Sustainable strategies for low-cost airlines: evidence on passenger loyalty in Indonesia

Abstract

This study explores the factors influencing passenger loyalty in Indonesia’s low-cost carrier (LCC) sector, addressing the question: What drives loyalty among LCC passengers in a competitive market? Amid intense competition and heightened customer expectations, LCCs must prioritize satisfaction to ensure sustainability. This research investigates the impact of service quality (SQ), price (P), customer satisfaction (S), and perceived value (PV) on loyalty, focusing on Indonesian airlines like Lion Air, AirAsia, and Citilink. The study’s significance lies in identifying strategies for LCCs to enhance loyalty in a post-pandemic market, where recovery remains challenging. Using a quantitative approach, data were collected from 313 Indonesian LCC passengers via an online survey conducted from July to August 2021. Structural equation modeling (SEM) with LISREL analyzed relationships among variables. The article details a hypothesis-driven framework, testing seven relationships, with four confirmed and three rejected. Findings reveal that high SQ and low prices do not significantly enhance satisfaction, reflecting unique Indonesian consumer behaviors, possibly due to cultural restraint or safety concerns. However, satisfaction and PV strongly predict loyalty, emphasizing their critical role. The discussion highlights how SQ influences PV, which in turn drives satisfaction and loyalty, offering insights into effective LCC strategies. Key findings indicate that prioritizing PV over SQ or price is essential for fostering loyalty, providing a sustainable competitive edge for Indonesian LCCs.