Nghiên cứu định tính (thảo luận nhóm) và nghiên cứu định lượng (SPSS 22 và AMOS 20) đã được áp dụng để tìm ra kết quả. Theo kết quả tìm được, sự tin cậy và độ an toàn là 2 yếu tố có tầm ảnh hưởng nhất đối với sự hài lòng của hành khách, sau đó là sự phản hồi và đồng cảm. Tuy nhiên, trong thực tế thì việc phản hồi cho hành khách đang không được đánh giá cao như những yếu tố khác.
Yếu tố hữu hình là yếu tố duy nhất không có ảnh hưởng đáng kể đến sự hài lòng của hành khách cùng với thực trạng chưa tốt của nó. Lời truyền miệng được tìm thấy là bị ảnh hưởng bởi sự hài lòng của khách hàng nhiều hơn là ý định mua lại. Bảo mật 1 Chapter 1: INTRODUCTION Service industries are the largest contributors to employment and gross domestic product in most countries (Looy et al. Among them, the growing of airline industry has led to the government around the world to deregulate the industry by enabling companies to form private airlines (Graham and Vowels, 2006).
In addition to its technology development, the growing of airline industry has played a role as supporting the world trade, international investment, and tourism activities, which is said that the airline industry is the center of globalization for other industries (Hanlon, 2000). An increasing number of air travelers have become more demanding in the expectation of service quality offered by the airlines. Hence, the delivery of high service quality has become a marketing priority for service companies as strength to get achievement (Hoffman & Bateson, 2002). It is especially true in the airline industry which has become extremely competitive so far particularly due to the emergence of Low-cost carriers (LCCs).
The growing of the airline industry provides opportunities along with challenges to the business entities operating in this industry. The opportunities arise due to the increasing demand for the airline service; however, air travelers are also increasingly demanding in terms of their expectations of the service quality offered by the airline carriers (Graham and Vowels, 2006). Meanwhile, the challenges arise not only because of the high level of competition between the airlines, but also due to growing customer demands for the better service. Therefore, managing quality of service has become the top priority in the airline industry (Wells & Wensveen, 2004).
LCCs compete on their low cost, point-to-point short-haul travel, no extra in- flight service, and direct sales etc., not using the service quality, but cost-conscious market segments for their competitive advantages (Graham & Vowels, 2006). However, airline managers need to know which factors affect customer satisfaction from passengers‟ perspective. Airlines started to examine whether perceived service Bảo mật 2 quality is a prime driver for customer satisfaction and behavioral intentions (Ahn and Lee, 2011) and to know which attributes really do matter to satisfaction and behavioral intentions (Martin et al. This research focused on examining how five dimensions of SEVRQUAL representing for the service quality influence on customer satisfaction and checking whether customer satisfaction can lead to customers‟ behavioral intentions in case of international flights from Ho Chi Minh city with LCCs.
Research background Southeast Asia is a region of rapid growth and huge potential, reaches one of the world‟s highest LCC penetration rates. Overall capacity growth in this region increased approximately by 7% in 2017 while passenger traffic here grew approximately by 10% in 2017. At least half of the region‟s 11 countries recorded double, or near double digit, passenger growth at least three years: Cambodia, Laos, Myanmar, Thailand, the Philippines and Vietnam. From an economic and traffic growth perspective, Southeast Asia has been a very attractive market in spite of its intensifying competition and suffering from overcapacity.
As a result, Southeast Asia is a market of huge potential with rapid economic growth and a growing, larger middle class providing an ideal environment for airline expansion, particularly LCCs. (CAPA, 2019) The LCC business model is one of the most recent changes in the general business model of the airlines. A low-cost carrier, or a no-frill carrier, is an airline that differentiates itself in the market through reducing ticket prices with their low cost, short-haul travel, no extra in-flight service. These airlines do not use the service quality for their competitive advantages, but cost-conscious market segments (Graham & Vowels, 2006).
Vietnam was the fastest growing market in Southeast Asia in 2017, and has even been one of the fastest growing markets in the world in recent years in spite of Bảo mật 3 the slow rate of growth from a staggering 28% in 2016. Domestic growth in Vietnam slowed to the high single digits in 2017, compared to 25% growth in 2016, but international growth remained very strong, at approximately 30%. Vietnam's LCCs have focused on international routes rather than regional domestic market. Among several LCCs in Southeast Asia, the three most well-known and huge LCCs flying from Tan Son Nhat International Airport, Viet Nam are Vietjet Air, Air Asia, and Jetstar.
Therefore, passengers flying abroad with these three LCCs would be aimed for the survey. Vietnam is well connected to other countries in Asia with the support of a complex flight network. Among destinations in Southeast Asia, Bangkok, Singapore and Kuala Lumpur are more attractive with most flight deals from Viet Nam (CAPA, 2018).1: Introduction of the three low-cost carriers Vietjet Air Air Asia Jetstar From Viet Nam Malaysia Singapore Over 20 stops 88 destinations Over 20 stops across Asia, across Southeast across Asia, Flights Southeast Asia Asia, Australia, Australia, North Asia, and Southeast Asia, the Asia-Pacific New Zealand Official site, app, Official site, app, Official site, app, Facebook and Facebook and Facebook and Booking Twitter pages Twitter pages Twitter pages, price watch alert Source: Tripsavvy, 2019. Bảo mật 4 Therefore, research in the airline industry in Viet Nam has become more and more favorable due to its significant growth speed in this sector.
Especially, this solid association of service quality, customer service and behavioral intentions has been more attractive to the scholars, but authors‟ research premises was just in domestic market such as Saha and Theingi (2009) with domestic Thai market, Ahn and Lee (2011) within Lon Don, U. Therefore, the detection of relationships of these three terms with international flights is a good choice. Problem statement This research studied the relationships between service quality applying SERVQUAL instrument, customer satisfaction, and behavioral intentions. Specifically, it aimed to assess service quality (reliability, assurance, tangibles, empathy, and responsiveness) in the LCCs market from the customers‟ perspective, leading to exploring how perceived service quality affects customer satisfaction then behavioral intentions.