Building trust through customer satisfaction in the airline industry in Indonesia: Service quality and price fairness contribution

Article history: Received: July 4 2019 Received in revised format: September 14 2019 Accepted: October 30, 2019 Available online: October 30, 2019 The intense competition in the airline industry urges adjustment to service quality and pricing. Alterations to service quality and price may lead to service degeneration and price unfairness, which will affect customer satisfaction and trust. The objective of this investigation was to figure out the role of service quality and price fairness in improving customer satisfaction and building customer trust in the airline industry in Indonesia. Questionnaire responses were collected from 300 randomly enrolled passengers at Halim Perdana Kusuma Airport Indonesia. This research took a verification approach by the Structural Equation Modeling (SEM) technique. The results indicate that service quality, price fairness, and customer satisfaction played an important role in building customer trust. Customers’ positive experiences, optimum service quality, and price fairness perception enabled the airline company to be closer to them and build their trust. Satisfaction was proven to mediate the relationship of service quality and price fairness to customer trust. © 2020 by the authors; licensee Growing Science, Canada


Introduction
As an archipelagic country, it is essential for Indonesia to have adequate means of transportation. It is imperative that Indonesia have modes of transportation capable of swift transport or displacement of human passengers or goods. One of the options is air transport. Currently, 6 major airlines in Indonesia are competing tightly to win the hearts of the consumers through a wide variety of services offered. Lion Air leads in LCC service, while Garuda Indonesia does in full service.  The presence of many airlines in Indonesia brings about competitions among them and gives the customers a range of options of which airline of preference is to be used. Take for an example, at a given point in time the flight price set by Citilink (LCC) is more expensive than that set by Batik Air (full-service). Such an instance evokes the perception of price unfairness, which will impact the customer satisfaction. Customer trust can be considered as one of the most pivotal in all business activities, especially if it is associated with customers' needs and wants fulfilment. This then raises the question of how price fairness influences customer satisfaction. Customers' judgments on the overall service quality depend on the gap between expectation and perception of the actual performance. Good service quality becomes a requirement the airline industry must satisfy for it to survive and remain competitive. Some complaints relating to the service expressed by the passengers concern the following: cancellations, delays, ticketing, boarding, responsiveness, meals, treatments during delays, and aviation accidents and incidents. Such complaints can deal an impact on the customer satisfaction and trust. It is expected that by maintaining the customer satisfaction trust can be built, thus necessitating a research study on the effect of service quality on customer satisfaction and trust.

Service Quality
Passenger judgements on airline service quality vary from individual to individual and as a whole depends on the gap between the expectation and perception of the actual performance (Parasuraman et al., 1988). Zeithaml (1988) defined perceived service quality as customers' judgement on the overall advantages of a product or service. Many researchers are of the view that the nature of service quality varies (especially when it comes to the number of dimensions), where it is highly likely that dimensions are unique and specific for each industry. Parasuraman et al. (1988) developed an instrument of five dimensions (tangibility, reliability, responsiveness, assurance, and empathy) known as SERVQUAL. SERVQUAL dimensions capture how consumers distinguish performance in each dimension (Bebko, 2000). According to the SERVQUAL model, customers' judgments on service quality stem from the comparison between service expectation and the actual performance. The measurement of service quality in this research referred to the airline service research by Gilbert and Wong (2003) with the following SERVQUAL dimensions: reliability, assurance, facility, employee, flight pattern, customization, and responsiveness.

Price Fairness
Price fairness is consumers' judgments and emotions whether the discrepancy between a seller's price and comparative others' is fair, acceptable, or justifiable (Xia et al., 2004). The wide variety of prices offered by airlines may give rise to unfairness, where the customers would take a fair price as another way to refer to a low price (Darke & Dahl, 2003). Such condition is preferred by the customers as it meets their own personal expectations. It is considered fair and just on a personal basis (Maxwell et al., 2009). However, a price would be counted as unfair if it fails to meet public's expectations. Customers would expect the price offered to meet social norms, equality, and needs. The measurement of price fairness in this research was modified from Setiawan et al. (2016) using two dimensions: comparable options and consumer knowledge. In determining the price fairness, consumers would take into account other aspects such as similarity of ticket prices offered to other consumers or those offered by agents or similar airlines (comparable options). Besides, they would also compare the price offered and their expectations as well as the facilities received (consumer knowledge).

Customer Satisfaction
Differences in interests and destinations between passengers bring about differences in the way they form judgments on satisfaction. Customer satisfaction has been defined as a cognitive or affective reaction arising as a response to a set of singular, prolonged service meetings (Hu et al., 2009). Anderson et al. (1994), on the other hand, defined customer satisfaction as a post-consumption experience by which the perceived quality and the expected one are compared. Cronin Jr and Taylor (1992) defined and measured customer satisfaction as a one-item measuring customers' overall feelings for a product or service. While Price et al. (1995) measured satisfaction using six-item, this research did using the modified three-item scale by Taylor and Baker (1994): pleasure in the service, expectation fulfilment, and satisfying experience.

Trust
Customer trust is indispensable in the intensifying competition in the airline industry. Trust is built on a gradual basis through continued interactions; these interactions in turn influence customers' trust in the company (Schoorman et al., 2007). In establishing interactions with customers, it is not infrequent that difficulties arise in understanding and predicting their wants, leading to an extraordinary degree of complexity. One way to reduce this complexity is building customer trust. Luhmann (2018) defined trust as a set of beliefs that others would keep their expected commitment. Meanwhile, Gefen (2000) explained that trust is the hope that an individual or company would behave ethically, be reliable, and keep the expected commitment. Hence, trust refers to one's belief in a positive hope regarding what others would do based on earlier interactions. This research measured trust using a modified scale by Suh and Han (2003) with three items: this airline works properly, this airline is reliable, and this airline keeps its promises and commitments.

The Effect of Service Quality on Customer Satisfaction
Previous research shows that service quality contributed to customer satisfaction (De Ruyter et al., 1997;Hu et al., 2009;Parasuraman et al., 1985). If the service is received in a poor quality, the consumer would be dissatisfied, and if the quality of the service received is good, the consumer would gain satisfaction (Tam, 2004). The company's ability to provide high-quality services would produce satisfaction in the customers (Shemwell et al., 1998). This finding supports the conclusion of Chang et al. (2009) that service quality had a positive effect on satisfaction. Based on the previous findings, a positive relation, in this research, was expected to be present between service quality and customer satisfaction. Thus, the following hypothesis is proposed: H1: Service quality has a positive effect on customer satisfaction.

The Effect of Price Fairness on Customer Satisfaction
If a customer has a fair price perception on an airline service, a positive feeling will develop gradually and produce satisfaction. Several studies have shown that satisfaction was positively correlated with fairness perception (Bowman & Narayandas, 2001;Huffman & Cain, 2001). Price perception serves as a prominent factor in customer satisfaction measurement (Martín-Consuegra et al., 2007). Fairness perception will be dependent on the quality of the service received relative to the price paid (Oliver & Swan, 1989). Prior works have proven that price fairness had a positive effect on customer satisfaction (Herrmann et al., 2007;Kaura et al., 2015). Based on the previous findings, a positive relationship between price fairness and customer satisfaction was expected in this research. Thus, the following hypothesis is proposed: H2: Price fairness has a positive effect on customer satisfaction.

The Effect of Service Quality on Trust
Trust in a service will arise if the customer has a perception of positive outcome sustainability in the future; hence, good, sustainable service quality will affect the customer's trust. Trust occurs when a party believes that the act of the other party would result in positive outcomes (Anderson & Narus, 1990). Trust is required to minimize uncertainties when consumers feel vulnerable as they are aware they can rely on it (Chaudhuri & Holbrook, 2001). Earlier research studies have suggested that service quality had a positive effect on trust (Kim et al., 2008). Based on the previous findings, it was expected in this research that service quality is positively related to customer service. Thus, the following hypothesis is proposed: H3: Service quality has a positive effect on trust.

The Effect of Customer Satisfaction on Trust
Trust is a cumulative process which will develop as long as interactions are repeated and satisfactory. Satisfaction alone may be insufficient to ensure customers' long-term commitment exclusively to a single service provider (Ranaweera & Neely, 2003). Another variable would be needed to strengthen satisfaction retention, that is, trust. Chumpitaz Caceres and Paparoidamis (2007) found trust, along with commitment, as a consequence of satisfaction. Long-term satisfaction in the customer would generate trust. Empirical studies have described satisfaction as an antecedent of trust (Garbarino & Johnson, 1999;Han & Hyun, 2015;Siau & Shen, 2003). Based on the previous findings, it was expected in this research that customer satisfaction would have a positive effect on customer trust. Thus, the following hypothesis is proposed: H4: Customer satisfaction has a positive effect on trust.

The Effect of Price Fairness on Trust
A number of researchers (Mayer, Davis, & Schoorman, 1995;Selnes & Gønhaug, 2000;Singh & Sirdeshmukh, 2000) segregated trust into two dimensions, namely benevolence trust and competence trust. Singh and Sirdeshmukh (2000) maintained that perceived price fairness sets a basis for benevolence trust, while competence trust serves a function of quality service performance. Discrepancies in the price offers perceived by customers become unfair particularly when the demand is high. This is in line with the research by Dickson and Kalapurakal (1994), who revealed that the majority of consumers found raising prices to deal with overdemand unfair. Such unfairness had a negative effect on trust. The results of the research by Garbarino and Lee (2003) show that price fairness had a positive effect on trust. Based on the previous findings, it was expected in this research that price fairness would positively affect customer trust. Thus, the following hypothesis is proposed: H5: Price fairness has a positive effect on trust.

Methodology
This research employed a verification approach. From an infinite size of population of flight passengers, a sample of 300 respondents were extracted based on a normal distribution estimation. The respondents were freely extracted from the population by the random sampling technique (Anderson et al., 2011). Questionnaires were designed based on earlier studies with some modifications then disseminated to 300 passengers who used the service of Halim Perdana Kusuma Airport Jakarta over a period of 1 month. This study was carried out using the Structural Equation Modeling aided with the Lisrel 8.7 software to examine the mediating role.

Results
From the calculation of the measuring model a standardized factor loading (SFL) value of ≥ 0.5 was obtained, and the t-value was greater than the critical value (≥ 1.96), indicating that the indicator was valid. Meanwhile, the reliability was determined based on the construct reliability (CR) and variance extracted (VE) values. Based on the calculation, the CR value was greater than 0.70 and the VE greater than 0.50, indicating that the indicator was reliable (see Table 1). Based on the goodness of fit (GOF) indices from the eleven-criterion measurement, nine indices met the requirements, but two others did not (Chi-Square and Sig. probability values). According to Hair et al. (2013), Chi-Squre is highly sensitive to large sample sizes (>200), necessitating accompaniment by other testing. Because this research employed a sample of 300 respondents, the Chi-Square and Sig. probability values were rendered ineffective. Nevertheless, it was considered valid because the other nine criteria tested had met the requirements. The magnitude of the direct influences of price fairness and service quality on customer satisfaction as well as the influences of price fairness, customer satisfaction, and service quality on trust can be seen in Fig. 2. Source: Processed primary data. 2019 Fig. 3 shows that the t-value was 3.40 for the effect of service quality on customer satisfaction and 4.64 for the effect of price fairness on customer satisfaction. The two t-values were greater than 1.96, leading to a conclusion that the effects of service quality and price fairness on customer satisfaction were significant. These results are in line with previous findings on the effects of service quality (Chang et al., 2009) and price fairness (Kaura et al., 2015) on customer satisfaction. The value of the direct effect of service quality on customer satisfaction was 0.32, showing that the customers were satisfied with the service quality. Friendly and polite employees as well as decent facilities were able to influence the customers' satisfaction. Meanwhile, the value of the direct effect of price fairness on customer satisfaction was 0.46, suggesting that the customers were satisfied with the prices offered, which met their expectations and suited the services received. The effect of price fairness on customer satisfaction was stronger than that of service quality on customer satisfaction, showing that the airline passengers in Indonesia were sensitive to price. The magnitudes of the effects of service quality, customer satisfaction, and price fairness on customer trust, as can be seen in Fig. 3, were t = 2.19 for service quality, t = 2.79 for price fairness, and t = 5.77 for customer satisfaction. The three t-values were greater than 1.96, leading to a conclusion that the effects of service quality, price fairness, and customer satisfaction on trust were significant. These results support previous research on the effects of service quality (Kim et al., 2008), customer satisfaction (Han & Hyun, 2015), and price fairness (Garbarino & Lee, 2003) on customer trust. The effect of service quality on trust amounted 0.18, suggesting that the customers trusted the quality of the services received. Flight timeliness and wide variety of flight destinations were able to improve the customer trust. The direct effect of customer satisfaction on trust amounted 0.53, suggesting that the customers took pleasure and gained satisfying experiences, which provided a foundation on which trust was built. Meanwhile, the direct effect of price fairness on trust amounted 0.26, suggesting that the customers trusted the prices offered. They felt that the prices offered were fair as compared with those of other airlines and were affordable to all. The testing results of the mediation of customer satisfaction in the relationship of service quality and price fairness to trust are shown below: Based on the computation, the effect of service quality on trust through customer satisfaction amounted 3.03 (>1.96). It could be concluded then that the indirect relation between service quality and trust through customer satisfaction was significant. Meanwhile, the effect of price fairness on trust through customer satisfaction amounted 3.84 (>1.96), indicating that the indirect relation between price fairness and trust through customer satisfaction was also significant. In conclusion, customer satisfaction was proven to mediate the relationship of service quality and price fairness to trust. The total effect of the variables service quality and price fairness on trust through customer satisfaction is shown below: The greatest effect exerted on trust was from customer satisfaction (0.53), which was established by good service quality and supported by perceived price fairness.

Discussion
Indonesian airlines must improve customer satisfaction to build trust. Customer satisfaction can be realized by maintaining the price fairness perceived by the customers and made continuous improvements to the service quality. One of the things actors in the airline industry must note to build customer trust is price fairness. The airlines have to control the prices for agents so that the customers perceive the prices offered are affordable to all. Then, with respect to service quality, the airlines must improve the inflight entertainment facilities, provide consistent services, and enable swift check-in and baggage claim. Through improvements in the price fairness and service quality, the airlines are expected to be able to enhance the customer satisfaction and trust.

Conclusion
Service quality and price fairness had significant, positive effects on customer satisfaction. The effect of price fairness on customer trust was stronger than that of service quality on customer trust, showing that the airline passengers in Indonesia were more sensitive to price than they were to service quality. The passengers perceived the prices offered to suit the services provided and their expectation and to be fairer than those offered by other airlines. Thus, price fairness was able to influence the customer satisfaction, urging that the price fairness effect be maintained and be given attention by the airline party. Similarly, service quality, employee's friendliness and politeness, and facilities enjoyed by the customers were able to improve the customer satisfaction. Service quality, price fairness, and customer satisfaction had significant, positive effects on customer trust. Customer satisfaction had the most significant effect on customer trust. The service satisfaction gained presented the customers with pleasurable experience. Customer satisfaction stemmed from the fairness offered and good service quality, on which customer trust was built.