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