Influence of online check-in on customer loyalty: A case of Vietnam Domestic Airlines

ABSTRACT:

The implementation of self-service technology in several service industries has remarkably transformed the way of interaction between businesses and consumers. The aim of this research is to evaluate the influence of traveler participation in airline online check-in system on their satisfaction and loyalty. The main results of this research are that the participation of consumer in airline online check-in system leads to the creation of co-value, which results in satisfaction towards the system. System satisfaction contributes to satisfaction towards the company, then system satisfaction and company satisfaction enhance passenger loyalty.

Keywords: Self-service technology, online check-in, customer participation, co-created value, satisfaction, loyalty.

1. Introduction

Contemporary technology advancement together with ever-increasing labor cost in service industry has significantly transformed the interactions between buyers and providers (Chen & Wang, 2016; Shamdasani et al., 2008). The increase of self-service has brought mutual benefits to both parties. Business representatives are no longer in need to get directly involved in service process. Hence, customers can get their demands met regardless of time and location (Lu et al., 2009; Lyytinen & Yoo, 2002). In addition, with the help of self-service technology, businesses also benefit from high and consistent service quality offered (Curran & Meuter, 2005; Fitzsimmons & Fitzsimmons, 2011). Self-service technology is omni-present in any aspect of our life, e.g. air travel online booking, online banking, automatic teller machines (ATMs), auto toll booths. With the advantages and widespread of self-service technology, almost all airlines have adopted online check-in service, which can greatly reduce travelers’ waiting time at counters, airlines’ service cost and airports’ over-crowded problems (Lu et al., 2009).

SITA’s passenger IT Insights (2019) shows that the number of air travelers who desire more technology-based systems to gain control of their journey has been increasing. In 2018, 54.5% passengers used self-service check-in systems. 97% of passengers considered online check-in at airline websites an enjoyable activity. In addition, the SITA’s survey (2017) shows that the positive attitude at self-service check-in plays a key role in positive travelling experiences in almost all passengers.

International Air Transport Association (IATA) (2019) predicted that the number of trips per Vietnamese passenger will go up by 8% annually through the period of 2018 - 2038. At present, Vietnam Airlines, as the flagship airlines, together with Jetstar Pacific Airlines, Vietnam Air Service Company, and a new-comer Bamboo Airways have been competing in this lucrative but competitive market. Winning a new customer is much more difficult and costly than retaining an existing one. Therefore, customer loyalty plays a decisive role for airlines to survive and thrive in this competitive market bringing more values to passengers while adopting new self-check-in technology.

Many academic studies in the last decade shows the contribution of customer participation in co-creating value process but few have paid attention to the relationship between customer participation’s co-created value and customer loyalty (Meuter et al., 2000) and this is very true in Vietnam’s context, as per the author’s knowledge. Therefore, this research intends to address that relationship taking other factors into account which can simulate Vietnam domestic aviation setting.

2. Literature review 2.1. Customer participation and co-created value

Customers and service providers can mutually benefit when customers get involved in the service delivery process by comparison with the lone dependent of customers on service providers (Chen & Wang, 2016; Yim et al., 2012; Ballantyne, 2004; Fitzsimmons, 1985). Customers can gain more enjoyment, control and time saving. Business can reduce total cost. Fuat et al. (1995) advised that business should incorporate customer participations in the production and delivery process to improve customer satisfaction. This cooperation between customers and businesses is a “two-way street” where both parties can learn from each other. Customized outcomes are generated to address customers’ unique demand leading to customers’ higher satisfaction (Saarijärvi et al., 2013; Grissemann & Stokburger-Sauer, 2012). Self-service technology offers businesses an effective tool to get customers involved in co-producing and delivery process.

Zeithaml (1988) defined value as “the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given”. Customer value is measured by personality, background, knowledge, and previous experiences (Saarijärvi et al., 2013). Co-created value has been significantly revolving. Agrawal and Rahman (2019) measured co-created value using both final outcomes and co-production process. Value can be intrinsic and extrinsic. Intrinsic value, which is also called enjoyment value or psychological benefit, relates to fun, pleasing emotion participation in the process (Yim et al., 2012). Extrinsic value includes economic value, which includes final outcomes and benefits gained participating in process, e.g. tailored solutions, consistent quality, less waiting time (Chen & Wang, 2016), and relational benefit, which relates to the strengthen relationship between customer and business (Yim et al. 2012).

Regarding the above customer participation in production and delivery’s co-created value, the following hypotheses are suggested

H1: Customer Participation in production and delivery’s is positively related to Enjoyment Value.

H2: Customer Participation in production and delivery’s is positively related to Economic Value.

H3: Customer Participation in production and delivery’s is positively related to Relational Value.

2.2. Co-created value and satisfaction

Various studies show the positive relationship between customer perceived value and customer satisfaction (e.g. Chen, 2008). The decisive factor of self-service technology to improve customer satisfaction is tailored outcomes (Meuter et al., 2000; Fitzsimmons, 1985). Yim et al. (2012) also said that pleasing emotion participating in process can improve customer satisfaction. When customers are treated well and develop close connection with business, they become more satisfied (Han & Kim, 2009). Thus, the following hypotheses are suggested

H4: Enjoyment Value is positively related to System Satisfaction.

H5: Economic Value is positively related to System Satisfaction.

H6: Relational Value is positively related to System Satisfaction.

2.3. System satisfaction and company satisfaction

Customers often describe their general viewpoint about the overall experience doing business when asked about company satisfaction. However, customers could give opinion of a specific service transaction when asked about particular transaction satisfaction. Overall satisfaction is the average of all past specific transaction (Jones & Shu, 2000). The online check-in system is only a part to assist the whole journey beside luggage check, security check. Hence, online check-in cannot represent the overall satisfaction, and this study separates satisfaction into system and company satisfaction. System satisfaction only relates to customer satisfaction of the online check-in system. According to Chen and Wang (2016), if passengers feel more satisfied with the system, they are more likely to have higher company satisfaction. Therefore, the following hypothesis is suggested

H7: System Satisfaction is positively related to Company Satisfaction.

2.4. Satisfaction and loyalty

Customer loyalty helps businesses survive and thrive through competition (Chen, 2008). Loyalty can be classified into behavioral, which measures customer loyalty with repeated purchase (Yang & Peterson, 2004), or attitudinal, which use emotional and psychological factors to measure loyalty (Bowen & Chen, 2001). Nevertheless, behavioral loyalty is too sensitive to situational factors, e.g. discount, time, or venue (Bowen & Chen, 2001). Customer loyalty adapts both approaches in this research.

Moreover, many studies detect the positive relationship between customer satisfaction and customer loyalty in general (e.g. Mahamad & Ramayah, 2010; Hallowell, 1996), and airlines with self-service technology, in particular (e.g. Chen & Wang, 2016). In this study, because satisfaction is classified into system satisfaction and company satisfaction, the following hypotheses are suggested

H8: System Satisfaction is positively related to Customer Loyalty.

H9: Company Satisfaction is positively related to Customer Loyalty.

Figure 1: Conceptual model

Source: Adopted from Chen & Wang (2016)

3. Methodology 3.1. Questionnaire design

There are two sections in the questionnaire. The first section is to measure concepts in the conceptual model, i.e. customer participation, enjoyment value, economic value, relation value, system satisfaction, company satisfaction, and customer loyalty. The second section includes demographic questions of air passengers, namely gender, age, income, travel frequency and travel purpose.

3.2. Data collection

The target population is Vietnamese passengers with experience using online check-in systems of Vietnam Airlines, Jetstar Pacific Airlines, Vietjet, Vietnam Air Services Company (VASCO) and Bamboo Airways. Questionnaires were released through online and off-line surveys. 227 valid questionnaires which include 133 printed and 94 Google-form questionnaires were collected.

3.3. Data analysis

Data collected are input into SPSS. Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA), and then Structural Equation Modelling were used to test the conceptual model.

4. Results and findings 4.1. Demographic factors

There are 112 males (49.3%) and 115 females (50.7%) in the total of 227 participants. This shows a quite balanced gender in this study. 29.5% passengers have monthly income less than 10 million VND. 15% passengers travel once a year or less, 50.7% within two and four times a year, 27.3% travel five times or more a year. 43.6% travel with business purpose, 50.2% for leisure, and 6.2% with others.

4.2. Reliability tests

This study uses the following criteria (George & Mallery, 2006): (1) Cronbach alpha > 0.7 and (2) Corrected item-total correlations > 0.3. After reliability tests, EV3 and RV1 were removed.

4.3. Exploratory factor analysis (EFA)

EN3 was removed. 26 remaining items were grouped into seven factors F1 (CP1, CP2, CP3, CP4, CP5, CP6), F2 (EN1, EN2, EN4); F3 (EV1, EV2, EV4, EV5); F4 (RV2, RV3, RV4); F5 (SS1, SS2, SS3); F6 (CS1, CS2, CS3); F7 (LO1, LO2, LO3, LO4).

4.4. Confirmatory factor analysis (CFA)

The regression weights of all factor loadings were found significant (p-value < 0.05).

The construct validity was examined with convergent validity and discriminant validity. The convergent validity was checked using factor loading (> 0.5), Composite Reliability (> 0.7) and Average Variance Extracted (> 0.5). Discriminant validity was checked with “average variance extracted (AVE) of a construct must be greater than its maximum shared variance (MSV) and average shared variance (ASV)” (Hair et al. 2010). All above criteria were met.

Finally, the model fit was checked using following criteria (Hair et al., 2010): Chi-square/df < 2; TLI > 0.9; CFI > 0.9; GFI > 0.8; and RMSEA < 0.08. All above criteria were met.

4.5. Structural equation modeling (SEM)

Figure 3 shows that all criteria are met: Chi-square/df =1.97 (<2), TLI=0.91 (>0.9), CFI=0.92 (>0.9), GFI = 0.87 (>0.8), RMSEA = 0.066 (<0.08). Therefore, the model fit is good.

In addition, all coefficients between constructs are significant, except the coefficient between Relation Value (RV) and System Satisfaction (SS) has p-value of 0.005. In other words, all hypotheses were supported, except the hypothesis H6 “Relational Value is positively related to System Satisfaction” was rejected.

Figure 2: Structural Equation Modelling

5. Conclusion and recommendations

First, this study shows the co-created value of customer participation in online check-in process. The effect is strongest on enjoyment value, then economic value, and weakest on relational value. In addition, enjoyment value and economic value can positively influence system satisfaction whereas enjoyment value has stronger power. This result can serve as a guideline for airline management in developing online check-in systems. Passenger satisfaction with the online check-in system would be enhanced if the process is funny and enjoyable.

Moreover, the result “relational value is not related to system satisfaction” contradicts to other studies (e.g. Chen & Wang, 2016). This could be explained by the following reasons: (1) Vietnamese customers prefer face-to-face interaction by comparison with Taiwanese. This may result from that many Vietnamese customers started using online check-in systems recently and have not become familiar with the technology. (2) Jetstar Pacific Airlines’ website is the only one which provides step-by-step guidelines for online check-in. Other airlines only provide general rules. To make the matter worse, help desk is not often available, and that would hinder developing connection between passengers and airlines.

Furthermore, the result shows that system satisfaction can influence company satisfaction and passenger loyalty. Put differently, if passengers become satisfied with the online check-in system, their overall satisfaction will improve, and their loyalty will be strengthened.

In summary, passenger participation in online check-in systems can co-create values which can lead to higher system satisfaction, then increase company satisfaction, and finally keep passengers loyal to airlines.

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NGUYỄN MINH TUẤN

Khoa Quản Trị Kinh Doanh - Trường Đại học Quốc tế,

Đại học Quốc gia Thành phố Hồ Chí Minh

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