Abstract:

In the respect of the growth in tourism and transportation, low cost airlines have been growing in Indonesia outstandingly. Recently, one of the most preferred low-cost airlines in Indonesia, Lion Air, has faced an accident. This study has a purpose in which to examine the influence of service quality towards price perception of service, customer satisfaction, and behavioral intention after the Lion Air JT610 incident. Moreover, this paper also evaluates how the external word of mouth (WOM) as the moderating variable affects the relationship between customer satisfaction and behavioral intention. In a sample of 252 passengers who have flown Lion Air in the past six months, using structural equation modelling (SEM), the results indicated that service quality positively influences price perception (monetary and behavioral price) and customer satisfaction. The monetary price itself also has a positive influence towards customer satisfaction. However, it has no significant influence towards behavioral intention. On the other hand, behavioral price has no influence towards customer satisfaction, whereas it has positively influence behavioral intention. Moreover, customer satisfaction is found to positively influence behavioral intention. However, there is no moderation effect of external WOM towards the relationship between customer satisfaction and behavioral intention. Lastly, this paper also provides managerial implications for low-cost airlines in Indonesia.