Transformations  in
Business & Economics

IMPACT OF AIRLINE SERVICE QUALITY ON PASSENGER SATISFACTION AND LOYALTY: MODERATING INFLUENCE OF PRICE SENSITIVITY AND QUALITY
Harith Yas, Ahmad Jusoh, Khalil Md Nor, Ahmed Alkaabi, Nebojsa Jovovic , Milica Delibasic

ABSTRACT: Passenger loyalty is one of the key success factors for the airline industry in most global markets. Four airlines based out of the United Arab Emirates (UAE); Emirates, Etihad, Flydubai and Air Arabia use airports in UAE as their hubs and compete for this highly sought-after passenger market. The strategies deployed by each company revolves around optimising their service offerings and pricing. Whether such strategies will be sustainable in the long term depends on a nuanced understanding of the relationship between service quality, passenger satisfaction and loyalty, in the backdrop of the consumer psychology related to price sensitivity and salience for quality among the passengers (quality seekers). The extant literature indicates that various studies have been undertaken to examine how service quality impacts customer satisfaction and loyalty using SERVQUAL and AIRQUAL models, among other theoretical frameworks. Nevertheless, relatively few studies have examined the impact of multiple dimensions of airline service quality on satisfaction and loyalty. Furthermore, there appears to be a dearth of studies that investigate how the above relationships are influenced by the constructs; price sensitivity and quality seekers. Therefore, the current study investigates the relationship between Pre-, In-, and Post-flight service quality and passenger satisfaction and loyalty when the relationships are moderated by price sensitivity and quality seekers. The research model comprises of a set of hypotheses that are tested using a sample of 386 passengers surveyed at three airports in UAE. The analysis conducted through SmartPLS confirms that price sensitivity and quality seekers weaken the relationships between service quality and passenger satisfaction. The findings of this study carry significant implications for theory and practice through a finer-grained understanding of how consumer preferences impact the linkage between service quality, satisfaction and loyalty.

KEYWORDS:  passenger satisfaction, passenger loyalty, price sensitivity, service quality, quality-seeking behaviors, quality seekers.

JEL classification:  M10, M30, M31