Research Express@NCKU - Articles Digest

1.Introduction
In a highly competitive circumstance the provision of high quality service satisfied by passengers is the core competitive advantage for an airline’s profitability and sustained development. Theory suggests that increasing customer retention is a major key to the ability of a service provider to generate profits. It is an important issue to better understand the determinants affecting a customer’s loyalty and the relationships between determinants. It is commonly believed that higher service quality can lead to a customer’s higher overall satisfaction and subsequently to positive behavioral intentions. Some studies have suggested that the measurement of consumer satisfaction should be used in conjunction with the measurement of perceived value, and perceived value may be a better predicator of repurchase intentions than either satisfaction or quality. Hence, service quality, perceived value, and satisfaction all seem to have good predictors of repurchase intentions while the relationship between them still remains unclear.

2. Theoretical Background and Hypotheses
Research studies have established the antecedent, mediating, and consequent relationships among customer perceptions of service quality, customer satisfaction, value, and post-purchase behavioral intensions. More specifically in the context of airline service, the importance of the relationships between all these variables has been examined by some studies Past studies have suggested that service quality directly and significantly influences satisfaction or perceived value. Since perceived service quality reflects the difference between customers’ expectations and the actual performance, the lower expectation or the higher perceived performance is more likely to lead to a better perceived service quality. Hence, it is reasonable to hypothesize that expectations directly and negatively influence both satisfaction and perceived value while perceived performances directly and positively influence both satisfaction and perceived value. In addition, the relationship of perceived value on customer overall satisfaction has been supported by many research studies. Both satisfaction and perceived value are direct antecedents of behavioral intentions.

Based on the review of past related studies, the hypotheses to be tested empirically are:
H1: Service expectation has a positive influence on perceived performance
H2: Service expectation has a negative influence on perceived value
H3: Service expectation has a negative influence on satisfaction
H4: Perceived performance has a positive influence on perceived value
H5: Perceived performance has a positive influence on satisfaction
H6: Perceived value has a positive influence on satisfaction
H7: Perceived value has a positive influence on behavioral intentions
H8: Satisfaction has a positive influence on behavioral intentions

3. Research Method
We collected a questionnaire survey in order to collect empirical data from international airline passengers for use in this current study. The questions in the questionnaire are based on a review of the literature and specific airline service contexts, and the questionnaire was pre-tested and revised. Part 1 of the questionnaire deals with the measurement of service quality with 30 attributes via a five-point Likert scale. Part 2 deals with the measurement of perceived value with two items through a seven-point Likert scale. Part 3 deals with the measurement of single-item overall satisfaction and two-item behavioral intentions through a seven-point Likert scale. Part 4 presents respondents’ demographic information with six items, such as sex, age, education, occupation, monthly income, and travel purpose.

4. Results
The questionnaires were distributed and collected at Koashiung International Airport in Taiwan during the month of December 2004. Due to limited time and manpower, a convenient sampling method was adopted. Passengers flying international routes were asked to complete the questionnaire. Three hundred questionnaires were distributed and 245 useable samples were obtained, i.e. an 81.6% response rate.

The proposed model and hypothesized paths are tested on the survey data collected. The measurement and structural models are tested using the LISREL 8 structural equation analysis package. The maximum likelihood method of estimation is utilized to analyze the data.

Convergent validity of the measurement model’s results should be supported by item reliability, construct (composite) reliability, and average variance extracted. Item reliability denotes the amount of variance in an item due to the underlying construct, and t-values associated with each of the standardized loadings are found significant (p < 0.01), assuring item reliability. Construct reliability estimates as being greater than 0.7. In this study the construct reliability of all constructs exceeds the recommended level. The average variance extracted, which should be above 0.50, measures the amount of variance explained by the construct. In this study the average variance extracted of all constructs exceeds 0.50. These results indicate that the measurement items have high reliability and validity.

Figure 1 and Table 1 are the estimated results of the hypothetical model. Three hypotheses are found to be rejected - namely, the relationships between service expectation and perceived value (H2), between service expectation and overall satisfaction (H3), and between perceived performance and overall satisfaction (H5), respectively. The others are found to be supported. As hypothesized, service expectation is found to have a significantly positive influence on perceived performance, but is not found to have a significant influence on both perceived value and overall satisfaction. Perceived performance is found to have a significantly positive effect on perceived value, but not on overall satisfaction. Furthermore, perceived value is found to have a significantly positive effect on overall satisfaction. In other words, instead of a direct effect, perceived performance has an indirect effect on overall satisfaction moderated by perceived value. Hence, without taking perceived value into account, the predictive power of service quality on overall satisfaction is questionable. This evidence supports the argument of the importance of the measurement of perceived value in conjunction with the measurement of satisfaction. Finally, both perceived value and overall satisfaction reveal significant positive effects on behavioral intentions.

Figure 1. Results of testing the hypothetical model

Table 1 Test results of the hypotheses

Table 2 reports the direct and indirect effects of independent variables on passengers’ behavioral intentions. The results show that perceived value and overall satisfaction have direct effects on behavioral intentions, while service expectation and perceived performance have indirect effects on behavioral intentions.

The total effect of perceived value on behavioral intentions, which is the sum of direct and indirect effects through perceived value’s effect on overall satisfaction, is found to be 0.67. However, the total effect, i.e. direct effect, of overall satisfaction on behavioral intentions is found to be 0.51. Perceived value reveals a larger effect than overall satisfaction on behavioral intentions. This indicates that the most important factor for behavioral intentions is perceived value.

Table 2 Estimates of the direct and indirect effect on behavioral intentions

5. Conclusions
This paper has presented a relationship model between service quality, perceived value, overall satisfaction, and behavioral intentions for international airlines. From the evidence in Taiwan, the analysis shows that both perceived value and overall satisfaction are found to have direct influences on passengers’ behavioral intentions, and perceived performance is found to have an indirect rather than a direct effect on overall satisfaction as moderated by perceived value. Unless it leads to an increase in perceived value, service quality is not guaranteed to lead to a customer’s overall satisfaction. In turn, the benefit brought about by positive behavioral intentions or loyalty is also uncertain. This suggests that perceived value plays an important role in affecting a customer’s satisfaction and future behavioral intentions in the airline service context.