A Study of Online Perceived Value in Vietnamese Low Cost Carriers Market

For the first time in over 30 years, Vietnam Airlines – the biggest airline in Vietnam – announces they still have plenty tickets left for people travelling before and after Lunar New Year 2013, thanks to the fierce competition from low cost carriers (LLCs) such as Vietjet Air, Jetstar Pacific and Mekong Air. The emergence of low cost carriers and the popularity of Internet in Vietnam have dramatically changed how Vietnameses travel nowadays. This study examines online service attributes that determine the perceived value of online transactions. In doing so, we address the concerns that LCCs have in matching expectations and perceptions of Vietnamese consumers towards online flight ticket purchases. The result from study found that some of the antecedents are very different to previous findings in other markets. Therefore the findings have implications for managerial decision makers in low cost carriers charged with the responsibility of increasing perceived value of their service through online consumer engagement. Introduction and Background Since 2008, the global airline industry has been hit hard by the financial crisis (Goetz and Vowels, 2009). While full service airlines have struggled to be financially viable in this lean global environment low cost carriers have successfully driven down their cost base and continue ti lower their prices. As a result, consumers start switching to low cost carriers for their travelling needs. And by doing so, consumers forego value-added services provided by full service carriers such as complementary on-board meals, in-flight entertainment and airline lounge services (Mathews, 2004). Moreover, consumers are also prefer using the internet to search for information, compare prices and purchase air tickets rather than using a phone or travel agent (Goh, 2005). The emergence of LCCs such as Tiger Airways, Jet Start Pacific, Indochine Airline and Viet Jet Air in Vietnam has changed the value proposition experienced by consumers when searching, purchasing, and travelling on an airline. Given the high level of internet connectivity in Vietnam, almost 31 million users – about 35% of the population (World Bank Report, 2012), LCC’s have particularly focussed upon leveraging the online channel to establish a leaner distribution channel for their services. Online delivery includes reservations and payment, and achieving operational and sales efficiencies (e.g. online check-in, meal preferences, seat allocation, baggage limit). Given the dramatic changes in how online delivery is contributing to the overall value experienced by Vietnamese LCC passengers an investigation is warranted to explore the success, or otherwise, that online delivery has in value creation. Consequently, this study tests a series of hypotheses focussed on exploring how value is constructed by passengers utilising LCC online services.