ABSTRACT Retaining customer loyalty is one of the essential elements that determines a company’s success or failure (Philips et al., 1983; Zeithaml! et al., 1985; Reihheld & Sasser, 1990). In addition, it is commonly known that good quality service results in long-term customer loyalty (Zeithaml et al, 1996). Hence, many companies strive to keep long-term customers and try to expand and maintain a large and loyal customer base by improving the quality of its service or products (Wong & Sohal, 2003). The purpose of this study is to measure the impact of service quality on customer loyalty to the Macau public bus services. The five dimensions of SERVQUAL (Zeithaml et al., 1998) and SERVPERF (Cronin & Taylor, 1992) were used as the independent variables in the measurement of service quality, they are “Tangibles”, “Reliability”, “Assurance”, “Empathy” and “Responsiveness”, while the framework of Zeithmal et al. (1996) of loyalty was used as the dependent variables namely “Word of Mouth”, “Purchase Intention”, “Price Sensitivity” and “Complaining Behaviour”. This study was conducted in Macau for the purpose of collecting related data. Street intercept face-to-face interviews were undertaken among 550 respondents with a response rate of 70.36 percent was obtained. Built on an empirical study of 387 valid respondents using the public bus service in Macau, results indicate that service quality correlates significantly with customer loyalty in the case of Macau’s public bus services. Moreover, the service features - Tangibles, Assurance, Empathy and Responsiveness are positively related to customer loyalty. Nonetheless, customers are not that satisfied with the service. The overall service quality is weighed as just average. On the other hand, most respondents are satisfied with the service provided by the hotline centre staff. For customer loyalty, the results indicate that most respondents refuse to recommend the service; they are concerned about the prices; but consider continuing to use the service in the near future. The results also point out that most respondents do not want to complain about the service to anyone even if they had experienced problems with it. In addition, frequency of usage does play a mediating role in the effect of service quality on customer loyalty. The results revealed that the management of the Macau public transportation services might have to pay more attention to the Tangibles, Assurance, Empathy and Responsiveness, as an increase in these variables will result in an increase in the level in customer loyalty. Besides improving the service quality, the public bus service providers may have to consider differentiation, while frequency of usage does moderate the relationship between service quality and customer loyalty. A differentiated offer, which meets high and low frequency users’ preferences, may improve the overall customer loyalty score. For the limitations of the study, most of the respondents were Cantonese -speaking, therefore the nationalities of respondents are limited and it may induce bias from the respondents. Furthermore, the limitation of resources, time constraints and the communication problems during the time the interviews were conducted and the data collected from a specific sector of the public bus service caused the limitations on the scope of the study. Finally, future research is presented. It is suggested that focus group meetings/interviews should be conducted in order to get more information. Furthermore, further research on the topic of frequency of usage as the moderator in the relationship should thus be extending the study. In addition, R square values suggest that future studies should examine other independent variables that are potentially important. Finally, qualitative research is suggested to further explore the attributes that contribute to service quality in different public transport service industries, in order to extend and refine the scale and identify any new issues, would be useful to understanding the phenomenon and implications of public transport service industry.