The impact of customer engagement and selected higher order marketing constructs on customer loyalty: an empirical investigation of the Indonesian airline industry

Abstract

The extant literature illustrates that loyal customers lead to an increase in retention rates, lower customer acquisition costs and higher profits. Therefore, several academics have investigated customer loyalty in the services sector. Studies on the global airline industry have also investigated various aspects of customer loyalty and its antecedents, such as perceived value, brand image, customer satisfaction and service quality. However, to date, no scholars on the airline industry have investigated all the interrelationships between these important constructs using a comprehensive modelling approach. In addition to the recognized customer loyalty antecedents, the construct of customer engagement is also attracting the attention of scholars. However, only limited studies have empirically assessed and focused on the direct relationship between customer engagement and behavioural intentions. This current study aims to satisfy three research objectives: (1) to analyse the determinant of airline passenger loyalty in the Indonesian airline industry; (2) to analyse the interrelationships among the service quality, perceived value, brand image, customer satisfaction, customer engagement and customer loyalty constructs; and (3) to explore the moderating role of gender on the interrelationships among the aforementioned constructs. The sample used in this study was based on the perceptions of 250 Indonesian airline passengers in Surabaya and Malang. The data set was analysed using Confirmatory Factor Analysis (CFA), Structural Equation Modelling (SEM) and a multi-group comparison, to satisfy the three research objectives of this study.

The results show that customer engagement has the most influential effect on passenger loyalty, followed by customer satisfaction. The empirical results of this current study also demonstrate that customer satisfaction has the largest direct effect on customer engagement. In addition to the direct relationships among the investigated constructs, this current study also found that service quality, perceived value and customer satisfaction also indirectly affect customer loyalty through the mediating variables. Moreover, gender has been identified as an important variable that moderates the interrelationships among: brand image, customer satisfaction and customer engagement constructs. The results of this study provide a comprehensive theoretical model for predicting passenger loyalty in the context of the airline industry including the direct and indirect interrelationships among the investigated constructs. In addition, this study also contributes to the marketing literature by proving the importance of customer engagement in the services sector, especially in the airline industry. The findings of this current study may also assist airline practitioners to design effective marketing strategies and allocate their resources efficiently.