Structural Equation Modeling to Determine Passenger Loyalty toward Intercity Bus Services

Abstract

This paper investigates passenger loyalty to intercity bus services and identifies important factors influencing loyalty. The relationships between passenger loyalty and other latent factors, including satisfaction, service value, service quality, sacrifice, switching costs, attractiveness of competitors, and trust are hypothesized and tested. Factor analysis is used to extract the latent service quality factors from a large number of service quality indicators. Structural equation models are then developed to elucidate the causal relationships of passenger loyalty and the latent factors. The empirical results have confirmed the proposed hypotheses. Satisfaction has the most significant influence on passenger loyalty. Service value, switching costs, and trust have direct and positive effects on loyalty, whereas attractiveness of competitors has a direct negative effect. The indirect effect of service quality, via service value and satisfaction, on passenger loyalty is also significant. From the empirical results, managerial implications for the bus carriers are addressed.