The economic impact of air transport development and consumer choice on airline services in the Southeast Asia region

The economic impact of air transport development and consumer choice on airline services in the Southeast Asia region

Air transport plays an important role in a country’s economic development. Because of post-colonial government attitudes, the civil air transport industry in Cambodia, Laos, Myanmar and Vietnam (the CLMV countries) did not develop from the 1960s onwards when compared with other countries in the Asia-Pacific region. The CLMV countries share a similar history in their political systems, the development of their aviation industries and their economic development in general. This study examines the air transport industry of the Southeast Asian region from two perspectives: (1) the relationship between air transport development, economic growth and inbound tourism in the CLMV countries; and (2) the impact of airline service quality on customer satisfaction and repurchase behaviours in Laos and Myanmar.

There is a bi-directional causality between air passenger traffic and economic growth in the long term. Inbound tourism has a significant impact on air transport demand in the long run but no significant relationship exists between the two in the short run. Air transport deregulation has a positive and significant impact on traffic volumes, particularly for Cambodia. Further reforms are still needed before such an outcome can occur in Myanmar.

The most important factor leading to airline choice for both Laos and Myanmar was brand credibility while the responses of air passengers demonstrated that product uniqueness was also of significant importance. Surprisingly, price and perceived value were not ranked as the most important influences of airline choice in these two low-income countries. Despite high service quality not necessarily generating repurchase behaviour, airlines need to understand customers’ needs to ensure that their service quality matches customers’ expectations to have a better chance of creating customer satisfaction. Because happy and satisfied customers are much more likely to re-purchase.