z Faculty of Business and Humanity Student Name: Guiqi Yang Student Number:C00290900 Programme of Study:CW 908 Management Lecturer Name for Research Methods Module: Dr. Fiona Burke Stage/Year: 4 Date:25thSeptember2023 Declaration This examination/assessment is submitted using Turnitin as the online submission tool. By submitting my examination/assessment to Turnitin, I am declaring that this examination/assessment is entirely my own work. I understand that I may be required to orally defend any of my answers, to the lecturer, at a given time after the examination/assessment has been completed, as outlined in the academic student regulations. To investigate the Impact of Service Quality and Pricing Strategies on Customer Loyalty in the Low-Cost Airline Industry of China and Ireland Contents Research Question ......................................................................................................... 4 Proposed research objectives ......................................................................................... 4 Research rationale .......................................................................................................... 4 Literature context ........................................................................................................... 5 Proposed methodology................................................................................................... 7 1. Data Collection ................................................................................................... 7 2. Questionnaires..................................................................................................... 7 3. Analysis Method ................................................................................................. 7 Expected Outcomes ....................................................................................................... 8 Ethical Implications Actions .......................................................................................... 8 Reference ........................................................................................................................ 9 Research Question Do service quality and pricing strategies affect the customer loyalty of low-cost airline in the Chinese and Irish markets? Proposed research objectives This research investigates the intricate relationship between service quality, price, and customer loyalty in the distinct low-cost airline market of China and Ireland. This research aims to achieve the following key objectives through an in-depth investigation. (1) Assess service quality: Construct the service quality from the four dimensions of responsiveness, comfort, punctuality and terminal tangible, measure the service quality, and evaluate the impact of service quality on customer loyalty in low-cost airpline of China and Ireland. (2) Analyze price strategies: Investigate and compare the pricing strategies of low-cost airlines in China and Ireland, including price levels and discount policy. (3) Examine customer loyalty: construct the dependent variable of customer loyalty through a comprehensive literature review, study the link between service quality and price and customer loyalty in China and Ireland. (4) Examining customer satisfaction: Construct the indexes of customer satisfaction and examine the mediating roles of customer satisfaction in the relationship between service quality, pricing strategies, and customer loyalty in the Chinese and Irish lowcost Airline markets. Research rationale Since the outbreak of COVID-19 in 2019, every economic sector have been affected by various degrees The International Air Transport Association (IATA) says in October 2020 airline share prices are still down nearly 50% compared to pre-COVID. In total, European airlines have seen their share prices fall by 45.8% over the year, while Asia Pacific airlines have seen their share prices fall by 38.1%. （IATA 2020）The aviation industry was frustrated the most because of the lockdown to restrict people from traveling during the explosion of COVID-19. Although the COVID-19 has ended, the current economic situation including the aviation industry, Employment in the airline industry yet to fully recover from the pandemic, according to the latest IATA data, with passenger and cargo airlines still less than 95% of their pre-pandemic employment. (IATA, 2023) Especially, greater financial pressures are faced by the low-cost airlines (Hassan and Salem,2021). In China, recent research (Zhang et al., 2021) concluded that the epidemic significantly impacts air passenger travel in areas with more confirmed cases, leading to the decline of China’s aviation industry during the epidemic. Total passenger revenue is expected to fall to $241 billion in 2020, well below the $621 billion in 2019.（Hou et al.2021）In Budd, Ison and Adrienne’s (2020) study of 40 airline and aviation groups in Europe, including the European Union, 32 have entirely suspended operations during the epidemic, and only eight are operating commercial service. Spring Airline is the biggest low-cost airline in China accounting for 3%share of the market, (Jiang et al., 2017). In contrast, Ryanair is the biggest low-cost airlines in Ireland (O'Connell & Williams, 2005). This research aims to take China’s Spring Airline and Ireland’s Ryanair as research targets to study the impact of the service quality and pricing strategies of low-cost airlines on customer loyalty, and the mediating role of customer satisfaction. The comparison of results in these two companies is expected to provide some suggestions for the sustainable development of low-cost airplane companies in these two countries. Literature context The relationship between, service quality and customer loyalty in the airline industry has been thoroughly studies (Ostrowski et al., 1993; Shen and Yahya, 2021). Notably, Ostrowski et al. (1993) research established a substantial connection between service quality and customer loyalty within the airline industry He used two full-service airlines in the United States as research subjects for his study. Subsequent work by Shen and Yahya (2021) reinforced this relationship, particularly in the context of low-cost airlines in Southeast Asia. Cost reduction is at the heart of the low-cost business model, and for low-cost carriers, pricing strategy and customer loyalty are particularly important. (Malighetti et al. 2009; Shen and Yahya, 2021). Malighetti study indicated that Rynair's pricing policy is innovative while attracting customers to book their tickets in advance. (Malighetti et al. 2009) In 2021, Shen and examined the importance of proper airfare pricing as an example of an airline in Southeast Asia that significantly impacts customer loyalty.( Shen and Yahya, 2021) The SERVQUAL model, initially introduced by Parasuraman et al. (1988), serves as a foundational framework for understanding the impact of service quality and prices on customer loyalty. Subsequent research has seen various adaptations and expansions of this model. For instance, Park (2004) further diversified the model by considering five critical factors: service expectations, perception, value, passenger satisfaction, and airline image. Chou et al. (2011) employed a fuzzy-weighted SERVQUAL approach to investigate service quality. Akamavi et al. (2015) did a correlation study using the link between attendant self-efficacy and service recovery, attendant self-efficacy and passenger trust. Shen and Yahya (2021) continued this trend by incorporating elements such as terminal tangible attributes, airline tangible features, personnel services, empathy, airline image, and price sensitivity. This reflects the evolving and multifaceted nature of research on service quality and its relationship with customer loyalty in contemporary studies. Based on the abovementioned literature review, service quality and prices are two critical factors affecting customer loyalty in the low-cost airline industry. The airline industries in the China and Ireland have grown rapidly, and the low-cost airline industries have confronted more fierce competition. However, previous studies did not focus this relationship in China and Ireland. Therefore, this study will fill the research gap on the impact of service quality and price of customer loyalty in the low-cost airline sectors and the mediating roles of customer satisfaction. Proposed methodology 1. Data Collection The respondents for this questionnaire will consist of typical residents from China and Ireland who typically choose to travel by air, either using low-cost or full-service airlines. The questionnaire aims to collect diverse responses, encompassing various demographics such as age, nationality, and more, to address the diversity gap identified in previous research. Additionally, this study will be supplemented with specific Spring Airlines and Ryanair data. 2. Questionnaires Questionnaires are one of the most employed tools for data collection in social science research (Taherdoost, 2016). In this research, data are collected through an extensive survey, and then analyzed to address the research questions. While alternative research methods such as case studies and field analysis exist, it is essential to note that case studies can sometimes amplify or underestimate research relationships, and their statistical significance often tends to be weak (Flyvbjerg, 2011, p. 314). Furthermore, the geographical distance of my research subjects makes field analysis impractical. 3. Analysis Method After collecting the data, this research will use Statistical Package for the Social Sciences (SPSS) etc., for descriptive and statistical analysis of the collected data and visualization. In this research service quality and price are independent variables, customer loyalty is the dependent variable and customer satisfaction is the mediator variable, which links service quality and price with customer loyalty thus conducting a study on the correlation between the three. To investigate the effect of service quality and price on customer loyalty of low-cost airlines in the cultural context of China and Ireland. Expected Outcomes The result of this study should be that service quality and price of low-cost airlines in China and Ireland have a positive and significant effect on customer satisfaction and thus on customer loyalty. It fills the gap of previous research on low-cost airlines in different cultural contexts. It improves the effect of low-cost airlines in service quality and price on customer loyalty. A reference article is proposed for low-cost airlines in China and Ireland to assist in their development. Ethical Implications Actions The research ethics protocol of SETU will be used in this study. Because this study will take questionnaires as the main methodology, it will obtain the respondents' consent to fill out the questionnaires during the distribution process. During the questionnaire completion process, they can skip this question if the respondents have violated their privacy. The questionnaires will be distributed and collected anonymously to protect the privacy of the respondents as much as possible. Only the researcher and the supervisor will have the right to use and access the data during the study, and no information of a personal nature will be released in this study. Reference Akamavi, R. K., Mohamed, E., Pellmann, K., & Xu, Y. (2015). Key determinants of passenger loyalty in the low-cost airline business. Tourism Management, 46, 528-545. https://doi.org/10.1016/j.tourman.2014.07.010 Budd, L. C., Ison, S., & Adrienne, N. (2020). European airline response to the COVID-19 pandemic – contraction, consolidation and future considerations for airline business and management. Research in Transportation Business &Amp; Management, 37, 100578. https://doi.org/10.1016/j.rtbm.2020.100578 Chou, C., Liu, L., Huang, S., Yih, J., & Han, T. (2011). An evaluation of airline service quality using the fuzzy weighted servqual method. Applied Soft Computing, 11(2), 2117–2128. https://doi.org/10.1016/j.asoc.2010.07.010 Flyvbjerg, B. (2011). Case study. The Sage handbook of qualitative research, 4, 301316. SAGE Publications Hassan, T. H. and Salem, A. E. (2021). Impact of service quality of low-cost carriers on airline image and consumers’ satisfaction and loyalty during the covid-19 outbreak. International Journal of Environmental Research and Public Health, 19(1), 83. https://doi.org/10.3390/ijerph19010083 Hou, M., Wang, K., & Yang, H. (2021). Hub airport slot re-allocation and subsidy policy to speed up air traffic recovery amid covid-19 pandemic --- case on the chinese airline market. Journal of Air Transport Management, 93, 102047. https://doi.org/10.1016/j.jairtraman.2021.102047 Jiang, Y., Yao, B., Wang, L., Feng, T., & Kong, L. (2017). Evolution trends of the network structure of spring airlines in china: a temporal and spatial analysis. Journal of Air Transport Management, 60, 18-30. https://doi.org/10.1016/j.jairtraman.2016.12.009 O'Connell, J. F. & Williams, G. M. (2005). Passengers’ perceptions of low-cost airlines and full service carriers: a case study involving ryanair, aer lingus, air asia and malaysia airlines. Journal of Air Transport Management, 11(4), 259–272. https://doi.org/10.1016/j.jairtraman.2005.01.007 Ostrowski, P., O'Brien, T. P., & Gordon, G. L. (1993). Service quality and customer loyalty in the commercial airline industry. Journal of Travel Research, 32(2), 16–24. https://doi.org/10.1177/004728759303200203 Park, J., Robertson, R., & Wu, C. (2004). The effect of airline service quality on passengers’ behavioural intentions: a korean case study. Journal of Air Transport Management, 10(6), 435-439. https://doi.org/10.1016/j.jairtraman.2004.06.001 Parasuraman, A. B. L. L., Zeithaml, V. A., & Berry, L. (1988). SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality. 1988, 64(1), 12-40. (PDF) SERVQUAL: A multiple- Item Scale for measuring consumer perceptions of service quality (researchgate.net) Shen, C. and Yahya, Y. (2021). The impact of service quality and price on passengers' loyalty towards low-cost airlines: the southeast asia perspective. Journal of Air Transport Management, 91, 101966. https://doi.org/10.1016/j.jairtraman.2020.101966 Taherdoost, H. (2016). Validity and reliability of the research instrument; how to test the validation of a questionnaire/survey in a research. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3205040 Zhang, L., Yang, H., Wang, K., Lei, B., & Zhang, X. (2021). The impact of covid-19 on airline passenger travel behavior: an exploratory analysis on the chinese aviation market.Journal of Air Transport Management, 95, 102084. https://doi.org/10.1016/j.jairtraman.2021.102084
