The moderating role of price sensitivity and social norm in understanding customer loyalty among passengers of low-cost carriers in Malaysia / Zulkiffly Abd. Aziz

Given the intense competition and market liberalisation in low-cost carrier industry in the country, customer loyalty has become a vital concern for low cost carrier. Thus, low-cost carriers are making efforts to maintain loyalty among their existing customers and attract new ones in order to achieve a sustainable competitive advantage over their competitors so that it will increase their profitability. Therefore, the primary objective of this research is to examine the direct relationship between three exogenous variables, cognitive loyalty, affective loyalty, conative loyalty as predictors of customer loyalty. At the same time, price sensitivity and social norm as moderator variables, had been included to investigate the interaction effect between exogenous variables and endogenous variable. From theoretical perspectives, Dick and Basu (1994) and Oliver (1997) of customer loyalty had been identified to support the research framework of the study. Thus, a research framework was proposed in which nine hypotheses were developed. Data was obtained from 420 respondents at Kuala Lumpur International Airport2 (klia2). A convenience sampling was carried out through a survey using the intercept method. The data were analysed by SPSS statistical program on descriptive analysis before employed SmartPLS version 3.0 to develop higher-order model through the repeated indicators approach inorder to assess the measurement and structural of the framework and moderation assessment analysis through orthogonalizing approach. The result of this study indicates that the direct relationship between the predictors (cognitive loyalty, affective loyalty, conative loyalty) and customer loyalty are significant. The results may imply passengers believing the superiority of airline service attributes of low-cost carrier, will lead to higher intention (conation) to purchase the ticket for their preferred low-cost carrier. The findings suggest that low-cost-carriers should provide impeccable service and build a relationship with their passengers by developing a strong media initiative through mobile applications and websites to enhance personalised customer experience, in turn strengthened customer loyalty. It also established that price sensitivity and social norm demonstrate fully statistically significant interaction effect between cognitive loyalty, affective loyalty, conative loyalty and customer loyalty.The significance of the results suggest that low-cost carriers should provide discounted ticket price for group booking or introduce fare families’ concept to encourage family members or friends travelling together and allocate advance-purchase discounts (APD) to more seats per aircraft on popular destinations to retain and entice price sensitivity pasengers.This study also provides further empirical support of the value of true loyal customers which is defined in terms of both (repeat patronage (behavioural) and relative attitude (attitudinal) perspectives in the low-cost carrier industry in Malaysia.