Key determinants of passenger loyalty in the low-cost airline business

Abstract

Given the intensive rivalry in the transport industry, passenger relationship management has become a vital concern for the low-cost airline (LCA) sector. However, determinants of LCA passenger loyalty, such as service employee self-efficacy, price, service recovery, passenger trust and satisfaction, are overlooked. Therefore, this paper examines key antecedents' effect on LCA passenger loyalty. We conducted surveys at two major British airports of 286 LCA passengers who had experienced service failure. Our results indicate that efficacious service employees not only positively influence service recovery and price but also enhance passenger trust. Service employee self-efficacy diminishes bad service experiences; primarily, however, it boosts passenger satisfaction. Our structural equation modelling findings also support our hypothetical predictions that service employee self-efficacy, service recovery and passenger trust have a dramatic impact on passenger satisfaction. Passenger satisfaction is the uppermost driver of passenger loyalty enhancement, not of price. This study provides novel insight regarding LCA passengers' behaviours, as well as managerial and research implications for effective passenger relationship management.