Abstract
The air industry is very competitive. Operating costs are high. To survive and earn profits, it is imperative for airlines to save substantial costs. This can come from selling tickets online. However, in many developing countries including Malaysia, a lot of consumers still refuse to buy flights online. Perceived risk of the internet is a key likely reason. To overcome this resistance, reducing perceived risk is crucial. This study examines the influence of perceived risk and risk-relievers on intention to reserve flight online. The two risk-relievers investigated are information type and personal sources of information. Using data collected online, PLS-SEM analysis was conducted to examine the relationship between type of information, personal sources of information, perceived risk, and intention to reserve flight online. Information type is found to relieve perceived risk and increases online reserve intention. Surprisingly, the results for personal sources of information show otherwise. In addition, perceived risk is empirically supported as being multidimensional. The findings suggest the importance of managing information to relieve risk perceptions so that airlines can stimulate higher online reservations. Thus, better profits can be made in spite of a competitive business environment.
Highlights
Online air ticket sales has been growing steadily over time coming mostly from advanced countries like the United States and Europe (Jacobsen & Munar, 2012)
This study aims to address the following research questions: How do Malaysian consumers perceive risk of online flight reservations? What information search behaviour is displayed by consumers? What is the effect of consumers’ information search behaviour in relieving perceived risk of reserving flights online, and intention to make online reservations? First, a literature review on perceived risk and information search as risk-reliever is presented
The population consists of all internet users who are at least 18 years old since they are more prone to reserve flight online than non-internet users
Summary
Online air ticket sales has been growing steadily over time coming mostly from advanced countries like the United States and Europe (Jacobsen & Munar, 2012). The air industry is very competitive, and profits are thin, if any. One way to save costs and improve profits effectively is to sell tickets directly to consumers online. The International Air Transport Association (IATA) made it compulsory for all its members to adopt electronic ticketing from 2008 onwards to stem the huge losses of the industry since 2001 (SITA, 2009). Savings come from bypassing travel agents to avoid high commission fees, and downsizing of costly physical ticketing office. To stimulate more online reservations, airline managers need to better understand risk perceptions, and how consumers try to relieve perceived risk
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