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 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 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 Table of Contents Cover page Declaration Table of contents List of tables List of figures Abstract Chapter 1: INTRODUCTION 1.1 Research background 1.2 Problem statement 1.3 Research objectives 1.4 Subjects, implication and scope of research 1.5 Assumptions 1.6 Research structure Chapter 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 11 2.1 Literature review 11 2.1.1 Low-cost carriers 11 2.1.2 Service quality 13 2.1.3 Customer satisfaction 15 2.1.4 Behavioral intentions 16 2.1.5 The relationship between service quality and customer satisfaction 17 2.1.6 The relationship between customer satisfaction and behavioral intentions 19 2.2 Conceptual framework and research hypotheses 21 Chapter 3: RESEARCH METHODOLOGY 23 3.1 Research strategy and design 23 3.2 Qualitative research 26 3.3 Quantitative research 27 3.3.1 Variables and measures 27 3.3.2 Population and sampling 30 3.3.3 Data collection 31 3.3.4 Data analysis 33 Chapter 4: DATA ANALYSIS AND DISCUSSION 37 4.1 Respondent demographics 37 4.2 Descriptive statistics 39 4.3 Reliability and validity 41 4.3.1 Reliability test 41 4.3.2 Validity test 44 4.4 Hypotheses test 51 4.5 Summary of data analysis results 52 4.6 Discussion 55 Chapter 5: CONCLUSION 59 5.1 Summary of the research 59 5.2 Theoretical implication of study 60 5.3 Managerial implication of study 61 5.4 Limitation and future recommendation 63 5.4.1 Limitation 63 5.4.2 Recommendation 63 REFERENCES APPENDIX List of tables Table 1.1: Introduction of the three low-cost carriers Table 2.1: Comparison between low-cost carriers and full-service carriers 11 Table 3.1: Participants in a group discussion 26 Table 3.2: Research variables and measures 28 Table 4.1: Summary of respondent demographics 37 Table 4.2: A summary of variables‟ Mean and Standard deviation 40 Table 4.3: Cronbach‟s alpha test outcomes 42 Table 4.4: EFA results 45 Table 4.5: Factor structure based on factor analysis results 46 Table 4.6: Summary of CR and AVE 48 Table 4.7: The convergent coefficients of factors 48 Table 4.8: The discriminant coefficients of factors 50 Table 4.9: Standardized regresion weights 51 Table 4.10:Standardized regresion weights 52 Table 4.11: Factor structure after hypotheses test 53 Table 4.12: Hypotheses test summary 54 List of figures Figure 2.1: Proposed research framework 21 Figure 3.1: Research process 25 Figure 4.1: Direct effects of service quality on customer satisfaction then behavioral intentions 55 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 lowcost 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 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 (wordof-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 Wordof-mouth was found to be more affected by customer satisfaction than repurchase intentions TÓM TẮT Mục tiêu nghiên cứu xem xét mối quan hệ tiêu chí chất lượng dịch vụ, hài lòng khách hàng, lời truyền miệng ý định mua lại từ phương diện khách hàng trường hợp chuyến bay quốc tế với hãng hàng không giá rẻ Việt Nam Nghiên cứu lấy mẫu theo phương pháp chọn mẫu thuận tiện Số lượng mẫu khảo sát phát 240, 238 mẫu thu đủ điều kiện để phân tích liệu Đối tượng khảo sát hành khách bay nước với hãng hàng khơng giá rẻ lần vòng năm Dữ liệu thu từ khảo sát sử dụng để phân tích thống kê để kiểm tra giả thuyết, mối quan hệ thuận chiều tiêu chí chất lượng dịch vụ hài lòng khách hàng, hài lòng khách hàng lời truyền miệng, ý định mua lại Nghiên cứu định tính (thảo luận nhóm) nghiên cứu định lượng (SPSS 22 AMOS 20) áp dụng để tìm kết Theo kết tìm được, tin cậy độ an toàn yếu tố có tầm ảnh hưởng hài lòng hành khách, sau phản hồi đồng cảm Tuy nhiên, thực tế việc phản hồi cho hành khách không đánh giá cao yếu tố khác Yếu tố hữu hình yếu tố khơng có ảnh hưởng đáng kể đến hài lòng hành khách với thực trạng chưa tốt Lời truyền miệng tìm thấy bị ảnh hưởng hài lòng khách hàng nhiều ý định mua lại Chapter 1: INTRODUCTION Service industries are the largest contributors to employment and gross domestic product in most countries (Looy et al., 2003) 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 inflight 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 Squared Multiple Correlations: (Group number - Default model) Estimate RI2 616 RI1 555 WOM2 456 WOM3 596 WOM1 661 CS2 682 CS3 649 CS1 741 Rel4 685 Rel1 568 Rel3 653 Emp1 667 Emp4 519 Emp2 693 Tan4 581 Tan3 686 Tan1 711 Res1 648 Res3 627 Res4 730 Ass3 567 Ass4 787 Ass2 716 Appendix 11: SEM RESULTS Structural equation modeling (SEM 1) Estimates (Group number - Default model) Scalar Estimates (Group number - Default model) Maximum Likelihood Estimates Regression Weights: (Group number - Default model) Estimate S.E C.R CS < Tan 056 058 968 CS < Rel 371 079 4.722 CS < Res 171 053 3.196 CS < Ass 266 065 4.067 CS < Emp 194 074 2.641 WOM < CS 309 070 4.425 RI < CS 160 077 2.076 Ass2 < Ass 1.000 Ass4 < Ass 1.038 068 15.260 Ass3 < Ass 867 067 12.906 Res4 < Res 1.000 Res3 < Res 873 068 12.924 Res1 < Res 854 065 13.073 Tan1 < Tan 1.000 Tan3 < Tan 894 069 12.930 Tan4 < Tan 855 070 12.168 Emp2 < Emp 1.000 Emp4 < Emp 834 074 11.221 Emp1 < Emp 900 072 12.514 Rel3 < Rel 1.000 Rel1 < Rel 968 083 11.629 Rel4 < Rel 1.182 095 12.491 CS1 < CS 1.000 CS3 < CS 940 066 14.165 CS2 < CS 991 067 14.700 WOM1 < WOM 1.000 WOM3 < WOM 921 093 9.879 WOM2 < WOM 810 088 9.260 RI1 < RI 1.000 RI2 < RI 994 447 2.225 P 333 *** 001 *** 008 *** 038 *** *** *** *** *** *** *** *** *** *** *** *** *** *** 026 Label Standardized Regression Weights: (Group number - Default model) Estimate CS < - Tan 061 CS < - Rel 350 CS < - Res 204 CS < - Ass 291 CS < - Emp 199 WOM < - CS 340 RI < - CS 183 Ass2 < - Ass 848 Ass4 < - Ass 886 Ass3 < - Ass 753 Res4 < - Res 852 Res3 < - Res 794 Res1 < - Res 805 Tan1 < - Tan 844 Tan3 < - Tan 828 Tan4 < - Tan 762 Emp2 < - Emp 833 Emp4 < - Emp 721 Emp1 < - Emp 816 Rel3 < - Rel 804 Rel1 < - Rel 757 Rel4 < - Rel 828 CS1 < - CS 856 CS3 < - CS 804 CS2 < - CS 828 WOM1 < - WOM 800 WOM3 < - WOM 786 WOM2 < - WOM 675 RI1 < - RI 778 RI2 < - RI 752 Covariances: (Group number - Default model) Estimate S.E C.R P Ass < > Res 422 115 3.657 *** Ass < > Tan -.281 103 -2.730 006 Ass < > Emp 644 110 5.851 *** Ass < > Rel 463 097 4.792 *** Res < > Tan -.324 114 -2.837 005 Res < > Emp 509 114 4.459 *** Res < > Rel 348 102 3.425 *** Tan < > Emp -.255 099 -2.587 010 Tan < > Rel -.439 097 -4.537 *** Emp < > Rel 450 093 4.827 *** Correlations: (Group number - Default model) Estimate Ass < > Res 287 Ass < > Tan -.210 Ass < > Emp 511 Ass < > Rel 399 Res < > Tan -.221 Res < > Emp 368 Res < > Rel 274 Tan < > Emp -.203 Tan < > Rel -.380 Emp < > Rel 413 Label Variances: (Group number - Default model) Ass Res Tan Emp Rel e26 e24 e25 e1 e2 e3 e4 e5 e6 e7 e8 e9 e10 e11 e12 e13 e14 e15 e16 e17 e18 e19 e20 e21 e22 e23 Estimate 1.342 1.611 1.336 1.185 1.000 498 827 831 524 396 771 610 719 638 541 489 705 522 763 482 546 699 640 411 547 509 526 493 734 560 654 S.E .175 214 181 164 144 076 133 389 076 073 086 101 093 086 089 075 085 083 087 071 075 084 097 060 066 066 090 079 085 386 383 C.R 7.675 7.545 7.381 7.236 6.935 6.550 6.228 2.136 6.866 5.455 9.002 6.031 7.728 7.453 6.050 6.558 8.261 6.309 8.786 6.823 7.251 8.283 6.589 6.894 8.246 7.707 5.822 6.221 8.636 1.451 1.709 P *** *** *** *** *** *** *** 033 *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** 147 087 Label Squared Multiple Correlations: (Group number - Default model) Estimate CS 558 RI 033 WOM 115 RI2 565 RI1 605 WOM2 456 WOM3 617 WOM1 640 CS2 685 CS3 646 CS1 733 Rel4 686 Rel1 573 Rel3 647 Emp1 666 Emp4 519 Emp2 694 Tan4 581 Tan3 686 Tan1 712 Res1 648 Res3 631 Res4 725 Ass3 567 Ass4 785 Ass2 719 Structural equation modeling (SEM 2) Scalar Estimates (Group number - Default model) Maximum Likelihood Estimates Regression Weights: (Group number - Default model) Estimate S.E C.R P CS < - Rel 353 074 4.746 *** CS < - Res 165 053 3.117 002 CS < - Ass 263 065 4.027 *** CS < - Emp 194 073 2.638 008 WOM < - CS 310 070 4.427 *** RI < - CS 160 077 2.080 037 Ass2 < - Ass 1.000 Ass4 < - Ass 1.035 068 15.262 *** Ass3 < - Ass 865 067 12.912 *** Res4 < - Res 1.000 Res3 < - Res 874 068 12.927 *** Res1 < - Res 851 065 13.035 *** Emp2 < - Emp 1.000 Emp4 < - Emp 833 074 11.224 *** Emp1 < - Emp 899 072 12.511 *** Rel3 < - Rel 1.000 Rel1 < - Rel 983 085 11.588 *** Rel4 < - Rel 1.189 097 12.274 *** CS1 < - CS 1.000 CS3 < - CS 940 066 14.163 *** CS2 < - CS 991 067 14.695 *** WOM1 < - WOM 1.000 WOM3 < - WOM 921 093 9.879 *** WOM2 < - WOM 810 088 9.260 *** RI1 < - RI 1.000 RI2 < - RI 992 445 2.227 026 Label Standardized Regression Weights: (Group number - Default model) Estimate CS < - Rel 330 CS < - Res 197 CS < - Ass 287 CS < - Emp 199 WOM < - CS 340 RI < - CS 183 Ass2 < - Ass 849 Ass4 < - Ass 885 Ass3 < - Ass 753 Res4 < - Res 852 Res3 < - Res 795 Res1 < - Res 803 Emp2 < - Emp 834 Emp4 < - Emp 721 Emp1 < - Emp 815 Rel3 < - Rel 799 Rel1 < - Rel 763 Rel4 < - Rel 828 CS1 < - CS 856 CS3 < - CS 804 CS2 < - CS 828 WOM1 < - WOM 800 WOM3 < - WOM 786 WOM2 < - WOM 675 RI1 < - RI 779 RI2 < - RI 751 Covariances: (Group number - Default model) Estimate S.E C.R P Ass < > Res 422 116 3.654 *** Ass < > Emp 646 110 5.855 *** Ass < > Rel 461 096 4.785 *** Res < > Emp 509 114 4.457 *** Res < > Rel 345 101 3.412 *** Emp < > Rel 447 093 4.819 *** Correlations: (Group number - Default model) Estimate Ass < > Res 286 Ass < > Emp 511 Ass < > Rel 400 Res < > Emp 368 Res < > Rel 273 Emp < > Rel 413 Label Variances: (Group number - Default model) Estimate S.E C.R P Ass 1.346 175 7.692 *** Res 1.614 214 7.547 *** Emp 1.187 164 7.242 *** Rel 987 144 6.846 *** e26 501 076 6.589 *** e24 827 133 6.227 *** e25 832 389 2.138 033 e1 520 076 6.816 *** e2 400 073 5.492 *** e3 771 086 9.003 *** e4 608 101 5.993 *** e5 715 093 7.688 *** e6 642 086 7.483 *** e10 520 083 6.291 *** e11 763 087 8.785 *** e12 484 071 6.837 *** e13 559 077 7.280 *** e14 683 084 8.085 *** e15 641 099 6.484 *** e16 411 060 6.895 *** e17 547 066 8.242 *** e18 509 066 7.705 *** e19 527 090 5.823 *** e20 493 079 6.221 *** e21 734 085 8.636 *** e22 558 386 1.445 148 e23 656 382 1.718 086 Label Squared Multiple Correlations: (Group number - Default model) Estimate CS 555 RI 034 WOM 116 RI2 564 RI1 607 WOM2 456 WOM3 617 WOM1 640 CS2 685 CS3 646 CS1 733 Rel4 685 Rel1 583 Rel3 639 Emp1 665 Emp4 519 Emp2 695 Res1 645 Res3 633 Res4 726 Ass3 567 Ass4 783 Ass2 722 ... 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. .. Vietjet Air Air Asia Jetstar Viet Nam Malaysia Singapore Over 20 stops 88 destinations Over 20 stops across Asia, across Southeast across Asia, Southeast Asia Asia, Australia, Australia, North Asia,...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