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This article studies how service quality is important in achieving customer satisfaction which in turn leads to customer loyalty. This study was conducted on the Chinese airline market because data on factors contributing to the passenger satisfaction and loyalty were not studied previously in this context. The four airlines investigated are Hainan Airlines, Air China, China Southern and China Eastern.

Since business travellers make frequent trips in a year they choose to travel with a specific airline because they are benefited by the frequent flyer program service offered by the airline. Demographic variables also play a role on how customers perceive service quality. The study was conducted on the Chinese domestic airline market because competition prevailed not only based on pricing but also on the quality of service.

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There is no exact definition for service quality. Customers believe that when they choose an airline with significant credibility, they will receive a good quality of service. When customer expectations are met it adds value to the brand image and increases loyalty of customers towards the airline. A probit model was used by the researchers to study the factors that influence customer satisfaction and loyalty.

The result of the probit model conclude that ground and inflight service were the most important factors contributing to customer’s satisfaction of the service. The result also arrives at another conclusion that there is little or no variety in services offered by the four airlines under study. The frequent flyer program was not successful as there were alternative modes of transport like the high-speed rail service. The factors that contribute to increase in number of loyal customers is distinct to a market due to distinct demographics.

Customer loyalty can be achieved by providing services that are unique to the airline. Since the study was conducted on only four domestic airlines, the applicability of these results to airlines of different sizes and ownership must be studied in the future.


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