Indirect Effect on Trust on Customer Satisfaction and Customer Loyalty Relationship

in Malaysian Airline Industry

Li Lin

Postgraduate Center, Limkokwing University of Creative Technology, Cyberjaya, Malaysia

Zahir Osman

Shiqian Wang

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This research aims to find out the main factors that affect customer loyalty in the airline industry in Malaysia because customer loyalty is regarded as the ultimate goal for the marketing behavior (Heskett, 2002; McMullan & Gilmore, 2008). Gaining customer loyalty and maintaining brand loyalty with customers is critical for the company to survive in a competitive environment (Heskett, 2002). It would contribute and assist airline industry in developing future strategies on how to enhance customer loyalty. In this study, researcher focus on two main factors (customer satisfaction and trust) influence on customer loyalty in direct or indirect pathways. Quantitative research design has been used, and convenience sampling has been chosen to collect data from airline passengers. The findings of this research recommended that customer satisfaction and trust are positively and significantly influence on customer loyalty in the airline industry in Malaysia. Besides, trust was found to have positive and significant mediating effect on the relationship between customer satisfaction and customer loyalty in Malaysian airline industry.


Based on Agustin & Singh, (2005) mentioned that it is crucial to obtain and sustain customer loyalty in contemporary marketing and it may be more important than achieving customer satisfaction. In addition, creating and maintaining brand loyalty is fundamental to build long-term relationships with their customers as well as it is critical for the survival of a company in a competitive environment (Heskett, 2002; McMullan & Gilmore, 2008; Mellens, Dekimpe,& Steenkamp, 1996). Airline companies are making efforts to maintain the customer loyalty with existing customers and ultimate retention their airline loyalty. Maintaining valuable customers is an essential precondition for the industry to achieve a sustainable competitive advantage. To gain further understandings, this research studied the factors of customer satisfaction and trusted that affecting customer loyalty in the airline industry. The airline industry as a tertiary and more intangible service industry (Clemes et al., 2008), it plays an important role in the global economy (Tiernan et al., 2008) but none of them are in the hand of airlines control. With the downturn of recent world economic in 2008/2009 which was a hit on the market of business travel and also aviation industry. As a result, the popularity of the low-cost airlines has been increasing in worldwide, so the deregulation practices have been magnified in the airline industry by many countries (Clemes et al., 2008; Saha and Theingi, 2009).

There are two main operators in Malaysian airline industry, they are Passenger airline and Cargo airlines. For the numerous visitors and travelers from globalizing come to Malaysia by international airlines, fierce competition among the airline service providers who are always looking to extend their services to achieve customer loyalty. Based on the statistics of Bursa Malaysia in 2014, the profit of Malaysian Airline has reduced by 60% (RM496.7 million) compared to previous year. The overall revenue of Air Asia's has increased, but the increasing rate dropped about 5% compared to last two years (Bursa Malaysia 2012-2014). One reason was the disasters of MH370, MH17 and QZ8501 happened in 2014 (Joanne, Hunter, & Raghuvanshi, 2014). The disappearance of MH370 causes the sharp decline of customers trust and loyalty towards airline industry in Malaysia (Ayob & Masron, 2014). It comes along with the financial loss of $1.3 billion over past three years before 2014 for MAS, one more reason is the development of competitors like Air Asia, and they promoted low price ticket which lured away numerous passengers (Zappei, 2014). It also existed many customers complain about Air Asia due to the poor service and experience like flight delay and crash landing incident when they travel (Amiruddin, 2013). The purpose of this paper is to show the mediating effect of customer trust on customer satisfaction and customer loyalty relationship in Malaysian airline industry and to test the hypotheses that are developed from the research model.

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