Nexus Between Service Quality and Customer Loyalty: With the Parallel Mediation of Perceived Value and Customer Satisfaction

Abstract

Ensuring high service quality is imperative for businesses to secure long-term market share and sustained competitiveness. Although previous literature has emphasized the importance of service quality (SQ), little attention has been given to comprehending how perceived service quality can be a key factor in increasing customer loyalty (CL). Acknowledging its significance, this empirical research aims to explore the influence of perceived SQ on developing CL within the Aviation industry of Pakistan and to analyze the mediating role of perceived value (PV) and customer satisfaction (CS) in fostering customer loyalty. Data was gathered via survey questionnaires administered to airline passengers in the waiting lounges of Allama Iqbal International Airport and subsequently analyzed through Structural Equation Modelling (SEM). Research findings have demonstrated that the quality of airlines’ services greatly influences customer satisfaction and loyalty. This impact is partially mediated by the perceived customer value elucidating the mechanism through which SQ helps to affiliate new and existing customers with the airline’s services. Furthermore, the SQ helps to foster relationships of customers with the firm and ultimately develops customer loyalty for an extended period. Based on the Expectancy Disconfirmation theory, this study contributes to existing literature by providing a conceptual framework based on the intricate relationship between SQ and CL and the parallel mediation of customer satisfaction and perceived value. The study also offers practical strategies for airline companies to improve SQ in order to enhance customer satisfaction. The findings would assist managers and practitioners of aviation firms to satisfy the new customers and retain the existing ones for business growth.