Budget Airlines

1. Introduction

Budget airlines have increased expeditiously all over the world in past few decades (O’Connell and Williams, 2005). Budget airlines are the by-product after the airline deregulation in 1978 because the cost per seat or passenger decreases as the number of per seats or passengers increases (Brueckner & Spiller, 1991; Caves, Christensen, & Tretheway, 1984 as cited by Pels, 2008; Kim and Lee, 2011). In the past, budget airlines impact on mature European market and US market, and nowadays budget airlines continuously developing in the Asia market, like Thailand and Korea (Lawton and Solomko, 2005). Budget airlines developing in Hong Kong as well because Hong Kong International Airport (HKIA) is the world’s busiest cargo gateway

According to Zeithaml (1988) perceived service quality is important rather than price. In this case, there is no doubt that budget airlines have competed successfully with full-service airlines, especially in the price-sensitive leisure market (Fourie and Lubbe, 2006) as budget airlines offer low fares as a competitive strategy, yet passengers’ perceived service quality is the most fundamental (Chang and Yeh, 2002). Saha and Theingi (2009) pointed out budget airlines able to provide low fares to passengers because of the cost reduction in operations, instead of diminishing service standards, though service quality is important to budget airlines. There is some studies integrated SERVQUAL model to measure airline service quality (Sultan and Simpson, 2000; Chang and Yeh, 2002), revealed from the literatures, reliability rated as the most important dimension among airline passengers. Thus, measuring and identifying the passengers’ perceived service quality is essential for an airline as service quality is critical for airlines to enhance effectiveness and competitiveness (Gilbert and Wong,

Some researchers believed that service quality is the former of customer satisfaction and customer satisfaction is influencing perceived service quality, therefore, they suggested providing high quality of service to the customers in order to achieve high level of customer satisfaction (Anderson et al., 1994; Anderson and Sullivan, 1993; Cronin and Taylor, 1992). However, some researchers argued that perceived service quality and customer satisfaction are distinctive constructs because perceived service quality produces the difference between the expectations and the actual service performance, and evaluate on the specific categories while customer satisfaction representing the overall performance (Chen, 2008; Zeithaml, 1988). Customer satisfaction has been described as a form of consumers’ attitude, and reflected the customer satisfaction level, from dissatisfied to satisfied (Churchill and Surprenant 1982; Baker and Crompton, 2000; Johnston, 1995). According to the SERVQUAL model suggested by Parasuraman et al. (1998), There is no doubt that customer satisfaction is vital in service