The Case of Ethiopian Airlines Arbaminch Airport)

ASSESSMENT OF SERVICE QUALITY AND CUSTOMER SATISFACTION: (THE CASE OF ETHIOPIAN AIRLINES ARBAMINCH AIRPORT)

A THESIS SUBMITTED TO THE DEPARTMENT OF MANAGEMENT, COLLEGE OF BUSINESS AND ECONOMICS, SCHOOL OF GRADUATE STUDIES ARBA MINCH UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ART IN BUSINESS ADMINSTRATION

ANTENEH GETACHEW H/MICHAEL

Principal Advisor: Dr. Afework Getachew

Co advisor: Getasew Yaregal

OCTOBER 2016

ARBA MINCH, ETHIOPIA ABSTRACT

This thesis assessed service quality and customer satisfaction in the case of Ethiopian airlines Arba Minch airport. The research method consisted of a survey regarding satisfaction with the airline services. A structured questionnaire was developed using the SERVQUAL model as a benchmark. The questionnaire was personally administered to the target population particularly for the members of Sheba miles passengers within the airport.

Convenience samplingtechnique was used in the study to take a sample from the population. Aquestionnaire was designed based on the model in order to examine all the five dimensions of servicequality in the model for airline. A total sample of156 respondents who have made a flight with Ethiopian airlines at Arba Minch airport particularly members of Sheba miles were taken as a respondent. The final research sample consisted of 148 participants. Tangibles, assurance, responsiveness, reliability andempathy are five features of the model and in all five dimensions the passengers are satisfied. The results of correlation analysis indicates that all five dimensions have a negative relationship with overall customer satisfaction. The regression analysis shows that expect tangibles and empathy other service quality dimensions had a negative effect on overall customer satisfaction. But when we see group mean differences reliability and tangibles had the least mean scorevalue which implies passengers are not satisfied with those services. So, the management of EAL Arba Minch airport should improve its services by trainingemployees and improve visually attractive facilities. Finally the management of Ethiopian airlines Arba Minch airport should improve its ability to perform the promised service dependably and accurately with all dimensions to attain its objectives which is satisfying the passengers by providing better quality service delivery.

Key words: Service quality, customer satisfaction, SERVQUAL

Acknowledgement

First of all, my hearty thanks go to Almighty God for His blessing-full knowledge, inspiration and diligence required for the successful completion of this Thesis and for making my dream a reality.

My special thanks and recognition go to my research advisorsDr. Afework Getachew (Assistant Professor of Management) and Getasew Yaregal (MBA)for their stimulating advice and constructive comments at every step of writing this thesis as well as for unreserved efforts to assist me.

I would like to thank customers and employees of Ethiopian airlines Arba Minch airport specially members of Sheba miles program who cooperated with me by filling up the questionnaires and officials of Arba Minch airport for their cooperation and providing valuable information for completing the thesis.

I also convey my grateful thanks to the writers of literature and secondary source materials which have contributed a lot to my thesis. My appreciation and thanks extend to my family who directly or indirectly contribute their unlimited initiation and facilitation. Specially, my sister Abeba Getachew who supported financially; her encouragement and motivation throughout my stay in Arba Minch University. Last but not the least, I would like to thank all who encouraged me and provided necessary materials for the study.

Arba Minch University

School of Graduate Studies

This is to certify that the thesis prepared by Anteneh Getachew Hailemichael, entitled: Service Quality and Customer Satisfaction the case of Ethiopian Airlines Arba Minch Airport and submitted in partial fulfillment of the requirements for the Degree of Masters of Business Administration in Management complies with the regulations of the university and meets the accepted standard with respect to originality and quality.

Signed by the Examining Committee:

External Examiner ______Signature ______Date ______Internal Examiner ______Signature ______Date ______Advisor ______Signature ______Date ______co advisor ______signature ______date ______

______Chair of Department or Graduate Program Coordinator

Table of Contents pages Abstract………………………………………………………………………………………………I

Acknowledgement……………………………………………………………………………...……II

List of tables…………………………………………………………………………………………..

List of figures………………………………………………………………………………...…….....

Acronyms ……………………………………..………………………………………………………

CHAPTER I: INTRODUCTION

1.1 Background of the study ...... 1

1.2 Statement of the Problem ...... 2

1.3 Research Questions ...... 4

1.4 Objectives of the Study ...... 5

1.4.1 General Objectives ...... 5

1.4.2 Spe cific Objectives ...... 5

1.5 Scope and Limitation of the Study ...... 5

1.6 Significance of the Study ...... 5

1.7 Organization of the study……………………………………………....………………….6

CHAPTER TWO

2 Review of Related Literature ...... 7

2.1 Historical Background of Airlines Industry ...... 7

2.2Service Concept ...... 9

2.2.1Definition of Service ...... 9

2.2.2 Customer service………………………...……………………………..………………….9

2.2.3 Service quality…………………………………………………………………………….10

2.2.4 the SERVQUAL……………………………………………………………...………….11

2.2.5 Discusing and measuring service quality……………………………………..………12

2.2.6 Service quality gaps…………………………………………………………….………13 2.3Overview of Customer Satisfaction...... 14

2.3.1 Importance of customer satisfaction…………………………………………………..16

2.3.2 Measuring customer satisfaction and expectation……………………………………17

2.4 Service Quality and Customer Satisfaction ...... 18

2.5 The Distinction Between Customer Satisfaction and Service Quality ...... 19

2.6 Service Quality in Airline Industry ...... 19

2.7 Reviews on Airport Passenger Experiences ...... 24

2.8 Forecasting the Airport of Tomorrow ...... 26

2.9 Conceptual framework…………………...…………………………………………………28

CHAPTER THREE

3. Research Methodology ...... 30

3.1 Research Design ...... 30

3.2 varibles of the study…………………………………………………………………….……30

3.3Method of Data Collection ...... 31

3.4Sampling Technique and Sample Size ...... 33

3.5Description of the Study Area ...... 34

3.6Data Presentation and Analysis ...... 35

CHAPTER FOUR

4. Data Analysis, Interpretation and Discussion of Results ...... 37

4.1 Introduction ...... 37

4.2 Data Analysis and Interpretation ...... 37

4.3 Descriptive Statistics ...... 38

4.4 Results of measures of central tendency and dispersion ...... 42

4.5 Results of Inferential Statistics ...... 45

4.5.1Pearson's Product Moment Correlation Coefficient ...... 45

4.5.2Multiple Linear Regression Analysis for HypothesisTest…………………………………48

CHAPTER FIVE 5. summary conclusitions and recommendation…………..……………………………………….51 5.1 summary…………………………………………………………………………………………51 5.2 conclusion………………………………………………………………………………………52 5.3 recommendation…………………………………………………………………………………53 5.4 limitations of the study………………………………………………………………………..…54 5.5 future research directions ………………………………………………………...……….……54 References…………………………………………………………………………………………… Appendices…………………………………………………………………………………………

List of table Page

Table 2.1. The Distinction between Customer Satisfaction and Service Quality……………………..19

Table 4.1 Distribution of Demographic Variables…………………………………………...………38

Table 4.2; Mean score for service quality dimensions……………………………………….……….43

Table 4.3 comparison on mean score results of other research findings with present work…44

Table 4.4: The relationship between dimensions of service quality and customer satisfaction………………………………………………………………………….…………………47

Table4.5: results of regression analysis………………………………………………...……49

List of figures Pages

Figure 4.1.Gender distribution using graph…………………………………………...……39

Figure 4.2. Presents the respondents responses with regard to their ages…………………..40

Figure 4.3. Graphical presentation of educational qualification………………………...…..41

Figure 4.4. Passengers return flights during last 12 months ………………………….…….42

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

In today’s competitive environment delivering high quality service is the key for a sustainable competitive advantage. Customer satisfaction does have a positive effect on an organization’s profitability. Satisfied customers form the foundation of any successful business because customer satisfaction leads to repeat purchases, brand loyalty, and positive word of mouth. (BiljanaA. and JusufZ. 2011).

Hence, service quality can be thought as the fit between current service level and customer expectations. Park (2004) define service quality as a consumer’s overall impression of efficiency of an organization and its services. Thus, customer satisfaction is a judgment made based on a specific service encounter.

Service quality is an important tool to measure customer satisfaction (Hazlina2011). Empirical studies show that the quality of service offered is related to overall satisfaction of the customer. According to Jamal and Anastasiadou (2009), reliability, tangibility and empathy positively related with customer satisfaction.Sulieman (2011) found that reliability, tangibility, responsiveness and assurance have significant and positive relationship with customer satisfaction. Moreover, the result of Ravichandran (2010) indicates responsiveness is the only significant dimension of service quality that affects the satisfaction of customers positively.

Nowadays all companies are realizing the significance of delivering and managing service quality, which leads to customer satisfaction. Service quality that is delivered can meet or exceed customers’ expectations are mainly influenced by customer’s prior expectations. (BiljanaA. and JusufZ.(2011).

According to Hansemark and Albinson (2004) satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some needs, goals or desire. Customer Satisfaction has been a central concept in marketing literature and is an important goal ofall business activities. Kotler and Armstrong (2012) preach that satisfaction is the post-purchase evaluation of products or services taking into consideration the expectations.

The airline industry is a major player in the world economy as it contributes significantly to the leisure/tourism and is a key element of international business (Tiernan, Rhodes & Waguespack, 2008).

The aviation sector has become the most important segment in the economic development of a nation. It plays a vital role in moving people or products from one place to another, be it domestic or international, especially when the distances involved are far. In a highly competitive environment the provision of high quality services to passengers is the core competitive advantage for an airline's profitability and sustained growth. In the past decade, as the air transportation market has become even more challenging, many airlines have turned to focus on airline service quality to increase service satisfaction. Service quality conditions influences a firm’s competitive advantage by retaining customer patronage, and with this comes market share. Delivering high-quality service to passengers is essential for airline survival, so airlines need to understand what passengers expect from their services.(R.Archana and DR.M.V.Subha, 2012).

As a result of this, the research work is also studies for assessing of service quality and customer satisfaction in Ethiopian airlines Arbaminch airport.

1.2 StatementoftheProblem

In this struggling environment, airlines are forced to shift their focus towards customer oriented service quality (Chang &Yeh, 2002). It is extremely important for carriers not only to understand the perception of passengers of their service offerings, but as well find out what customers expect from the services (Chen & Chang, 2005) and what kind of services customers consider most important. In the airline industry, services are composed of very complex mix of intangibles as the airlines sell not physical objects but performances and experiences (Gursoy et al., 2005). Thus, service quality is a key to attract and keep loyal customers (Liou&Tzang, 2007; Chang &Yeh, 2002).

According to Ekaterina T. (2012), the customers care more about very basic aspects of air transportation: provide good information for decision making, be on time and communicate promptly in case a flight is delayed or cancelled. The airlines may consider such results as an incentive to deliver key services on consistently high level and carefully reconsider the value of ancillary services.

Ethiopian airline is exposed to a heavy competition against giant alliance in the international scene, regional alliance in Africa and the Middle East, and strong individual airlines from Europe, Middle East and Africa. Unless the airline prepare and develops strategy to counter the upcoming competitive pressure, the consequences could be unmerciful.

According to (Chen 2008), Regardless of the size of your business and whether it is product- based or service based, success will depend on a high level of customer satisfaction. As customer satisfaction strategies are proven to enhance the service quality of the business, knowing how to provide passengers with satisfaction is vital for Ethiopian airlines Arbaminch airport to increase its competitive advantage. Thus, the most important factor in attracting and retaining customers is service quality as satisfied customers will maintain their loyalty to the airline.

According to the findings of (Aako T. 2012), results show that, customer satisfaction is poor. Which indicates that air service quality doesnot match the expectation of customers. Although there are service dimensions which were reported as satisfactory by customers, satisfaction levels, were, overall poor. The gap of the research was it uses small sample size.

According to the finding of (Gashaw G, 2012), in tangibles and reliability dimensions passengers are satisfied, and the researcher inclusively concluded that passengers of EAL are not satisfied with other three dimensions. The gap of the research was it uses only one sample T-test to analyze the data and took regular passengers as a respondent. From above empirical study gaps the present study tried to fill the gaps such as using large sample sizes instead of using small sample size. And also the present study takes Sheba miles members as a respondent to get valuable and reliable information.

All this realities was provoked this research to assess service quality and customer satisfaction at Arba Minch airport so that some useful recommendations had been forwarded.

With regard to service quality and customer satisfaction of Ethiopian airlines Arbaminch airport,this thesis was viewed service experience as a process, starting with a search for a ticket and ending with post-flight services. All the steps a customer is taking during air transportation are listed and discussed. Service quality is created on each step of the process, and it had been important to understand the customer preferences and expectations from the services.Moreover, the results from this research would assist airline managers and employees to better serve their customers, monitor and develop service quality to achieve the highest level of their passenger’s satisfaction.

1.3 Research Questions

The key research questions are:

1. Arecustomers satisfied with the airline service delivery? 2. What is the relationship between service quality dimensions and customer satisfaction? 3. Do service quality dimensions have effect on customer satisfaction?

1.4 Objectives of the Study

1.4.1 General Objectives

The main purpose of this study wasto assess service quality and customer satisfaction in the case of Ethiopian airlinesArbaminch airport.

1.4.2 Specific Objectives

 To ascertain whether the service provided by the airline satisfies customers or not.  To examine the relationship between service quality dimensions and customer satisfaction  To determine effects of service quality dimensions on the satisfaction of customers 1.5 Scope of the Study

This paper was taken as a respondent only those passengers that are waiting their flight at Arbaminch Airport terminal particularly which are using Sheba Miles program service because those permanent members use frequently the flight and have better perception about the whole service of the airline than the regular passengers. So, this helps the researcher to attain valuable and reliable information.

Such key service quality dimensions as safety, flight frequency, reliability etc. was considered on generic level only, with the analysis focusing on service attributes such as speed of check-in, entertainment and catering on board as well as employees’ attitude.

1.6 Significance of the Study

The output from the researchwould help the airline to recognize its performance deficiencies and to find constructive ways of improving its service quality to enhance customer satisfaction and increase marketing advantages. More importantly, the outcome of this study would contribute to the improvement of strategy formulation and resource allocation which would enhance the service quality of airline within Arbaminch airport.

Furthermore, the tentative solutions provided by the researcher would assist airline management to better serve their customers and monitor and develop service quality to achieve the highest level of customer satisfaction.

This research would serve as potential reference for those individuals who want to conduct further studies on the same or related areas.

1.7 Organization of the Study

The research thesis had five chapters. The first chapter is deal with research preliminaries including background of the study, statement of the problem, objectives, research questions, scope of the study, significance of the study. In the second chapter, review of related literature had been presented in a detailed manner. In the third chapter, research methodology usedwas presented. In the fourth chapter, Facts and figures obtained from both primary and secondary sources was presented, discussed and analyzed. Based on the fourth chapter, conclusions and possible recommendations had been made in the fifth chapter. The thesis also consists of other formal sections like Bibliography, Appendices, etc CHAPTER TWO

2 Review of Related Literature

This chapter is a comprehensive presentation of the relevant literature that was reviewed. It touches on the concepts of Historical background of airlines industry, Service Concept, Definition of service, Customer service ,Service Quality ,The SERVIQUAL, Discussing and Measuring Service Quality, Service Quality Gaps, Overview of Customer Satisfaction, Importance of customer satisfaction, Managing Customer Satisfaction and Expectations, Service Quality and Customer Satisfaction ,The Distinction between Customer Satisfaction and Service Quality, Service Quality in Airline Industry, Reviews on Airport Passenger Experiences and finally Forecasting the airport of Tomorrow.

2.1 Historical Background of Airlines Industry

The aviation sector has become the most important segment in the economic development of a nation. It plays a vital role in moving people or products from one place to another, either being domestic or international, especially when the distances involved are long. Currently, anyone can easily access the aviation service from their respective air terminals. In a highly competitive environment the provision of high quality services to passengers is the core competitive advantage for an airline's profitability and sustained growth. In the past decade, as the air transportation market has become even more challenging, many airlines have turned to focus on airline service quality to increase passenger satisfaction. (Kalaippiriya K. Santhi A. and Barathy D., 2015).

Compared to other industries the airline industry has a rather short history to look back at. Even though it is not possible to provide a single date which serves as a starting point for the airline business it is feasible to mention the Wright brothers who conducted powered air flights in 1903 and by doing that set the basis for personal aviation (Sheehan & Oclott, 2003).

Bieger and Agosti (2005) developed a model of four stages which comprises the evolution of the airline business and divides it into four parts. The first stage mentioned is called technical stage and lasts until the beginning of World War II. In those early years travelling by air was rather suitable for adventurers. The business was a supply side business and airlines making profits could hardly be found. Stage two, called political stage covers the establishment of international regulations, agreements and standards which were set for the transportation industry. Important technological achievements were made in the 1950s with the development of jet planes which enabled airlines to start immense growth (Sheehan & Oclott, 2003). The airline business started putting more emphasize on quality and costs in the early 70ies. This third stage was also shaped by the introduction of open sky policies, new services, pricing schemes and competitors entering the market with new business concepts.

The last stage, network and alliances, started in the 90ies with the introduction of low cost carriers (LCCs) and the process of forming alliances among already established carriers which completely changed market conditions. In Europe new established LCCs like Ryan air or Easy jet took advantage of the liberated European skies and managed to successfully position themselves in the market. At the same time many old-established full services carriers like British Airways or Austrian Airlines faced severe financial problems. In 2002 Swiss Air who was renowned for service excellence was grounded, a scenario that at that time no one would have accepted for an established carrier. Swiss Air’s grounding however stressed the need for airlines, regardless of how long they were already part of the airline market, to adapt their business model to the changing needs of customers. Current developments show that traditional full service airlines have to face new competitors like Emirates entering their home markets. How Emirates managed to successfully enter distinct markets around the world and continues to make profit. (Bieger and Agosti et al, 2005).

The transformation of airport customer service began in the late 1990s, but accelerated after the tragic events of September 11, 2001 (9/11), when airports were called upon to provide emergency support to many stranded customers. After 9/11, changes in security protocols and substantial airline losses transformed airport operations and led airport management to take a more direct role in customer service. From the customer’s perspective, there is now a need to spend more time at the airport to allow sufficient time to pass security checkpoints. Limited food service on aircraft has increased demand for concessions and eating areas. Many passengers hand-carry baggage onto aircraft and need extra maneuvering space through the terminal, which has led to design changes. Consolidation and cost savings initiatives by airlines, rental car companies, and concessions have translated into fewer customer service agents on airport premises. In the current environment, the airport has become the first recourse. (www.TRB.org 2013). 2.2 Service Concept

2.2.1 Definition of Service

A serviceis any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. Increasingly, manufacturers, distributors, and retailers are providing value- added services, or simply excellent customer service, to differentiate themselves. (Kotler 2012)

2.2.2 Customer Service

Customer service is an organization’s ability to supply their customer’s wants and needs (Chinunda, 2014: 14). It may also mean an experience that one goes through in life. There are of course many definitions of customer service doctored to suit company products and service offerings but what is important is to understand its concept.

Providing excellent customer service is the ability for an airline to constantly and consistently exceed passenger’s expectations. It is interesting, to note that, sometimes customer service refers to a person or desk which is set up to give general assistance to customers. The success of any airline lies in the hands of their customers (Atalik, 2009). Once a customer is satisfied with the products or services, then an organization is assured of great profits. Therefore, it is only airline’s passengers who can put up or down the reputation of the company. A good customer experience results in repeat venture to the same business. In fact, customer service is the most important difference between one airline and its competitors. The only airline which survives in business is the one which gives good customer service (Chilembwe, 2014).

2.2.3 Service Quality

Service quality is a concept that has aroused considerable interest and debate in the research literature because of the difficulties in both defining it and measuring it with no overall consensus emerging on either.

There are a number of different "definitions" as to what is meant by service quality. One that is commonly used defines service quality as the extent to which a service meets customers’ needs or expectations (Lewis, 2010). Service quality can thus be defined as the difference between customers’ expectations of service and perceived service. If expectations are greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs (Lewis, 2010). Always, there exists an important question: why should service quality be measured? Measurement allows for comparison before and after changes, for the location of quality related problems and for the establishment of clear standards for service delivery. The starting point in developing quality in services is analysis and measurement.

Service quality conditions influences a firms competitive advantage by retaining customer support, and with this comes market share. Delivering high-quality service to passengers is essential for airline survival, so airlines need to understand what passengers expect from their services. Service quality is one of the best models for evaluating customer’s expectations and perceptions. Service quality can also be defined as a customer’s overall impression of the relative efficiency of the organization and its services. Understanding exactly what customers expect is the most crucial step in defining and delivering high-quality service. (Kalaippiriya K. Santhi A. and Barathy D., 2015).

In these challenging circumstances, Airline services regardless of whether they are full service or low cost carriers are made up of a very complex mix of intangibles. Thus, measuring customers’ expectations, as well as their service quality is a real challenge because customer satisfaction is determined by many intangible factors such as atmosphere and ambiance of the cabin crews behaviors, etc. Fitzsimmons, J.A., & Fitzsimmons M.J. (2001). Airlines companies need to review its service strategy to increase customer satisfaction and subsequently customer loyalty. They should have strong commitment to service excellence as they also act as the ambassadors that carry the image of the nation.

The performance of a company leads to passenger satisfaction with a product or service. Passenger satisfaction is fundamental to the practice of consumer sovereignty. Passenger satisfaction can be defined as a judgment made on the basis of a specific service encounter. Satisfaction and loyalty are not surrogates for each other. It is possible for customers to be loyal without being highly satisfied and to be highly satisfied and yet not loyal. Firms are needed to gain a better understanding of the relationship between satisfaction and behavioral intention in the online environment and to allocate the online marketing efforts between satisfaction initiatives and behavioral intention program. (Kalaippiriya K. Santhi A. and Barathy D., 2015).

Moreover, the results from this research would assist airline managers and employees to better serve their customers, monitor and develop service quality to achieve the highest level of their passenger’s satisfaction.

2.2.4 The SERVIQUAL

The original conceptualization of service quality was a framework developed by Parasuraman (1985, 1988 and 1994). Their works led to the development of a 22-item scale, the SERVQUAL instrument which has been used extensively by most researchers. The SERVQUAL instrument was originally measured on ten (10) aspects or dimensions of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding, and tangibles (Parasuraman et al 1985) as a means of measuring the gap between customer expectation and experience.

The original construct was found to be overly complex, subjective and statistically unreliable, and as a result it was simplified and modified to the five dimensional model which is measured on five (5) aspects, namely - reliability, assurance, tangibility, empathy and responsiveness (RATER). (McCabe, 2007). Service quality is therefore a function of pre - purchase customers‟ expectations, perceived process quality and perceived output quality (McCabe et al, 2007).

Parasuraman et al (1985), conceptualized service quality as the gap between customers’ expectation and their perception of the service experience. Based on their conceptualization of service quality, the original instrument was made up of 22-items.

The five dimensions of the SERVQUAL scale include (Parasuraman, Zeithaml, and Berry, 1988):

(a) The physical facilities, equipment, and the appearance of the staff (Tangibles);

(b) The dependability and accuracy of the service provider (Reliability);

(d) The ability of the staff to instill confidence and trust in the company (Assurance); (e) The ability of the staff to provide a caring service to customers (Empathy).

In this study, the researcher incorporates a slightly modified SERVQUAL instrument in a comprehensive questionnaire in exploring the assessment of service quality and customer satisfaction in Ethiopian airline Arba Minch airport. The SERVQUAL has proved to be an invaluable tool for service organizations to better understand what their customers’ value and how well they are meeting the needs and expectations of customers. It provides a benchmark based on customer opinions of an excellent organization, on the ranking of key attributes and on comparison to what employees of service organizations believe customers feel.

2.2.5 Discussing and Measuring Service Quality

Quality, comprising both operational dimensions and service personnel, is an important attribute for achieving competitive advantage through the strategy of differentiation. (Tiernan, Rhoades and Waguespack et al., 2008).

Quality is a driving force for improved competitiveness, customer satisfaction and profitability (Edvardsson, 1992). As for service quality, e.g. American Marketing Organization defines it in two ways: first, it is an area of study that defines and describes how services are delivered so that the service recipient is satisfied; second, high quality service is a delivery of service that meets and exceeds the expectations of the customers.

Parasumaran et al. (1985) state that service quality is defined by the customer evaluation of service outcome and service process as well as a comparison of customer expectations with service performance. Hence, service quality can be thought as the fit between current service level and customer expectations. Park et al. (2004) define service quality as a consumer’s overall impression of efficiency of an organization and its services.

Thus, customer satisfaction is a judgment made based on a specific service encounter. Chen & Chang (2005) suggest that service quality is a process, and in case of airline industry, the authors divide the process into ground and in-flight services and state that passengers’ expectations are different for each of the processes.

Measuring service quality has proven to be challenging for both the researchers and companies due to its characteristics (Tiernan et al., 2008). Different from product quality, a set of specifications or by physical aspects such as defects cannot be applied to service quality due to service intangibility and simultaneous production and consumption. (Tiernan et al., 2008).

In addition, service quality cannot be measured by evaluating outcomes of service process only (Johnson et al., 1995), but as well has to consider service production process – e.g. employee training and customer-employee interaction. Hence, measuring all aspects of service production is essential to understand the quality of a service. Probably the most famous service quality model is SERVQUAL, developed by Parasumaran et al. in 1985.

2.2.6 Service Quality Gaps

There are seven major gaps in the service quality concept. The model is an extension of Parasuraman et al. (1985). According to the following explanation (Curry, 1999) the three important gaps, which are more associated with the external customers are Gap 1, Gap 5 and Gap 6 because they have a direct relationship with customers.

Gap 1: Customers’ expectations versus management perception: this is as a result of lack of marketing research orientation, inadequate upward communication and too many layers of management.

Gap 2: Management perceptions versus service specification: this is as a result of inadequate commitment to service quality, a perception of unfeasibility, inadequate task standardization and an absence of goal setting.

Gap 3: Service specifications versus service delivery: this is as a result of role ambiguity and conflict, poor employee-job fit and poor technology-job fit, inappropriate supervisory control systems, lack of perceived control and lack of teamwork.

Gap 4: Service delivery versus external communication: this is as a result of inadequate horizontal communications and propensity to over-promise.

Gap 5: The discrepancy between customers’ expectations and their perceptions of the service delivered: this is as a result of the influences exerted from the customers’ side and the shortfalls (gaps) on the part of the service provider. In this case, customers’ expectations are influenced by the extent of personal needs, word of mouth recommendation and past service experiences. Gap 6: The discrepancy between customers’ expectations and employees’ perceptions: this is as a result of the differences in the understanding of customers’ expectations by front-line service providers.

Gap 7: The discrepancy between employee’s perceptions and management perceptions: this is as a result of the differences in the understanding of customers’ expectations between managers and service providers.

2.3 Overview of Customer Satisfaction

Satisfaction is related to the customer’s evaluation of a product or service that determined whether it meets the customer’s expectancies. (Huang, Y. K. and Feng, C. M. 2009) having purchased a product previously, the consumer has more than likely developed an attitude towards it. It is likely that the attitude is tied fairly strongly to the consumer’s intention to repurchase the product or patronize the service in the future. Satisfaction can be defined as judgment made on the basis of a specific service encounter. Whenever satisfaction fails, dissatisfaction is the result when the needs and expectations are in failure. From the mentioned definitions it can be concluded that satisfaction is related on how customer had the feeling to repurchase certain products or services.

Satisfaction plays a key role in the service industry and especially in the travel and hospitality industry (Chang & Chang, 2010). As the service has evolved, researchers have made great strides to define and understand satisfaction from the customer’s perspective. The emphasis to comprehend what truly creates satisfied customers has led to an ever increasing body of literature surrounding satisfaction, how service providers create satisfied customers and the value as well as effects that satisfaction has on businesses today (Anderson & Fornell, 2000).

The performance of any firm leads to customer satisfaction with a product or service. Customer satisfaction is fundamental to the practice of consumer sovereignty. Customer satisfaction (or dissatisfaction) has become an important issue for marketing practitioners because of the rapid business environment. (Zeithaml, 2008).

Achieving high levels of customer satisfaction requires that organizations continually monitor and examine the experiences, opinions, and suggestions of their customers and people who are potential customers. Improving service quality to meet customers’ standards is an ongoing part of doing business. In this way, customers drive the market and the organization. At the same time that organizations act to attract and satisfy customers, the customers themselves exercise ultimate influence. Their satisfaction depends on both their expectations and their treatment. Through their choices, customers decide which organizations survive and thrive, determine what goods and services are available and shape how they are provided. In addition to using their purchasing power informed consumers can shape the marketplace by communicating their preferences and standards to organizations that are poised to listen and respond.(www.cssp.org (2007)

2.3.1 Importance of Customer Satisfaction

Customer satisfaction helps customers to communicate their needs straight to the sellers. Customer satisfaction is very important because it helps to learn about the business’s strengths and weaknesses. Business holders can just know their strengths and weaknesses and make the progression. Not only this, also customer satisfaction also helps to appropriate resources for eventual strike or satisfaction. Furthermore, it supports to show calmness about making better quality of products and services to both the employees and the customers. It does not help to learn about strengths and weaknesses but helps it also to persuade competitive strengths and weaknesses. Similarly, it helps to benefit more vision into the sources of frustration and areas desiring progression. At last, customer satisfaction helps to accommodate a system for informing management of problems or situations requiring actual promotion. (ICR 2011)

While talking about business, it is not easy to establish this thinking but everything needs to be set up everything from top to bottom and management also exists there. Nature of business depends upon the size that was established, either in the form of big-scale or small- scale. No business has been established without thinking about the profit, and customers are the pillars of the business. So every business’s stake holders always think about the satisfaction of the customers by trying to meet the needs of the customer, which is the main responsibilities of the business investor. As the task of the research is concerned with the importance of customer satisfaction, some points have already explained this in the above section, and some points are going to be explained here. (ICR 2011) Actually, customer satisfaction helps to increase the profit for business investors so every such investor thinks that to earn profit is not as easy. If the business is successful, and able to satisfy the customers then customers will be happy, they buy more goods and the company will be able to sell more goods and it helps to increase the profit. Similarly, it helps to increase the sales, to reduce the production costs, and to enhance marketing and advertising If the customers are fully satisfied with the goods and services provided by the business company, they refer it to their friends and relatives telling them that they are satisfied, and this helps to promote marketing and advertising of the business. Similarly, it helps to improve the goodwill. (ICR 2011).

Airports managers interviewed described three reasons why customer satisfaction has become a priority:

 Measuring and tracking the customer experience will lead to a better understanding of needed airport improvements from the user’s perspective.  Good customer service helps the passenger feel more at ease and relaxed, which translates to repeat business, higher spending rates at the concessions, and ultimately greater net revenues to the airport sponsor.  Airports that exceed their customers’ expectations will have a competitive edge, especially in regions where fliers can select among multiple airports.(www.TRB.org 2013) 2.3.2 Measuring Customer Satisfaction and Expectations

Customers form service expectations from many sources, such as past experiences, word of mouth, and advertising. In general, customers compare the perceived service with the expected service. If the perceived service falls below the expected service, customers are disappointed. Successful companies add benefits to their offering that not only satisfy customers but surprise and delight them. Delighting customers is a matter of exceeding expectations. (Kotler 2012)

Furthermore, Parasumaran et al. (1991) categorize customer service expectations into five service dimensions: reliability, tangibles, responsiveness, assurance and empathy. Reliability is concerned with an outcome of a service, whereas the rest of dimensions are concerned with service process. Customer satisfaction is driven by multiple factors: some are within the airport’s control, such as cleanliness, ease of way finding, variety of shops, comfort of departure areas, reliability of escalators and moving walkways; others may or may not be within the airport’s control such as Security Clearing Time and Baggage Delivery Time; and still others are not within the airport’s control, such as speed of airline check-in, level of airfares, and range of flights offered. Airports must understand what drives their customer satisfaction rating in order to take appropriate action, including working with airlines and government agencies as required to improve their performance. (Oliver W.2012).

2.4 Service Quality and Customer Satisfaction

During the age of modern age everybody has seen that business is rapidly growing day by day and concerning with business there are always two parties called buyers and sellers, and buyers are concerned with quality, and sellers are always concerned with money.

Today's world is dependent on business end engagements in at least three major activities. On this regards, many scholars have argued over this matter and said that the first activity is production, which involves making a product or providing a service. The second is manufacturing, where firms create products finally, customers purchase to satisfy needs, whereas service firms use the skills of employees to offer activities and assistance to satisfy customer needs. (Burrow & Everard 2004). In the same sense Hernon (2001) argues that satisfaction and service quality provide a conceptual framework that should prove useful in understanding, thinking, and talking about service quality and customer satisfaction, what they are, how they are shaped, and how a subject can evolve to both internal, controllable forces and external, uncontrollable factors.

2.5 The Distinction Between Customer Satisfaction and Service Quality

Table 2.1. The Distinction between Customer Satisfaction and Service Quality

Customer Satisfaction Service Quality

Customer satisfaction can result from any The dimensions underlying quality dimension, whether or not it is quality judgments are rather specific. related.

Customer satisfaction judgments can be Expectations for quality are based on ideals formed by a large number of non-quality or perceptions of excellence. issues, such as needs, equity, perceptions of fairness.

Customer satisfaction is believed to have Service quality has less conceptual more conceptual antecedents. antecedents.

Satisfaction judgments do require experience Quality perceptions do not require experience with the service or provider. with the service or provider.

Source: Adapted from various sources (Choi 2004; Grace and O’Cass, 2005).

2.6 Service Quality in Airline Industry

Service quality is like beauty in the eyes of the beholder and hence a matter of perception (Rhoades and Waguespack, 2004).However, it’s measurement, plays an important role in assessing a service organization’s performance, scrutinizing service problems, managing service delivery and determining corporate rewards (DeMoranville and Bienstock, 2003).

According to (Oliver W. 2012), Service quality indicators focus both on how passengers perceivethe level of service provided by the airport, and on objectivemeasures of service delivery.

Those service quality indicators provided by airports are:

 Practical Hourly Capacity  Gate departure delay  taxi departure delay  Customer Satisfaction  Baggage delivery time  Security Clearing time  Border Control Clearing time  Check-in to Gate time This important area of airport performance reflects the strides made by airports to deliver an increasingly high standard of service in multiple areas, ranging from airport cleanliness to minimization of wait times, to the provision of a wide range of attractive retail opportunities. Some measures of service quality must be based on passenger surveys, as they reflect overall passenger perceptions. Some delay measures may be driven by airport capacity limitations. (Oliver W. et al, 2012).

A. Practical Hourly Capacity Service Quality 1:Maximum aircraft movements per hour assuming average delay of no more than four minutes, or such other number of delay minutes as the airport may set. Practical hourly capacity is largely a function of runway capacity which is determined by the number of runways, their configuration and separation, taxiway access and capacity, air traffic system restrictions, weather and terrain, type and mix of aircraft, arrival/departure mix. Many of these factors are fixed until new infrastructure is added.

There is no consensus on the best measure of runway capacity, which is a fundamental airport metric along with terminal capacity. PracticalHourly Capacity (PHC) is a useful measure because it incorporates a level of service requirement. The standard definition of PHC uses a maximum delay of 4 minutes, although individual airports may calculate PHC based on other maxima, such as 8 minutes, depending on individual circumstances and air carrier planning criteria. Runway capacity, expressed in movements per hour, is generally higher during optimum conditions when radar separation between aircraft is required. The magnitude of the difference varies from airport-to-airport depending on the airfield configuration and other drivers listed above. Other measures of runway capacity include declared runway capacity and maximum hourly capacity.

B. Gate Departure Delay Service Quality 2: Average gate departure delay per flight in minutes measured from scheduled departure time at average and peak times. Gate departure delays may be a function of airport capacity constraints, limited air traffic system capacity, airline scheduling practices, airline operational issues, late aircraft arrivals from the prior station, adverse weather, and other factors.

Multiple delay measures are used by airports, airlines, and others. To compare airports across countries, delay measures first should be standardized. It is important to determine the causes of gate departure delays, which may be largely beyond the airport’s control and may vary by season. Related operational measures include flight cancellations and airport closures.

C. Taxi Departure Delay Service Quality 3: Average taxi delay for departing aircraft per flight in minutes measured by comparing actual taxi time versus unimpeded taxi time at average and peak times. Taxi departure delays may be a function of airport capacity constraints, limited air traffic system capacity, airline scheduling practices, airline operational issues, adverse weather, and other factors.

D. Baggage Delivery Time Service Quality 5: Average time for delivery of first bag and last bag measured over the course of a year. Airline or ground handling company operational performance, airline scheduling practices (which determine volume of connections and connecting times), security screening issues (often driven by government agency management of screening), and airport layout, facilities, and equipment,

Baggage delivery time is an important service quality metric, although one that is largely beyond the control of airports and within the control of airlines or their designated ground handling companies. In its Baggage improvement Program the international Air transport Association (IATA) lists over 70 performance issues to be tracked over the course of baggage check-in, security screening, transfer, and re-delivery to the passenger. The airport role in these issues is largely limited to providing necessary facilities and equipment.

E. Security Clearing Time Service Quality 6: Average security clearing time from entering queue to completion of processing measured at average and peak times. Level of security staffing, type of screening technology used and number of units in operation, screening procedures and protocols, number of security lanes that are staffed, passenger demand profile.

Security is administered differently across countries; it is operated by the airport or privatized in some cases, while conducted by a government entity in others. Also, different airports have different profiles in terms of peak period versus average screening demands, the amount of passenger carry-on luggage to be screened, and the level of the security threat. Passengers focus on security clearing times as an important aspect of their overall airport experience.

F. Border Control Clearing Time Service Quality 7: Average border control clearing time from entering queue to completion of processing measured at average and peak times. Level of border control staffing, technology employed, procedures and protocols, number of screening lanes that are staffed, passenger profile in terms of border control screening.

Passengers focus on border control clearing times as an important aspect of their overall airport experience. Procedures and processing times vary from country to country. Although an important performance indicator for passengers, border control processing is almost always under the control of national authorities, and airport influence is largely limited to attempting to persuade those authorities to make changes in staffing and procedures.

G. Check-in to Gate Time Service Quality 8: Average time from entering the check-in queue to arrival at the boarding gate measured at average and peak times. Numerous drivers at multiple processing points, including queuing and processing times at initial check-in, security screening, and in some cases, border control and then transit time by rail or bus from terminal to gate area. In addition, walking distances are a factor in the overall result and are likely to be longer at larger airports. Passengers focus on the time spent from check-in to gate, and on the variability of this measure. The primary drivers of airline check-in and security screening times are usually beyond the airport’s control. Airports should focus on the elements of this performance indicator within their control and should influence airlines and government agencies to provide short processing times. (Oliver W, 2012 et al www.aci.aero).

As airlines provide experiences and performances but not physical objects, experiences and performances differ from service provider to service provider, and customer to customer (Gursoy, 2005). Therefore, the structural content of the service as a process may influence the service evaluations by the consumer. In service quality research, literature suggests various concepts of measuring quality. To date, several researchers have proposed a finer measure to evaluate airline service quality. It is perceived that airline service quality as a multidimensional construct and using on time performance may not address the total service quality of an airline (Parast and Fini, 2010).

Airline providing high service quality to passenger is important because competition is ever increasing as airline firms try to acquire and retain customers. Price and service quality are initially used as the primary competitive weapons. Airlines realize that competition on price alone represents a no-win situation in the long term. This implies that airline’s competitive advantage based on price alone is not sustainable. Airline’s competitive advantage lies in service quality perceived by customers. The airlines’ management needs to make important efforts for improving their customers’ satisfaction. Since passengers probably spend most of their time airborne, the quality of inflight service deserves more attention by the airline. And yet, the evaluation of in-flight service quality in the domestic airline is an on-going process that requires continuous monitoring to maintain high levels of in-flight service quality across a number of different service criteria.(Yuan-H.C, Ming-L.T and Ru-J.L 2011).

Wen and Lai (2010) measured airline service quality based on airfare, schedule time difference, flight frequency, on time performance, airport check in service, in-flight seat space, in-flight food and beverage service. Tiernan et al (2008) measured service quality international airlines in the America and Europe based on percentage of not cancelled flights, percentage of passengers filling baggage lost, damaged , delayed or stolen, and on-time performances. Babbar and Koufteros (2008) suggest that an element of personal touch and nature of an employee’s attention, helpfulness, promptness, and courtesy enables better management of quality. But by large many researchers like Tsaur et al, (2002) ,Sultan and Simpson, (2000), Chen et al, (1994) and Frost and Kumar, (2001) measured airline service quality based on (Parasuraman, 1988) SERVQUAL service quality model.

SERVQUAL model was based on five broad dimensions reliability, responsiveness, assurance, empathy and tangibles. Tangibility meant the physical presentation of services like in-flight equipment, entertainment, food, seating etc.; reliability stood for the airline’s credibility of safety and pilot navigation skills; responsiveness was described by the cabin crew and ground staff interaction with customers, assurance represented the certainty provided by the airline staff and empathy represented the ability of airline staff to deal with customer service requirements and dealing with customer complaints.

2.7 Reviews on Airport Passenger Experiences

Airport passenger experience includes a complete set of passenger activities from departure terminal to arrival terminal in order to meet requirements in all airport processing domains and to spend any spare time they have in these airport terminals. Popovic, Kraal, and Kirk (2010) described airport passenger experience as “activities andinteractions that passengers undergo in an airport terminal building”. Passenger experience is categorized into two broad categories:

 processing activities and  Discretionary activities. Processing activities are those that should be completed by a passenger in sequence upon arrival at the airport, which consist of check-in, security screening, immigration, and boarding; while discretionary activities are optional and unordered activities based on passengers’ freedom of choice (Kirk, 2013; Popovic et al., 2010).

Since customer needs are changing over time, airports should be able to adjust to these changes by delivering services that customers require. Wiredja (2010) recommended companies use a set of dynamic performance measures that provide flexibility to adjust the measures depending on their needs, adding or replacing measures as the company evolves. Popovic et al. (2010) classified an airport processing domains in the departure terminal into: (i) check-in, (ii) immigration (iii) security screening, and (iv) boarding, while the processing domains in the arrival terminal consist of (i) disembarkation, (ii) immigration, (iii) baggage claim, and (iv) customs and quarantine. While queuing and processing activities remain important to the experience, what passengers do when they are not being processed is also important. Recent research highlighted that a passenger’s time inside the airport terminal building can be approximately be apportioned as 50% processing and 50% discretionary (Fukaya, 2012).

Other research found that accounted for approximately two thirds of passengers’ whole airport experience (Kirk, Popovic, Kraal, & Livingstone, 2012). Discretionary activities of air passengers consist of carrying out consumptive, social, passive, preparatory, queuing and entertainment activities during their time at the airport.

The classification of passenger activities is important not only to analyze passenger experience but also to improve airport service performance. Moreover, each activity or combination of these activities is important improve airport passenger experience. For instance, when the airport management provided clear information in advance to every passenger (preparatory activities) before queuing at the X-ray machine, this resulted a significant reduction in average queuing times and an increased capacity on screening processing from 260 passengers per hour to 340 per hour (Kirk et al., 2012). The Taxonomy of Passenger Activities (TOPA) model, which captures all passenger processing and discretionary activities, has provided a novel perspective and detailed understanding of:

 what passengers do at an airport,  how passengers are processed,  how they spend their discretionary time, and  Where the airport can potentially improve passenger experience (Kirk, 2013). Selection of service attributes in assessing airport performance based on passenger experiences will include all types of passenger activities into a complete set of airport domains from the time passengers enter an airport domain at the departure terminal until leaving the arrival terminal. The importance of Airport’s Accessibility, Airport’s Facilities, and Retail Area both for departure and arrival terminals, Wiredja (2015) included these three non-processing domains making the composition of airport domains:

1. Departure a. Processing domains: Check-in, Security, Immigration & Customs, Boarding b. Non-processing domains: Airport’s Accessibility, Airport’s Facilities, Retail Area 2. Arrival a. Processing domains: Disembark, Immigration, Baggage Claim, Customs b. Non-processing domains: Airport’s Accessibility, Airport’s Facilities, Retail Area 2.8 Forecasting the Airport of Tomorrow

In an effort to better differentiate their offerings and provide improved customer service, airlines are implementing customer recognition strategies. Airline marketing is evolving beyond simple loyalty status to developing a better understanding of the value of every customer to the airline’s bottom line. Sophisticated Passenger Service Systems (PSS) technology can provide the underpinnings for this customer value calculation, but executing on this strategy requires a multipronged approach ensuring that consistent communication is sent to the passenger at all points of contact. Various market segments have differing requirements as well. Just as airlines execute marketing programs to address specific segments such as groups, seniors, business travelers and families, so must the evolving communication structure reflect the specific requirements of these segments. (Norm R. 2011).

Self-service and mobility are the key themes of the airport of tomorrow. Ubiquitous connectivity means the passenger is always online and thus expects real time communication. Simple advances such as verifying that the passenger’s baggage is on board the aircraft can help minimize frustration and uncertainty. Automating responses to periods of service disruption where vouchers are generated automatically and delivered to mobile devices is a key opportunity to shift this activity to a more self-service mode. Roaming agents handling severe disruptions, coming to the passenger rather than making the passenger stand in an extended queue helps manage limited resources and improve overall efficiency. (Norm R, et al 2011). To achieve this vision of the airport of tomorrow, airlines and airports must invest in new systems that automate manual tasks, share information and provide proactive communication to the passenger. Airlines need to provide airports critical passenger data so they may better plan manpower needs. Baggage systems need to provide real time awareness of location to all parties to reduce loss and accelerate the reuniting of the baggage and passenger. At the Centre of all this technology is customer information. With comprehensive customer information all stakeholders can improve service to the passenger and use customer insight to market ancillary airline services and airport products and services. (Norm R, et al 2011).

The airport revolution has already begun. The revolution is actually an evolution continuing today’s efforts to increase self service capabilities for the passenger and communicating to the traveler the status of their flight, and bag in real time whilst enhancing and improving their in airport experience. (Norm R, et al 2011).

Today, the majority of passengers are printing their boarding passes at home or through a kiosk. Drop off stations for customers who check-in online help reduce traditional long queues, but despite these enhancements over the last 3-4 years, long lines still persist during peak times. With most airlines still using a legacy Departure Control Systems (DCS), manual steps still plague the check-in process. Automation adoption faces a number of barriers. Airline personnel may resist new systems that eliminate manual steps but require a change in process. Airline management need to take a more holistic view of their airport operations and recognize that any significant improvement must involve their airport employees adopting new improved processes as well as systems. Airports need to understand that control over technology and housing the system locally, are no longer tied together. Computer visualization techniques have matured to the point where the issue of where the technology is physically housed has been eliminated. The connecting of these disparate airport systems must be a priority to enable the future passenger airport experience. (Norm R, et al 2011).

2.9 Conceptual framework

Since the development of SERVQUAL by Parasuraman, Zeithaml, and Berry (1985), service quality has been widely researched and applied in different types of industries. SERVQUAL is a ‘diagnostic tool that uncovers a firm’s broad weaknesses and strengths’ in service quality (Hoffman and Bateson, 2006). According to Omachonu Z. (2008), quality has a long term impact on the satisfaction of customers. Customer satisfaction and service quality are certainly interlinked and these create value for the customer or client and help him to make decisions as to whether the service justifies the cost.

Five specific dimensions of service quality have been identified – tangibles, reliability, responsiveness, assurance and empathy (Parasuraman et al, 1988). Cavana S. (2007), agreed that the dimensions of service quality are five but different in that they introduced a different dimension and dropped „tangibles‟. According to them service quality dimensions are - assurance, responsiveness, empathy, reliability and convenience.However, as earlier noted the dimensions as conceptualized by Parasuraman et al (1985, 1988) are the most universally acclaimed.

On the basis of the above literature concerning the assessment and also relationships of service quality and customer satisfaction, the following theoretical framework can be drawn.

Service quality

Tangibles

Reliability Customer satisfaction

Responsiveness

Assurance

Empathy

Source: Institute of Interdisciplinary Business Research (2010)

The SERVQUAL scale include (see Parasuraman, Zeithaml, and Berry, 1988):

(a) The physical facilities, equipment, and the appearance of the staff (Tangibles);

(b) The dependability and accuracy of the service provider (Reliability);

(d) The ability of the staff to instill confidence and trust in the company (Assurance);

(e) The ability of the staff to provide a caring service to customers (Empathy).

CHAPTER THREE

3 RESEARCH METHODOLOGY

3.1 Research Design

The study adopted a purely descriptive research approach as it sought to assess service quality and customer satisfaction in Ethiopian airlines Arba Minch airport.

According to Amnafi J.(2012), descriptive research involves collecting data in order to test hypotheses or answer research questions concerning the current status of the subject of the study. Thus this approach was adopted because it sought to describe the situation as it was with regards to service quality and customer satisfaction, the satisfaction of customers with the airlines service delivery, how the former had effect on the latter and finally the relationships of service quality and customer satisfaction.

In this paper the five dimensions of service quality and their respective attributes of the SERVQUAL model was expressed using a five point Likert scale in the following manner: much worse than expected, worse than expected, equal to expected, better than expected and much better than expected. Five different scores were assigned: 1, 2, 3, 4, 5, to represent this five-point scale.

3.2 Variables of the Study

 Independent Variables (IV): Service Quality  Tangibility  Reliability  Responsiveness  Assurance  Empathy  Dependent Variable (DV):  Customer Satisfaction

3.3 Method of Data Collection

The research methods that are used in this study were quantitative approach.Both primary and secondary data was used to collect the required information. Convenience sampling technique was used to set sample size and simple random sampling had been used to distribute questionnaires to obtain the required data from the passengers.

To measure the travelers’ evaluation of airport services at Ethiopian airlines Arba Minch airport, a survey was conducted using a questionnaire. During the research, a list of critical variables that influenced travelers’ evaluation of airport services was prepared, which is largely based on the following literatures.

Parasuraman et al. (1991) undertook a significant work to measure service quality across a broad range of services and they come up with a framework known as SERVQUAL. The SERVQUAL is a five-dimensional construct of service quality consisting of tangibles, reliability, responsiveness, assurance, and empathy. To develop the SERVQUAL scale, Parasuraman et al. (1991) gathered data from five different service categories. Even though these categories represent a broad range of services, SERVQUAL’s five dimensions and 22 item scales drawn from those industries are difficult to apply to airlines. This is because the SERVQUAL instrument does not address other important aspects of airline service such as in-flight meals, frequent flyer programs and seat space. (Aako T. 2012). Against this background, the present study tries to include the important determinants of airline service quality.

The SERVQUAL scale was modified to fit the specific context of aviation industry by generating additional quality related measures or items other than the ones already included in the SERVQUAL instrument to develop a more appropriate scale for measuring airline service quality. (Aako T. 2012). The respondents were asked to indicate the degree of offered services at Ethiopian airlines Arba Minch airport which corresponded to their expectations.

The required sample size was determined by using Yamane’s (1967) formula. A total of 156 questionnaires was distributed to a sample of 156 respondents who had traveled by air particularly users of Sheba miles program conveniently at the Arba Minch airport terminal. Out of which 148 were returned, four questionnaires were rejected due to missing data and four were returned unfilled. Therefore, 148 questionnaires served as data for analysis to present the findings and draw conclusion. The respondents selected at Arba Minch airport were those who waiting for their flight. In the item generation phase of the initial questionnaire, so as to fit the measurement of Ethiopian airlines service quality, many of the items were adapted from the study of Gashaw G. (2012), that had examined aspects of airline service quality dimensions. Also some variables are taken from a guide book for conducting airport user surveys (2009).

A person administered questionnaire was used as the main data gathering instrument for this study. The SERVQUAL questionnaire model was used as the basis of this research, however there were modifications made to fit the context of Ethiopian airlines services.

The Cronbach's Alpha for comparing the internal reliability of items in dimensions of service quality was used. A reliability coefficient of .70 or higher is considered acceptable in most social science research. The Table below, shows the Cronbach’s Alpha based on standardized items.

Reliability Statistics

Service quality dimensions Cronbach's Alpha Cronbach's Alpha N of Items Based on Standardized Items

Tangibility .975 .976 5 Reliability .975 .978 6 Responsiveness .976 .979 6 Assurance .984 .987 8 Empathy .964 .969 5

customer satisfaction .995 .996 31 According to the above table, Cronbach’s Alpha results of .995 for the thirty items are above the suggested threshold of .70. The results show internal consistency between variables.To assure validity, questionnaires were designed on the basis of previous studies and review of related literatures.

3.4 Sampling Technique and Sample Size

To conduct the research passengers who had flown on Ethiopian airlines Arbaminch airport Specifically Sheba miles members were selected as a respondent. The respondents select at Arbaminch airport were those who waiting for their flight. Therefore, convenience sampling technique was used in the study. The reason for using convenience sampling is because the population is too large and it is impossible to include every individual and because of their convenient accessibility to the researcher.

To determine the sample size of the population, the researcher had taken the last three consequent month’s number of passengers who are traveled in Arbaminch airport in the following table:

Month No. of passengers traveled No. of Sheba miles member traveled

February 2016 1141 261

March 2016 942 250

April 2016 896 255

Average - 255

Source: (Ethiopian airlines Arba Minch airport ticket office 2016)

So, from the above table the researcher had taken specifically average total population of Sheba miles member travelers in a month which is 255.

The required sample size was determined by using Yamane’s (1967) formula.

= /1 + ()2 Where: n = the sample size N= the study population e = the level of precision 1 = designates the probability of the event occurring. Therefore, the sample size of this study is 156 respondents which is 255/1+255 (0.05)2.

A total sample of 156 passengers who had traveled using Ethiopian airlines Arbaminch airport particularly members of Sheba miles userswas taken as a respondent. Out of which 148 passengers returned a completely filled questionnaire, four passengers returned a questionnaire with missing data and four others returned unfilled. Therefore, 148 provide a response that served as data for analysis to present the findings and draw conclusion. 3.5 Description of the Study Area

Ethiopian Airlines (Ethiopian) is the flag carrier of Ethiopia. During the past sixty plus years, Ethiopian has become one of the continent’s leading carriers, unrivalled in Africa for efficiency and operational success, turning profits for almost all the years of its existence. Operating at the forefront of technology, it has also become one of Ethiopia’s major industries and a veritable institution in Africa. It commands a lion’s share of the pan African network including the only daily east-west flight across the continent. Ethiopian serves 61 international destinations.

During the fiscal year, capacity measured in terms of Available seat Kilometer (ASK) grew by 17.2%, traffic measured in revenue passenger kilometers (RPK) increased by 16% and the number of passengers is 6.91 million. (Ethiopian airlines Annual report 2014).

With regard to Sheba Miles Frequent Flyer program, membership stands at 170,775. These members are from 193 countries. Nigeria with 21% and Ethiopia with 12% constitute 33% of the total membership. The rest of Africa contributes 34% while Europe follows with 12%, America with 9%, Asia 7% and the Middle East with 5%.

Arbaminch Airport is situated on the north eastern shore of Lake Abaya, Arba Minch Airport is extremely attractive. It is located about 2 kilometers north of the old Arba Minch airport, which had served from 1963 to 1995 with its capacity of handling aircrafts such as DC-3.

The new Arbaminch airport lies some 5 kilometers north east of Arba Minch town, which is about 504 kilometers south of Addis Ababa. It is located at an elevation of 4000 feet above sea level with an average temperature of 27 degree centigrade.

The current airport was constructed at a cost of 65 million birr. It has a 2,800 meters long and 45 meters wide runway, able to accommodate aircraft such as Boeing 737. The construction of the runway started in 1995 and was completed in 1997, while the construction of the terminal building started in 1999 and was completed in 2001. The terminal is equipped with basic facilities and has the capacity of accommodating 111 passengers at peak hour operation. The terminal has an arrival and departure hall, a VIP salon, and rooms that can be used for offices, shops, restaurants, cafeteria, etc. The airport was constructed with a standard to provide full-fledged services for the ever- increasing number of travelers to the various sections in and around Arba Minch, and for the tourist who comes to visit the sites such as the Crocodile farm at Arba Minch, the Mizan and Nechisar national parks.

Though the airport is standardized and equipped with modern facilities, the unavailability of regular flights has forced its underutilization. (Ethiopian Airports Enterprise 2015).

Now a day Arbaminch airport is started a regular flight and is given day to day flight within seven (7) days in a weak.

3.6 Data Presentation and Analysis

After editing was done the data was quantitatively analyzed. The Statistical Package for Social Scientist (SPSS) software IBM version 20 were used to analyze the relationship between the service quality dimensions and overall customer satisfaction. Specifically, descriptive statistics, regression and correlation tests were conducted.

Data analysis is the further transformation of the processed data to look for patterns and relationship between and/or among data groups by using descriptive or inferential (statistical) analysis.

3.6.1 Descriptive Analysis: The researcher used descriptive analysis to reduce the data in to a summary format by:

 Tabulation -the data arranged in a table format.  Measure of central tendency – minimum and maximum values, mean and standard deviation were used for the sake of explaining service quality dimensions and overall customer satisfaction of the sample respondents.

3.6.2 Inferential Analysis

According to Sekaran (2000:401), “inferential statistics allow researchers to infer from the data through analysis the relationship between two variables; differences in a variable among different subgroups; and how several independent variables might explain the variance in a dependent variable.” The following inferential statistical methods are used on this research.  The Pearson Product Moment Correlation Coefficient: Cohen and Swerdlik (2002) posit that the Pearson Product Moment Correlation Coefficient is a widely used statistical method for obtaining an index of the relationships between two variables when the relationships between the variables is linear and when the two variables correlated are continuous. To ascertain whether a statistically significant relationship exists between service quality dimensions and customer satisfaction, the Product Moment Correlation Coefficient was used.  Multiple Regression Analysis:Multiple regression analysis takes into account the inter-correlations among all variables involved. This method also takes into account the correlations among the predictor scores. Multiple regression analysis more than one predictor is jointly regressed against the criterion variable. (Cohen & Swerdlik, 2002). This method is used to determine if the independent variables will explain the variance in overall customer satisfaction.

CHAPTER FOUR

4. DATA ANALYSIS, INTERPRETATION AND DISCUSSION OF RESULTS

4.1 Introduction

In this part of the paper, the researcher attempts to present the practical observed facts about Assessment of service quality and customer satisfaction in case of Ethiopian airlines Arba Minch airport with data collected from customers by using both descriptive and inferences on the data analysis and procedures are presented.

4.2 Data Analysis and Interpretation

To facilitate ease in conducting the analysis, the results of the descriptive analysis are presented first, followed by the inferential analysis.

The first phase involved editing, coding and the tabulation of data. This assisted in identifying any anomalies in the responses and the assignment of numerical values to the responses in order to continue with the analysis. The data was then checked for possible erroneous entries and corrections made appropriately. The statistical program used for the analyses and presentation of data in this study is the Statistical Package for the Social Sciences (SPSS) version 20. The descriptive statistics utilized are based on frequency tables to provide information on the demographic variables. Through tables, summary statistics such as means, standard deviations, minimum and maximum are computed for each dimensions of service quality in this study. This is followed by presentation of inferential statistics based on each hypothesis formulated for the study. All statistical test results were computed at the 2-tailed level of significance. The alpha levels of .05 and .01 selected a prior for test of significance for correlations, and simple linear regression.

One hundred fifty six questionnaires were distributed to the respondents and out of 156 questionnaires, 148 of them were collected. Accordingly, the analysis of this study is based on the number of questionnaires collected.

4.3 Descriptive Statistics

Table 4.1 Distribution of Demographic Variables (N = 148)

No. Variable Frequency Percent 1. Gender A. Male 103 69.6 B. Female 45 30.4

Total 148 100 2. Age group A. Under 20 9 6.08 B. Between 20 and 35 87 58.78 C. Between 36 and 50 33 22.3 D. Over 50 19 12.84 Total 148 100 3. Educational qualification A. Doctorate degree 13 8.78 B. 2nd degree 51 34.46 C. 1st degree 43 29.05 D. Diploma 17 11.49 E. Certificate(other) 24 16.22

Total 148 100 4. How many return flights have had during the last 12 months A. 1 to 2 14 9.46 B. 3 to 5 63 42.57 C. 6 to 10 45 30.40 D. More than 10 26 17.57 Total 148 100 Source: (survey questionnaire 2016) Gender

120

100

0 male female

Source: (survey questionnaire 2016)

Figure 1.Gender distribution using graph

The first part of the questionnaire consists of the demographic information of the respondents.

As shown in figure 1, the first demographic variable that is gender division of the respondents, majority of the respondents were males, i.e. 69.6% representing a bigger part of the sample group. However, 30.4% percent of the respondents were females. This means majority of the respondents were males. It also gives an indication that in EAL Arba Minch airport sample, male respondents played a major role and had greater influence on the findings of this study. Age Group 100 90 80 70 60 50 40 30 20 10 0 under 20 between 20 and 35 between 36 and 50 over 50

Source: (survey questionnaire 2016)

Figure 2. Presents the respondents responses with regard to their ages

When we see the distribution of the second demographic variable in figure 2 which is the age group 6.08% of the respondents are Under 20, 58.78% of the respondents are between 20 and 35, 22.3% of the respondents are Between 36 and 50 and 12.84% of the respondents are Over 50.This picture might very possibly be the general situation because majority of EAL Arba Minch airport passengers are shared among these age brackets. It is also the case that most of these are among the active segments of the population are more besides of using air transportation.

Educational Qualification 60

0 doctorate degree 2nd degree 1st degree diploma certificate(other)

Source: (survey questionnaire 2016)

Figure 3. Graphical presentation of educational qualification

When we see the distribution of the third demographic variable as shown in figure 3 which is the level of education. When we see the specific qualification level 8.78% of the respondents have a qualification of doctorate degree, 34.46% have a second degree qualification, 29.05% of the respondents have a first degree qualification, 11.49% of the respondents have an educational qualification of college diploma and the certificate and other qualification level comprises of 16.22%.This point to the fact that the majority of the respondents are above degree level and highly educated.

Return flights duiring last 12 months 70

0 1 to 2 3 to 5 6 to10 more than 10

Source: (survey questionnaire 2016)

Figure 4. Passengers return flights during last 12 months

The other main variable that the respondents were asked is the number of flights they had made using Ethiopian airline Arba Minch airport. As indicated in figure 4, majority 42.57% of the respondents answered they had made a flight with the airline 3 to 5 times, 9.46% of the respondents answered the category one to two flights, 30.40% of the respondents answered the category six to ten flights and 17.57% answered the category more than ten flights. The majority of passengers return flight was above 3 to 5 this shows that using Sheba miles members as a respondent should give us valuable and reliable information about the service quality of the airline better than regular passengers.

4.4 Results of measures of central tendency and dispersion

This part explains the descriptive statistics calculated on the basis of the variables included in the Service quality dimensions questionnaires. The measures of central tendency and dispersion for the dimensions of service quality: tangibles, reliability, responsiveness, assurance and empathy results obtained from the sample respondents are shown in table 4.2 below:

Table 4.2; Mean score for service quality dimensions

Service quality dimensions N Minimum maximum Mean Std.

score Deviation

Tangibles 148 1 5 2.58 1.02

Reliability 148 1 5 2.74 1.07

Responsiveness 148 1 5 3.11 1.02

Assurance 148 1 5 3.26 1.12

Empathy 148 1 5 3.13 1.02

Customer satisfaction 148 1 5 3.05 1.34

Source: (survey questionnaire 2016)

Table 4.2 shows the mean score for the five dimensions of service quality. The highest mean is scored by Assurance followed by empathy and responsiveness. The least mean score is for tangibles followed by reliability. According Table 4.2, the assurance dimension of service quality is carried out superior to the other four dimensions with a mean score of 3.26. This indicates the EAL Arba Minch airport is performing at satisfactory level Sincerity and patience in resolving passengers problems, Probability of flight breakdowns, Employees instill confidence to passengers, Employees are consistently courteous and Knowledgeable employees to answer customers question. The second dimension as per the rating of the customers is empathy with a mean score of 3.13. The customer perceived that the EAL Arba Minch airport is performing better in Numerous ,easy to use ticketing channel, Spontaneous care and concern for passengers needs and Having a sound loyalty program to recognize you as a frequent customer. The third dimension is responsiveness with 3.11 mean score. The least performed dimensions are reliability and tangibles with a mean score of 2.74 and 2.58 respectively. As per the response of the customers, EAL Arba Minch airport was not good in delivering reliability and tangibles service. This indicates that there are weaknesses in In- flight modern and clean facilities, Varity and choices of in-flight entertainment facilities, Providing visually appealing equipment, Transfer service and efficiency at departure airport, Providing ground /in-flight services consistentlyand performing the services right the first time services provided for passengers.Next, service quality dimensions were tested. The results are shown in Table 4.2, and compared to the results by Gilbert & Wong (2003), Gashaw Girma, 2011 andR.A.J.Van ES, 2012.

Table 4.3 comparison on mean score results of other research findings with present work

Service quality Results (Gilbert Results Results (Gashaw Results of mean dimensions & Wong, 2003), (survey), Girma, 2011.) score (R.A.J.Van mean* mean* ES,2012)

Tangibles 4.4299 2.58 1.592 -1.278

Reliability 2.7165 2.74 0.043 0.775

Responsiveness 2.8963 3.11 -0.158 1.383

Assurance 1.1098 3.26 -1.612 -0.587

Empathy 4.3659 3.13 -2.699 -0.293

From Table 4.3 it is clear that there are differences in assurance and empathy. In Gilbert & Wong’s results, assurance is rated as fifth most important dimension, however, in survey results it is the first. Responsiveness is more important for survey respondents (ranked third) for both results. Reliability are ranked fourth in both cases. Tangible dimension is the second with mean score of (4.42) in Results of (Gilbert & Wong, 2003), but in survey result it have least score with mean score of (2.58). The comparison also shows that empathy and responsiveness are the most important dimensions, whereas reliabilityin both cases is least important. Differences in target groups, among other factors, can explain the differences between the survey results and results by Gilbert & Wong (2003). In addition, there have been many changes in airline industry during the last decade, so the expectations and perceptions may have simply changed overtime.

In the results of Gashaw G., 2011, tangibility is rated as first most important dimension according to mean score results but in the present study tangibility has the least mean score value. In results of Gashaw G. 2011, responsiveness, assurance and empathy dimensions had a least negative mean score value but in present study assurance, empathy and responsiveness had a highest positive mean score value.

In line with the findings of (R.A.J.Van ES, 2012), the Results of mean score showed that comparable statements suggest that responsiveness and reliability are the most important service quality items. These two variables should be the pillars of the service. Value propositions should focus on these two aspects. But in the present study assurance, empathy and responsiveness dimensions of service quality are the most important and had highest mean score results. Also in present analysis reliability and tangibility dimensions had a positive least scores. So from the analysis most of the respondents are satisfied with those services provided by EAL Arba Minch airport.

4.5 Results of Inferential Statistics

The following sections demonstrate the results of inferential statistics employed in this study. So as to assess the objectives of the study, Pearson’s Product Moment Correlation Coefficient was computed, and linear regression analysis was conducted. With the help of these statistical tools, conclusions are drawn with regard to the sample and decisions are made with respect to the research hypotheses.

4.5.1 Pearson's Product Moment Correlation Coefficient

On this study, Pearson’s Product Moment Correlation Coefficient was used to determine the following relationships:

 The relationships between tangible dimension and overall customer satisfaction  The relationships between reliability dimension and overall customer satisfaction  The relationships between responsiveness dimension and overall customer satisfaction  The relationships between assurance dimension and overall customer satisfaction  The relationships between empathy dimension and overall customer satisfaction Devore and Peck (1993) provided a guideline for assessing resultant correlation coefficients as follows: coefficients less than 0.5 represent a weak relationship, coefficients greater than 0.5, but less than 0.8, represent a moderate relationship and coefficients greater than 0.8 represent a strong relationship. Moreover, Pearson correlation coefficient is a technique used to measure the degree of association between two variables which may have any value between -1.0 and 1.0. The correlation coefficient is represented by r. If the value of r is 1.0, there is perfect positive linear (straight-line) relationship. If the value of r is -1.0, there is perfect negative linear relationship or perfect inverse relationship. The strength of association will be stronger as the value of correlation approaches one while it will be weaker as the value of association approaches zero.

Table 4.4 Correlation Between Service Quality Dimensions And Customer Satisfaction

Tangibles Reliability Responsivene Assura Empathy Customer ss nce satisfaction Pearson 1 .425** .976** .975** .982** -.276** Correlation Tangibles Sig. (2-tailed) .000 .000 .000 .000 .001 N 148 148 148 148 148 148 Pearson .425** 1 .391** .472** .397** -.526** Correlation Reliability Sig. (2-tailed) .000 .000 .000 .000 .000 N 148 148 148 148 148 148 Pearson .976** .391** 1 .976** .983** -.343** Responsiv Correlation eness Sig. (2-tailed) .000 .000 .000 .000 .000 N 148 148 148 148 148 148 Pearson .975** .472** .976** 1 .980** -.365** Correlation Assurance Sig. (2-tailed) .000 .000 .000 .000 .000 N 148 148 148 148 148 148 Pearson .982** .397** .983** .980** 1 -.256** Correlation Empathy Sig. (2-tailed) .000 .000 .000 .000 .002 N 148 148 148 148 148 148 Pearson -.276** -.526** -.343** -.365** -.256** 1 Customer Correlation satisfactio Sig. (2-tailed) .001 .000 .000 .000 .002 n N 148 148 148 148 148 148 **. Correlation is significant at the 0.01 level (2-tailed).

The following can be deduced from the above. Generally, a negative relationship exists between service quality and customer satisfaction but the strength of the relationship differ with each dimension.

The Pearson correlation of -0.276, -0.343, -0.365and -0.256 for Tangibility, responsiveness, assurance and empathy show very weak negative relationship while for reliability of -0.526 indicate an intermediate negative relationship. Thus correlation test indicate that reliability were the major determinant of customer satisfaction in the EAL airlines Arba Minch airport.

4.5.2 Multiple Linear Regression Analysis for HypothesisTest

It was also already explained in the previous chapter that multiple linear regressions analysis was used to assess service quality and its effects on customer satisfaction in case of EAL at Arba Minch airport. Service quality dimensions were treated as an independent variable and the customer satisfaction treated as a dependent variables. In this part multiple Linear Regression analysis was used to test the effect of multiple independent variables (service quality dimensions) on single dependent variable (customer satisfaction) with interval scale.

The results of multiple liner regression analysis regress overall customer satisfaction, as dependent variable, on the dimensions of service quality are displayed in Tables below.

Model Summary Mode R R Square Adjusted R Square Std. Error of the Estimate l 1 .782a .612 .598 .855 a. Predictors: (Constant), tangibles, reliability, responsiveness, assurance, empathy

R (Correlation Coefficient) is 0.782 means there is a stronger linear relationship between the independent variables which are Empathy, Tangibility, Responsiveness, Reliability, Assurance and the dependent variable Customer Satisfaction.

From the table R-Squared (coefficient of determination) is 0.612 which implies that 61.2% of the variation in Customer Satisfaction is explained by Empathy, Tangibility, Responsiveness, Reliability and Assurance. It also shows that the values of Empathy, Tangibility, Responsiveness, Reliability and Assurance can perfectly predict the values of the dependent variable by 61.7%.

The Adjusted R-squared of 0.598 suggests that Empathy, Tangibility, Responsiveness, Reliability and Assurance fit to the model by approximately 59.8%.

ANOVAa Model Sum of df Mean F Sig. Squares Square Regression 163.787 5 32.757 44.821 .000b

1 Residual 103.781 142 .731 Total 267.568 147 a. Dependent Variable: customer satisfaction b. Predictors: (Constant), tangibles, reliability, responsiveness, assurance, empathy

With the P – Value of 0.000 compared to the alpha level of 0.05 it can be concluded that, the independent variables Empathy, Tangibility, Responsiveness, Reliability, Assurance reliably predict the dependent variable and also dimensions of service quality had significantly positive effect on customer satisfaction.

Table 4.5 Regression Analysis On Service Quality Dimensions And Customer Satisfaction

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig. Coefficients B Std. Error Beta (Constant) 4.839 .306 15.823 .000 Tangibles 1.301 .422 .940 3.086 .002 Reliability -.491 .085 -.375 -5.746 .000 1 Responsiveness -3.275 .434 -2.367 -7.549 .000 Assurance -2.137 .409 -1.703 -5.222 .000 Empathy 4.137 .533 2.966 7.769 .000 a. Dependent Variable: customer satisfaction

The above Table indicates tangibles, reliability, empathy, responsiveness and assurance dimension of service quality have a significant influence on customers’ satisfaction at 95% confidence level.

The regression results indicate all the service quality dimensions (tangibility, reliability, responsiveness, assurance and empathy) combined significantly influence the satisfaction of customers. The adjusted R square of 0.598 indicates 59.8% of the variance in customer satisfaction can be predicted by the service quality offered by the Ethiopian airlines Arba Minch airport.

According to the findings of Mishal M.A (2015), the review of the hypotheses testing in linear regression analysis clearly reveals that all the hypotheses are supported at P level of less than 0.001. Of all the hypotheses, service quality has a positive impact on customer satisfaction resulted with a stronger impact compared to the rest. With the results of the present research all dimensions of service quality except tangibility and empathy has a negativeeffect on overall customer’s satisfaction at P level of less than 0.05.Overall, all the results were acceptable with no offending estimates.

According to the findings of (Mesay S. 2012), the results of simple linear regression indicates empathy, responsiveness and assurance dimension of service quality have a significant influence on customers’ satisfaction at 95% confidence level. Conversely, reliability and tangibles dimension have no significant influence on customers’ satisfaction. The regression results indicate all the service quality dimensions (tangibility, reliability, responsiveness, assurance and empathy) combined significantly influence the satisfaction of customers.When we see the results of the present research, tangibility and empathy dimensions of service quality have a positive effect on customer satisfaction.

CHAPTER FIVE

5 Summary, Conclusion and Recommendation 5.1 Summary

In order to assess the service quality performance, the five dimensions of service quality were used. Among the five dimensions, the EAL Arba Minch airport were found to be superior in providing appealing service environment. The airline was good in assurance, empathy and responsiveness dimensions. The mean score values are lowest for reliability and tangibles inferior performance of EAL Arba Minch airport in those dimensions of service quality. These are the areas like In-flight modern and clean facilities, Varity and choices of in-flight entertainment facilities, Providing visually appealing equipment, Transfer service and efficiency at departure airport, Providing ground /in-flight services consistentlyand performing the services right the first time services provided for passengers are the attributeswhere the airline at the airport need to work in order to improve customer satisfaction of service quality. Counter staff need to be continuously trained with proper skill of providing caring and prompt service. Moreover, staff that are committed in implementing quality services and gained recognitions from customers should be given better rewards.

Generally, a negative relationship exists between service quality and customer satisfaction but the strength of the relationship differ with each dimension.

This indicates that the airline at the airport required initializing provision of caring, individualized attention given to the customers. Moreover, managers should encourage quality service delivery and problem solving attitude prevailing in the airline.

Quality service delivery and customer satisfaction is potentially one of the most powerful weapons that airline industries of can employ in their fight to gain a strategic advantage and survive in today’s ever-increasing competitive environment. Moreover, EAL Arba Minch airport need to develop strategies that enhance satisfaction of their customers. R (Correlation Coefficient) is 0.782 means there is a stronger linear relationship between the independent variables which are Empathy, Tangibility, Responsiveness, Reliability, Assurance and the dependent variable Customer Satisfaction.

The Adjusted R-squared of 0.598 suggests that Empathy, Tangibility, Responsiveness, Reliability and Assurance fit to the model by approximately 59.8%.

5.2 Conclusion

The main aim of the study was to assess the service quality of EAL Arba Minch airport and its effects on customer satisfaction. The specific objectives was: To assess overall customer satisfaction of passengers on the airline service quality, to identify the effects of service quality dimensions on the satisfaction of passengers and to examine the relationship between service quality dimensions and customers satisfaction.

It has therefore been revealed that the customers’ satisfaction level in general was remarkably moderate almost in all dimensions. From those dimensions as shown in the mean score result reliability and tangibility dimensions have the least score result. The best scored dimension was assurance. This study also found a negative relationship between all service quality dimensions and customer satisfaction. Accordingly, the results of this research paper confirmed the theory of literatures regarding the relationship between service quality dimensions and customer satisfaction.

Furthermore, the research revealed that tangibles and empathy dimensions of service quality had positive effect on the satisfaction of customers and reliability, responsiveness and assurance dimensions had negative effect on customer satisfaction.

5.3 Recommendation

In light of the research findings, it is therefore recommended that EAL Arba Minch airport should strive at making improvements especially in tangibility and reliability dimensions. Also the airline at the airport should make improvements in assurance, responsiveness and empathy dimensions of service quality,and all the time if to withstand and remain competitive in airline business. also the management of EAL Arba Minch airport should improve its quality service by delivering services like In-flight modern and clean facilities, Varity and choices of in-flight entertainment facilities, Providing visually appealing equipment, Transfer service and efficiency at departure airport, Providing ground /in-flight services consistently, performing the services right the first time and having other travel related partners e.g. Car rental, hotels, travel insurance to avoid overpromising to its passengers.

In conclusion, the airline can benefit from the fact of knowing how customers perceive the service quality and knowing the way of how to measure service quality. Therefore, the management can use the specific data obtained from the measurement of service quality in its strategies and plans. This will help the airline at Arba Minch airport to better understand various service quality dimensions that affect overall customer satisfaction. In this way, the airline can better allocate resources to provide better service to their customers. Thus, understanding customer satisfaction with service quality is very important and challenging.

5.4 Limitations of the study

There are several limitations of this study. First, the results are limited to the airport service quality dimensions included in the study. This study used only five dimensions to evaluate the effect of service quality rating on these dimensions to overall satisfaction of customers. Second, the sampling method, using Sheba miles members, did not permit an effective implementation of random sampling. Third, Participants in the survey were limited to Sheba miles members. No responses were collected from other regular members who would have met the qualifications for the survey.

Finally, the results are limited to the major airports included in the study. The study only considered Arba Minch airport. No considerations were made to include other similar airports in terms of size and passenger traffic from other regions in the Ethiopia. Therefore, the findings may not be generalizable over the population.

5.5 Future research directions

Further research should be carried out in order to enhance the understanding of the concepts of service quality and customer satisfaction, how they are measured because they are very important for service organizations in terms of profitability and growth.

Although this research provides some significant insights into service quality in Ethiopian airlines industry, there is still a chance to extend the findings to gain a more comprehensive understanding of the nature of airline services. The future research may highlight the service quality in Ethiopian airlines in total, the future research may be directed to analyze the application of SERVQUAL to other service industries by incorporating other dimensions of service quality.

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APPENDIXES APPENDIX A

ARBA MINCH UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

MBA PROGRAM

(QUESTIONNAIRE FOR AIR PASSENGERS)

Sir/ Madam, the purpose of this questionnaire is to gather data to assess Service quality and Customer satisfaction of passengers in the case of Ethiopian airlines Arbaminch airport. The study is purely for academic purpose and thus it does not affect you in any case. Your genuine, frank, timely response is vital for the success of the study. Therefore, I kindly request you to respond to each question item carefully.

Note: No need of writing your name.

Thank you, in advance for your cooperation and timely response.

Demographic Section

1. Gender: Female male

2. Age group: under 20 between 20 and 35 between 36 and 50 over 50

3. Educational qualification?

Doctorate degree 1st degree Certificate (other)

2nd degree Diploma

4. Reasons for fly: Business Holiday medical visiting friends/families other

5. How many return flights have you had during the last 12 months?

1 to 2

3 to 5

6 to 10

More than 10 Airline Evaluation

For each statement, circle the number that best describes your satisfaction level/ expectation with regard to service delivery. Your evaluation should reflect your experience on the service quality offered by Ethiopian airline at Arba Minch airport. On a scale of 1-5, please give your rating for each statement.

Attributes Much Worse than Equal to Better Much worse than expected expected than better expected expected than expected

1. Tangibles 1 2 3 4 5 Appearance, attitude and uniforms of employees

In-flight modern and clean facilities 1 2 3 4 5

Varity and quality of inflight meals 1 2 3 4 5

Varity and choices of in-flight entertainment 1 2 3 4 5 facilities

Providing visually appealing equipment 1 2 3 4 5

2. Reliability 1 2 3 4 5 Efficiency of the check in process

Transfer service and efficiency at departure 1 2 3 4 5 airport

On time performance of schedule flights 1 2 3 4 5

Remedial procedures for deployed or missing 1 2 3 4 5 baggage

Providing ground /in-flight services consistently 1 2 3 4 5

Performing the services right the first time 1 2 3 4 5

3. Responsiveness Capable to response to emergency situations 1 2 3 4 5

Prompt attention to passengers specific needs 1 2 3 4 5

Understanding the specific needs of passengers 1 2 3 4 5

Keeping customers informed about when services 1 2 3 4 5 will be performed

Prompt respond of employees of the airline to 1 2 3 4 5 your request or complaint

Capacity to respond to canceled or delayed flights 1 2 3 4 5

4. Assurance Sincerity and patience in resolving passengers 1 2 3 4 5 problems

Probability of flight breakdowns 1 2 3 4 5

Safety performance of airline 1 2 3 4 5

Knowledgeable and skillful provision and 1 2 3 4 5 services

Sincere and responsive attitude to passenger 1 2 3 4 5 complaints

Employees instill confidence to passengers 1 2 3 4 5

Employees are consistently courteous 1 2 3 4 5

Knowledgeable employees to answer customers 1 2 3 4 5 question

5. Empathy Numerous ,easy to use ticketing channel 1 2 3 4 5

Convenient flight schedule 1 2 3 4 5

Spontaneous care and concern for passengers 1 2 3 4 5 needs Having a sound loyalty program to recognize you 1 2 3 4 5 as a frequent customer

Having other travel related partners e.g. car 1 2 3 4 5 rental, hotels, travel insurance

6. Overall Customer Satisfaction( Dependent variable)

Totally Dissatisfied Neutral Satisfied Totally dissatisfied satisfied Variable

What is your overall satisfaction with 1 2 3 4 5 regard to the airline service delivery?

Appendix B Descriptive Statistics

Attributes N Minimum Maximum Mean Std. Deviation

Appearance, attitude and uniforms of employees 148 1 5 3.59 1.003

In-flight modern and clean facilities 148 1 5 3.57 .920

Varity and quality of inflight meals 148 1 5 2.99 1.152

Varity and choices of in-flight entertainment facilities 148 1 5 2.46 .972

Providing visually appealing equipment 148 1 5 2.49 1.053

Efficiency of the check in process 148 1 5 3.55 .943

Transfer service and efficiency at departure airport 148 1 5 2.52 .979

On time performance of schedule flights 148 1 5 2.57 1.310

Remedial procedures for deployed or missing baggage 148 1 5 3.43 .956

Providing ground /in-flight services consistently 148 1 5 3.76 1.163

Performing the services right the first time 148 1 5 2.69 1.106

Capable to response to emergency situations 148 1 5 2.39 1.021

Prompt attention to passengers specific needs 148 1 5 3.14 .865

Understanding the specific needs of passengers 148 1 5 3.65 1.211

Keeping customers informed about when services will be performed 148 1 5 3.16 1.044

Prompt respond of employees of the airline to your request or complaint 148 1 5 2.99 .990

Capacity to respond to canceled or delayed flights 148 1 5 3.36 1.024

Sincerity and patience in resolving passengers problems 148 1 5 3.72 .939

Probability of flight breakdowns 148 1 5 3.23 1.031

Safety performance of airline 148 1 5 3.11 1.116

Knowledgeable and skillful provision and services 148 1 5 3.33 1.372

Sincere and responsive attitude to passenger complaints 148 1 5 3.69 .848

Employees instill confidence to passengers 148 1 5 3.02 1.226

Employees are consistently courteous 148 1 5 3.09 1.130 Knowledgeable employees to answer customers question 148 1 5 2.90 1.313

Numerous ,easy to use ticketing channel 148 1 5 3.74 .732

Convenient flight schedule 148 1 5 3.29 1.083

Spontaneous care and concern for passengers needs 148 1 5 3.32 1.138

Having a sound loyalty program to recognize you as a frequent customer 148 1 5 3.11 1.076

Having other travel related partners e.g. car rental, hotels, travel insurance 148 1 5 2.21 1.090

Valid N (Listwise) 148 Source: questionnaire 2016 APPENDIX B

Summary of collinearity and multicollinearity of results

Coefficientsa

Model Unstandardized Coefficients Standardized T Sig. Correlations Collinearity Coefficients Statistics B Std. Error Beta Zero- Partia Part Toleran VIF order l ce

(Constant) .267 .199 1.346 .180

Tangibles .430 .093 .310 4.600 .000 .881 .360 .142 .209 4.781 Reliability .042 .102 .045 .418 .000 .888 .035 .013 .181 5.524

Responsiveness .244 .078 .273 3.125 .002 .887 .254 .096 .124 8.073 Assurance .242 .098 .256 2.474 .000 .900 .203 .076 .188 5.319 Empathy .091 .059 .097 1.525 .000 .811 .127 .047 .233 4.286 Dependent Variable: customer satisfaction NB.  The condition index was <15  The variance inflation factors are <10  The value of tolerance was close to 0(zero), and >0.10 so, the result shows that there is no multicollinearity problem.

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APPENDIX C

Collinearity Diagnosticsa

Model Dimens Eigenvalu Conditio Variance Proportions ion e n Index (Constant) Tangibles Reliability Responsivene Assuranc Empathy ss e 1 5.832 1.000 .00 .00 .00 .00 .00 .00 2 .116 7.080 .11 .01 .00 .00 .00 .14 3 .031 10.706 .12 .00 .02 .13 .01 .63

4 .009 5.401 .05 .03 .00 .54 .55 .21 5 .006 7.267 .29 .48 .58 .11 .00 .01 6 .005 5.742 .43 .49 .39 .23 .43 .00 . Dependent Variable: Customer satisfaction

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APPENDIX D

Normality test for service quality dimensions

Service quality dimensions p-value

Tangibles 0.096

Reliability 0.221

Responsiveness 0.114

Assurance 2.325

Empathy 2.412

 NB. The normality test is considered as a pre-requisite into the determination of the best approach for data analysis.  The normality test results presented in the above table confirmed that the data follows a normal distribution model as can be seen in the p-values which are greater than 0.05.

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