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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 it.
Keywords: Customer Loyalty, Customer Satisfaction, Service Quality, Vietnam Low-Fare Airlines.
JEL Classification: D11, E21, N35, O53
(ProQuest: ... denotes formulae omitted.)
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...