UNIVERSITY FOR DEVELOPMENT STUDIES FACULTY OF MATHEMATICAL SCIENCES DEPARTMENT OF MATHEMATICS

ASSESSMENT OF THE PROLIFERATION OF AIRLINES IN GHANA AND ITS IMPACTS OF CUSTOMER SATISFACTION: USING LOGISTIC REGRESSION CASE STUDY: GHANA AIRPORT COMPANY LIMITED (SUNYANI AIRPORT)

BY ANKAMAH JACOB (FAS/3514/09) UDS, FMS, JUNE, 2013

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ASSESSMENT OF THE PROLIFERATION OF AIRLINES IN GHANA AND ITS IMPACTS OF CUSTOMER SATISFACTION: USING LOGISTIC REGRESSION MODEL

A PROJECT IN THE DEPARTMENT OF MATHEMATICS SUBMITTED TO THE FACULTY OF MATHEMATICAL SCIENCES, IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELOR OF SCIENCE (HONS) MATHEMATICS WITH ECONOMICS

BY ANKAMAH JACOB (FAS/3514/09) DEPARTMENT OF MATHEMATICS FACULTY OF MATHEMATICAL SCIENCES UNIVERSITY FOR DEVELOPMENT STUDIES NAVRONGO CAMPUS, GHANA JUNE, 2013
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ABSTRACT This project is a research works on the assessment of the proliferation of airlines in Ghana and its impacts of customer satisfaction in Brong Ahafo Region of Ghana. Some of the objectives of the study are to formulate statistical best fit model for low-cost airline customer satisfaction, determination of significant variables to the satisfaction model and finally assess the socioeconomic impact of low-cost airlines in less developed region like Brong Ahafo. Chi-square goodness of fit test was used to determine the satisfaction level of customers who patronise these airlines. Categorical or binary variables were used to solicit responses of Yes or No for Satisfied or Dissatisfied responses from the customers. Logistic regression analysis technique was further used to analyse the relationship between satisfaction and some related factors like price of airline ticket, safety and reliability, quality of service and long distance, booking, arrival and departure times. The result shows safety and reliability, price of ticket, long distance and quality of service were the most significant variables. Given that these variables are significant, the low-cost industry had generated employment, revenue and others.

DEDICATION This research work is dedicated to Oppong Ankamah Jacobs and Isabella Oppong Ankamah.

DECLARATION I Ankamah Jacob (FAS/3514/09) in the Department of Mathematics, Faculty of Mathematical Sciences - University for Development Studies, Ghana under the supervision of Mrs. Gloria K. Bob-Milliar hereby declare that this dissertation is the result of my own original work and that no part of it has been presented for another degree in this university or elsewhere. Related works by others which served as a source of knowledge has been duly acknowledged or referenced.

Ankamah Jacob (STUDENT)

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CERTIFICATION This is to certify that this work was carried out under strict supervision and has been approved for submission to the University for Development Studies in partial fulfillment of the requirement for the award of B.Sc. (Mathematics with Economics).

Mrs. Gloria K. Bob-Milliar (Supervisors Name)

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Dr. S. Twum Head of Department (Mathematics)

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ACKNOWLEDGEMENTS The success of this project is as a result of Gods infinite help bestowed on me. Madam, Gloria Bob-Milliar (my supervisor) whose support, corrections and directions made this dissertation a success. Mr. Oppong Alex my beloved brother, My late parents Mr. and Mrs. Rebecca Ankamah, friends and the entire family. My special thanks go to all the lectures of Mathematical Sciences Faculty-UDS through whom I have acquired all this knowledge, skills and experience. I have come this far through your effects, encouragement and blessing. God bless you all.

TABLE OF CONTENT
TITLE PAGE

Abstract.....i Dedicationii Declaration......iii Certification....iv Acknowledgement.......v Table of content..vi List of tables....xi Acronyms/Symbols......x

CHAPTER ONE
1.0 Introduction....1 1.1 Background of the study....4 1.2 Statement of problem.5 1.3 Objective of the study....6 1.4 Relevance of the study...7 1.5 Limitations of the study.7 1.6 Organisation of the study ..8
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CHAPTER TWO
2.0 Literature Review...9 2.1 European Low Cost Airlines..9 2.2 North American USA Low Cost Airlines.10 2.3 Development of Low Cost Carriers in Ghana..12 2.4 Airports in Ghana.13 2.5 Sunyani Airport....15 2.6 Reasons for the Emergence of Low Cost Airlines...........17 2.7 Demand and Supply of the Air Transport Industry.17 2.8 Service Quality and Customer Satisfaction.18 2.9 Economic Benefits of the Air Transport (Sunyani Airport)....20 2.9.1 Factors that make Low Cost Airlines Operate effectively21 2.9.2 Operating features of Low Cost Airlines..22 2.9.3 Relationship between Low Cost Carriers and Full Service Carriers ...23

CHAPTER THREE
3.0 Methodology....24 3.1 Research study area..24

3.2 Data description...24 3.3 Primary data.24 3.4 Sampling method.....25 3.5 Method of analysis...27 3.6 Hypothesis....28

CHAPTER FOUR
4.0 Data Analysis and Presentation...29 4.1 General description of variables..29 4.2 Preliminary Analysis....31 4.3 Testing the Association between Satisfaction and gender...32 4.4 Testing the Association between Satisfaction and Educational status.33 4.5 Testing the Association between Satisfaction and Job status..34 4.6 Testing the Association between Satisfaction and Income status....35 4.7 Further Analysis...35 4.8 Formulating mathematical model for an airline customer satisfaction40 4.9 Forecasting using the derived satisfaction model with discussions 41

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CHAPTER FIVE
5.0 Conclusions and Recommendations....42 5.1 Conclusions..42 5.2 Recommendations....44 REFERENCES..48 Appendix A........51 Appendix B....52 Appendix C....55

LIST OF TABLES
TITLE PAGE

Table 1: Description of variables..29 Table 2: Test of association between satisfaction and gender..31 Table 3: Test of association between satisfaction and educational status.32 Table 4: Test of association between satisfaction and job status..34 Table 5: Test of association between satisfaction and income status...35 Table 6: Illustrating the summary of the stepwise selection.37

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Table 7: Analysis of the Maximum Likelihood estimates for the model..38

ACRONYMS/SYMBOLS
Acronyms ATAG FAS FSC FSNC GACL IATA LCC SAS SPSS UDS Meaning Air Transport Action Group Faculty of Applied Sciences Full Service Carrier Full Service Network Carrier Ghana Airport Company Limited International Air Transport Association Low Cost Carrier Statistical Analysis System Statistical Package for Social Sciences University for Development Studies

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Symbols Ho Null hypothesis H1 Alternative hypothesis

Beta Pi

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CHAPTER ONE 1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY An Airline is a company that provides air transport services for traveling passengers and freight. Airlines can be divided into two groups based on their core activity: passenger airlines and freight airlines (Airline Business Models, 2008) Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body. Airlines vary from those with a single aircraft carrying mail or cargo, through full-service international airlines operating hundreds of aircraft. Airline services can be categorized as being intercontinental, intra-continental, domestic, regional, or international, and may be operated as scheduled services or charters. Despite the decreasing trend in the Airline Industry, Low Cost Carriers succeed in increasing their turnover, profit and number of passengers over the past decade. The industry is expected to grow up to 713.6$ billion within next few years. The market is divided between domestic (64% of all flights) and international (36%) (Datamonitor, 2011) Americas account for 44.4% of all flights and Europe accounts for 33.1%. While many developing countries under a crushing burden of debt and other external disequilibria have adopted numerous means of transportation systems; land, sea, road, etc. Low Cost Carriers seem to be immune against all adverse factors militating the airline industry of the world and even Ghana as a developing nation. Moreover, the interest in the low cost air travel business is expressed in the huge market capitalization of budget airlines at the stock market. In June 2002, Ryanair had a market capitalization of 4.9 billion. This was 45 % more than British Airways had, with revenues that were 20 times larger (Binggeli & Pompeo,
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2002).The recent success of low cost airlines in the market has influenced the emergence of a growing number of budget airlines or low cost airlines trying to copy the strategy of the start-up low cost airlines and to repeat their success. It seems surprising that low cost carriers manage to stimulate new demand which means that they are not taking customers away from traditional carriers, but are able to attract new customers. Usually, budget airlines ( low cost airlines) fly to / from small airports, so-called secondary airports that charge less, because the stream of passengers increases their revenue and represents potential customers for the regional (tourism) development. This is of particular interest because the airport in case study situated in less developed region (Sunyani-Ghana). American aviation pioneers, such as Rufus Porter and Frederick Marriott, attempted to start airlines using airships in the mid-19th century, focusing on the New YorkCalifornia route. Those attempts floundered due to such mishaps as the airships catching fire and the aircraft being ripped apart by spectators; Deutsche LuftschiffahrtsAktiengesellschaft was the world's first airline. It was founded on November 16, 1909 with government assistance, and operated airships manufactured by The Zeppelin Corporation in Frankfurt. (Calder, 2003). The airline industry has recently experienced an unprecedented expansion of so called

"Low Cost Carriers". (Lederman and Januszewski, 2003). The growth of low-fare, low-cost airlines throughout the 1990s have been dramatic. In the US, low-fare carrier market shares have increased from just over 5% in 1990 to about 25% in 2004. In Europe, Asia and Australia, low-fare carriers are blossoming. With the rapid growth of new entrants, traditional network carriers must fight to remain competitive and are therefore making changes to adapt to this new competitive environment. These changes include fare structure changes and cost reductions. (Gorin, Belobaba).

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Today low-cost carriers pose a serious threat to traditional "full service" airlines, since the high cost structure of full- service carriers prevents them from competing effectively on price - the most important factor among most consumers when selecting a carrier. From 2001 to 2003, when the aviation industry was rocked by terrorism, war and SARS, the large majority of traditional airlines suffered heavy losses while low-cost carriers generally stayed profitable. The first successful low-cost carrier was Pacific Southwest Airlines in the United States, which pioneered the concept when their first flight took place on May 6, 1949. Often, this credit has been incorrectly given to Southwest Airlines which began service in 1971 and has been profitable every year since 1973. With the advent of aviation deregulation the model spread to Europe as well, the most notable successes being Ireland's Ryan air, which began low-fares operations in 1991, and easy Jet, formed in 1995. Ghana Airways was founded on 4 July 1958 by the government of Ghana with startup capital of 400,000; the government holding a sixty percent stake, with BOAC holding the remainder. When the company was founded, a seven year agreement between the airline and BOAC was also signed, which saw BOAC personnel being seconded to Accra, and Ghanaian personnel being trained in order for them to take over management and operations of the airline. The airline ceased operations in 2004, but was to be revived during 2010 as a partnership between the government of Ghana and Arik Air of Nigeria. At the end of the airline's first year of operation it had made a net profit of US$28,000. (http://en.wikipedia.org/, 2012). Ghana now is a competitive emergence of budget airlines like Johnsons Air-1996, Aerogem Aviation-2000, Meridian Airways-2007, Antrak Air-2003, City link, Air-link, Star bull, new African budget airline Fastjet will absorb Fly540. While Fastjet is still in early stages of development, they hope to be flying by the end of 2012. Fastjet will be Africas first true low-cost airline and is backed

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by Sir Stelios Haji-Ioannou, the founder of Europes Easyjet. It will initially serve Ghana, Kenya, Tanzania and Angola. The continual entry of budget airlines into the Ghanaian economy necessitates the reason of this research findings using Sunyani Airport as a case study.

1.2 STATEMENT OF PROBLEM Recently, a lot of literature can be found about low cost airlines and their strategies to survive in the long run, but few about their impact on airports and regional development and the consequences for investment decisions that have to be taken in the region. This study aims at combining the two fields future perspectives of Low Cost Carriers and impacts of Low Cost Carriers on airports and regional development. Therefore, the overall research question can be formulated as follows: Is the emergence of Low Cost Carriers merits for small airports and economic development at and around these airports? In order to answer this question, theories about the future development of the low cost market will be discussed, an analysis of the impacts on an airport and the region, the reasons for the emergence of some budget airlines, as well as an analysis of the customer-service satisfaction. The research area is Sunyani Airport in the Brong-Ahafo Region of Ghana. There are various factors for choosing this airport. Sunyani Airport is situated in a less developed region compared to other regions in Ghana. If there are impacts because of low cost airlines starting and landing there, they will be easier to examine than in a prosperous regions. Secondly, the Brong-Ahafo Region is not a typical international tourists receiving destination. An increase in the number of especially foreign tourists will be more obvious than in regions with a great international visitor flow.

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Finally, Ghana Airways (Kotoka International Airport) been founded on 4 July 1958 by the government of Ghana with startup capital of 400,000; subsequently the Sunyani Airport was established with other six (6) secondary airports. This leads to the fact, that there have been some positive impacts for the airport and regional developments, necessitating the emergence and proliferation of Low Cost Carriers in Ghana hence possible impacts.

1.3 OBJECTIVES OF THE STUDY The objectives of this research include: To investigate the reasons for the emergence of budget airlines, To find the factors influencing preference of low-cost airlines, Assessment of service quality and customer satisfaction, Passengers perception on budget airlines, To study the impact of low cost airlines on the economic growth and development of Ghanaian economy. To predict the sustainability of low cost airlines and to identify the future growth option.

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1.4 RELEVANCE OF THE STUDY The study of an emergence of low cost airlines will be relevant to both the private sectorentrepreneurs, and the government as a whole in the macro-economic system of Ghana. Also will it be significant to academia, airline passengers and foreign investors in general case. Statistical estimates on the relationships concerning the above stated research objectives could be a useful guide for the group of people afore-listed and others. It contributes to literature on Ghanaian airlines which would be readily available for some vital information concerning the growth and development of the competitive budget or low- cost airlines in Ghana. The various outline objectives of this research when achieve successfully would aid airline investors, service providers on how to turnover their profit at maximum levels. The research seeks to discover how clients are satisfied with the service provided by some budget airline providers and the Sunyani airport managements, when critically evaluated would disclose all the unrecognized factors this research study had captured, that they need to consider in aim of achieving higher productivity.

1.5 LIMITATIONS Time constraints: The academic time frame compelled the research to be limited to only the Sunyani Airport among many of the government owned airports in Ghana. Financial difficulties: The project was conducted under no financial sponsorship from any institution. This made conducting of interviews, administration of questionnaires difficult.

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1.6 ORGANIZATION OF THE STUDY The research will contain Five Chapters; Chapter One contains an introduction of the whole research, chapter 2 covers literature review of the research, chapter 3 contains the methodology, chapter 4 covers data analysis and chapter 5 covers the conclusion and recommendation.

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CHAPTER TWO 2.0 LITERATURE REVIEW

2.1 EUROPEAN LOW COST AIRLINES By the end of the year 2002, low cost carriers accounted for one-third of the total intra-European market involving UK and Ireland. Between Ireland and the UK, low cost carriers accounted for 47.2% of the traffic. British Airways was created in 1974, when the British Overseas Airways Corporation and British European Airways Corporation (BEA) were combined under the newly formed British Airways Board (Aviation Strategy 2003b). The first low-cost airline was Southwest Airlines which started flying in 1971. (Gross, S. Schroeder, A. Eds). Deregulation on the domestic front helped the Low Cost Carriers to emerge and prosper. The low cost revolution pioneered in the USA by Southwest and in Europe by Ryanair showed growth consistently. LCCs struggled to gain grounds in other parts owing to regulated markets, rising fuel cost, reducing passenger load factors, slow paced regional economic growth, lack of ability to create a distinctive competitive image, bankruptcy, reducing profit margins (Hardy, 2009). With initial hiccups airlines then started to grow, Virgin Blue in Australia, Gol in Brazil, Tiger Air in Singapore and Air Asia in Malaysia (Alloway, 2008). In the mean while, Europe was already saturated with number of LCCs, the number of passengers travelling on LCCs increased from 3 million in 1994 to 100 million passengers in 2004 (Doganis, 2006). LCCs in Europe exceed by 50% of the market share on some intra European routes, as compared to 8% by Asian LCCs on some Intra Asia routes (Benson, 2008). LCC carried more than 1/3 of the schedule passengers
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(Airbus, 2009). This growth was also a clear symptom of the price conscious customers willingness to travel in a LCC over the FSC or traditional carriers.

2.2 NORTH AMERICAN-USA- LOW COST AIRLINES The low-cost carrier concept originated in the US with Southwest Airlines. The US preference for maximum operating freedom and open skies operating regimes helped contribute to the rise of low cost carriers. In 1978, the US Airline Industry Deregulation, lowered barriers for new aircrafts just as a downtown in the industry occurred (Smith, Myron J, 2002). A new breed of budget airlines such as Southwest Airlines, JetBlue, AirTran Airways, Skybus Airlines and their counterparts in other parts of the world emerged posing a threat to the legacy carriers. The success of Southwest Airlines spurred the growth of low cost airlines. UK based Easyjet and Irelands Ryanair rule the roost in Europe. Ryanair is Europes largest low cost carrier and largest in the world in terms of number of international passenger units. US Airways traces its history to All American Aviation Inc, a company founded by du Pont family brothers Richard C. du Pont, Alexis Felix du Pont, Jr. and CEO Steven Gardner. Headquartered in Pittsburgh, the airline served the Ohio River valley in 1939. In 1949 the company was renamed All American Airways as it switched from airmail to passenger service; it became Allegheny Airlines in 1953 (Britannica, 2008).

Allegheny's first jet was the Douglas DC-9 in 1966; it absorbed Lake Central Airlines in 1968 and Mohawk Airlines in 1972 to become one of the largest carriers in the northeastern United States and sixth largest airline in the world as measured by passenger boardings. (US Airways, Chronology, 2008).

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But with expansion came growing pains: by the 1970s Allegheny Airlines had the nickname "Agony Air" due to customer dissatisfaction with the carrier's service (Hoovers, 2007) Even after a later rebranding to "USAir", when service sometimes skidded downward, complainers sometimes dubbed the airline "Useless Air", or even worse, "USScare." Allegheny's agreement with Henson Airlines, the forerunner to today's US Airways Express carrier Piedmont Airlines, to provide service under the Allegheny Commuter banner, is regarded as the industry's first codeshare agreement, a type of service now offered throughout the industry.

As of October 2012, US Airways employed 32,335 people worldwide and operated 3,036 daily flights 1,198 US Airways Mainline, 1,838 US Airways Express, (Usairways.com, FS, 2012)

This obviously means that, the United States pioneered as first to develop Air Transport Industry has gain global extensions and its proliferations for the past decade is generally as the result of the airlines market viability, acceptability and sustainability. The lucrative nature of the airline industry mostly LCCs turns to attract entrepreneurs and investors worldwide.

2.3 DEVELOPMENT OF LOW COST CARRIERS IN GHANA Air Transport Industry is one of the biggest industries in the world, reaching turnover of 501.2$ billion (Datamonitor, 2011) and 18$ billion in profits as of 2010 (IATA, 2011) and hence providing significant amount of work places as well as taxation revenues to governments. Ghana Airways was founded on 4 July 1958 by the government of Ghana with start-up capital of 400,000; the government holding a sixty percent stake, with BOAC holding the remainder. When the company was founded, a seven year agreement between the airline and BOAC was also signed, which saw BOAC personnel being seconded to Accra, and Ghanaian personnel being trained in order for them to take over management and operations of the airline (Freight International), 1958
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Prior to the foundation of the company, BOAC and West African Airways Corporation were responsible for international services from Ghana, operating pool services from West Africa to London. Ghana Airways joined the pool services, when BOAC began operating the Accra-London route on 16 July 1958 with a Boeing 377 Stratocruiser, with the aircraft being operated with the Ghanaian flag and in a livery minimally adapted from that of the UK carrier. The airline's relationship with West African Airways ceased on 30 September, and on 1 October it began operating in its own right the domestic and regional flights formerly offered by WAAC . The airline's first aircraft, and hence the first aircraft to be registered in Ghana since the nation became independent (Guttery, Ben R 1958). At the end of the airline's first year of operation it had made a net profit of US$28,000 (McLaughlin, Kathleen, 1961).

2.4 AIRPORTS IN GHANA An airport is a location where aircraft such as fixed-wing aircraft, helicopters, and blimps take off and land. Airports are divided into landside and airside areas. Landside areas include parking lots, public transportation train stations and access roads. Airside areas include all areas accessible to aircraft, including runways, taxiways and ramps. Access from landside areas to airside areas is tightly controlled at most airports. Passengers on commercial flights access airside areas through terminals, where they can purchase tickets, clear security check, or claim luggage and board aircraft through gates. Kotoka International Airport is the largest and only international airport in Ghana. The airport occupies 1610 acres (651 hectares) within the city of Accra, and is about 10 kilometres from the City Centre. The reference co-ordinates points are 05 35 47 North Latitude by 000 10 12 West

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Longitude. Elevation is 63.5m (205ft). K.I.As central location in the world, (on the Greenwich Meridian and close to the Equator) makes it easily accessible from any part of the world. Before 1946 it was used as a military aerodrome by the Royal Air Force (British) during the World War II. In 1946 the port was handed over to civilian authority following military pullout. January 1956Development Project launched for construction of a proper international airport for Ghana. March 1958- Ghana Airways began operations with the Accra Airport base. In 1969 new passenger terminal was commissioned and airport renamed Kotoka International Airport. May 1986, Promulgation of PNDC Law 151 was established to make Ghana Civil Aviation Authority an autonomous entity. November 2004, Enactment of Civil Aviation Act 2004, Act 678. In January 2006, decoupling of Ghana Civil Aviation Authority into two entities was done. (GACL, 2006)

Apart from KIA, Ghana has four other secondary airports facilitating high emerging demands of low cost airlines. The Kumasi Airport-1947, Tamale airport-1948, Takoradi Airport and Sunyani Airport- 1969, the building of these above stated secondary airports in some regions of Ghana paved way for some investors and entrepreneurs to engage in the Air Transport Industry. Amongst the most LCCs in Ghana is the Antrak Air. It started operations in September 2003 and operates scheduled domestic, regional and international services, as well as charter services in West Africa. Its main base is at Kotoka International Airport, Accra. The company suspended all operations in May 2012 following a fire on board its only aircraft (Wikipedia, Antrak); The Company resumed its domestic flights on August 6 after about 2 months grounded. Antrak Air was a designated carrier of passengers to various countries worldwide including the United Kingdom, Germany, South Africa and Saudi Arabia. The effort of this local investor had attracted many investors globally to invest in the Ghanaian economy. After the entry of Antrak Air in 2003,

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other LCCs competitively emerged into the Ghanaian economy. For instance, City link, Air-link, Fly 540, Starbow, new African budget airline Fastjet will absorb Fly540.

2.5 SUNYANI AIRPORT Sunyani Airport dates back as 1942, when a communication outpost and aerodrome was built for the use of allied forces. However, before the end of the war, the airstrip was abandoned. In 1969, the Busia Government seeing the need for an airport for Sunyani initiated construction work for a full airport. This was completed and officially opened on the 13th July 1974, by Col. P.K. Agyekum, the then commissioner for Transport and Communications. The 1,400 metre runway of Sunyani Airport cannot be extended due to a gully at one end and hill at the other. This limitation renders the airport unsuitable for use by medium range jets. Sunyani Airport is one of the domestic under the management of GACL. Sunyani Airport is located at 7 21 33N; 2 19 45W, Elevation of 1041ft (1402m), Runway directions of 07/25(marked at end as 20), Runway width of 148ft(45m), Runway slope varies from 2.0% uphill to 2.0% downhill on differing areas. Runway surface is a chip course seal coat 0.5 inch thick above grade and retard runoff. Smoothness is satisfactory. Stop way of 100ft (30ft) at each end, Airfield width of 300ft(100m) off end 07, trees 300ft(1000m) off ends 25; each at 1.5% threshold. There is no lightening but a Parking ramp. (GACL Handbook, 2006)

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2.6 REASONS FOR THE EMERGENCE OF LOW COST AIRLINES With the rapid growth of new entrants, traditional network carriers must fight to remain competitive and are therefore making changes to adapt to this new competitive environment. These changes include fare structure changes and cost reductions. (Gorin, Belobaba). Currently two major issues affect profitability of airlines (Kostama & Toivonen, 2012): firstly, whereas demand has been stable for last decade, terrorism threat and financial crisis slowed down the industry growth (11.9% industry growth in 2010 and 7.8% in 2011 (Datamonitor, 2011)). The expected recovery is slow, with growth projected to reach only 7.4% in 2015 (Datamonitor, 2011). Second, deregulation of European airline industry in 1990s allowed Low Cost Carriers (LCCs) to enter the market with new, revolutionary business model, thus driving the customers away from regular full-service airlines. The growth of low cost carriers has shown that they can successfully compete with full-service carriers, particularly in the price-sensitive leisure market, on these variables (Fourie and Lubbe, 2006) Although price is the most important factor among many that consumers consider before selecting a low cost carrier. Customers expectations on service quality and satisfaction is also contributing factor for the entry of many low cost carriers. The notion that service quality and customer satisfaction are distinctive variables has achieved some degree of consensus among researchers (Saha and Theingi, 2009). When customers expectations are met by airline service companies, it turns to increase the demand for their products and services which finally increases their productivity in maximized profit turnovers. Customer satisfaction depends on a variety of factors, including perceived service quality, customers mood, emotions, social interactions, and other experience-specific subjective factors (Rust and Oliver, 1994). Hence from the above reviews and

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discussions, its obvious that the emergence of low cost airlines is as a result of high demands by customers due to the factors such as low price, the safety, on time performance, convenience of schedules can be mentioned among the most important factors for the passenger on preferring the low cost carriers. However the factors such as comfort, airline images, baggage services, and cabin services and personnel behaviors have come into prominence much more in proportion to the others in terms of the importance attached.

2.7 DEMAND AND SUPPLY OF THE AIR TRANSPORT INDUSTRY According to Proussaloglou and Koppelman (1999), when passengers choose a flight, they try to maximize their "air travel utility". In their analysis, the elements that influence the choice of travelers are "the market presence, quality of service, frequent flyer membership, fare levels and travel restriction, and schedule convenience offered by each available flight". (Claudio and Filippi, 2002) On the other hand travel choice decisions are based on the assumption that the travelers is "a rational decision maker who actively searches for options that satisfy his/her air travel plans, evaluates the identified options, and selects the option with the highest overall utility that satisfies his/her individual scheduling constraints" (Proussaloglou and Koppelman, 1999) LCCs industries supply of quality service and products in meeting the demand of customers expectation on their utility (equilibrium) empirically had contributed to the emergence of low cost airlines globally and as such Ghana. Air transportation providers in supplying services do not function in isolation but in an environment that involves meaningful connection and interaction between several players in numerous activities with diverse resources (Dale, 2009). Some of the players in the air transport industry providing services to their customers at various locations include airline operators, airline agencies for booking or reservations, airport personnel,

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management and technical personnel for maintenance and operation, and other players involved in the delivery of the required service to customers. The air transportation industry therefore needs to work with several players to fulfil its purpose along its value chain in delivering the necessary and required service to satisfy its customers (Air Transport Action Group, 2008). Air transportation plays a fundamental role in our lives because it has allowed the transporting of vast numbers of people around the world to attend business conventions, holidays, vacations around the globe, or travel to important events (Wensveen, 2007). As a result, air transportation has become an important part of any nations economic and social environment.

2.8 SERVICE QUALITY AND CUSTOMER SATISFACTION Customer satisfaction depends on a variety of factors, including perceived service quality, customers mood, emotions, social interactions, and other experience-specific subjective factors (Rust and Oliver, 1994). According to Crompton and Love (1995), the two constructs are likely to be positively correlated, but unlikely to be linear. Although researchers have generally agreed on the conceptions and distinctiveness of service quality and satisfaction, their causal relationship is yet to be resolved including in the airline service consumption. Although a lot of literatures could be found and reviewed concerning the strategies LCCs adapt in their operations while they continually emerge and satisfying their customers, this study seeks to find possible factors affecting the choice of LCCs in remote or disadvantage regions. Basically the correlation between LCCs service quality and customer satisfaction in less developed regions of Ghana is the main focused of this study since many of the existing literatures do not address the reasons for the proliferation of LCCs in the Ghanaian economy for the last decade.

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2.9 ECONOMIC BENEFITS OF AIR TRANSPORT (SUNYANI AIRPORT) The air transport industry plays a vital role in the work and leisure of millions of people. It promotes an improved quality of life and helps improve living standards (Sheehan, 2003). Even though air transport has contributed to the enhancement of tourism, it has also contributed towards substantial economic growth for many economies. The above factors are made possible through the production of employment opportunities, escalating income from tax collection and nurturing the enhancement of secluded communities (Doganis, 2006). The most important contribution the air transport industry has made in a given economy and the globally is its impact on the performance of other businesses as a means of growth. Its impact and efficacy on the improvement of other businesses across the whole continuum of economic activity can be best seen through the following benefits (Air Transport Action Group, 2008); As a catalyst of world trade: with the presence of air transport, countries have managed to participate in the global market through increased access to markets enabling the globalization of manufacturing. It also assists countries to concentrate on activities in which they have equal advantage and to trade with countries manufacturing other goods and services. Air transports significance for tourism: specifically for remote communities, tourism is found to be a great supporter of airlines and airport employment. Air transports contributions towards global productivity: an efficient and effective transport link will lead to the expansion of the markets in which companies operate, enabling them to exploit economies of scale thereby reducing cost and at the same time in areas of comparative advantage. In this case, air service will allow the opening up of new

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market exposing companies to stiffer competition and motivating them to become more efficient. Its efficacy and efficiency towards the supply chain: with the presence of air transportation companies can manage their deliveries more efficiently.

2.9.1 FACTORS THAT MAKE LOW COST AIRLINES OPERATE EFFECTIVELY For every low cost airline to operate effectively and to remain profitably in the business, it requires to reduce the unit cost and increase both productivity and output. LCC try to maximize the flying time for each airplane and in turn reduce the time it takes for each turnaround thereby fully utilizing the capital equipment. It means that the use of airplanes and their capacity within the network of a given size is maximized. This greatly helps in reducing costs. In the case of LCC, the workers usually have heavier workload as compared to their fellow workers in the regular full service network carrier (FSNC) and are paid less for the same job. According to ECA (2002), the gross annual income of pilot in a short distance carrier is lower by 28% than for a pilot in a FSNC, even though the flying time is 25% more. There is tendency to use non unionized labor. The price of a LCC increases the load factor, which is usually more than 80% of the full capacity. (Dobruszkes, F, 2006).

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2.9.2 OPERATING FEATURES OF LOW COST CARRIERS All the low cost airlines that operate in the European market follow more or less the model of the most successful low fare airline in the United States: Southwest Airlines. The strategy of Southwest Airlines includes: Establishing a corporate ethos of ongoing and rigorous cost reduction Translating these savings into lower prices than competitors Growing existing markets through stimulating demand with the low prices Developing markets neglected by competitors such as secondary routes or visiting friends and relatives (Lawton, 1999) Ryanair is the European airline which adopted this strategy the closest of all airlines in Europe.

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2.9.3 RELATIONSHIP BETWEEN LOW COST AND FULL SERVICE AIRLINES

PRODUCT FEATURES OF LOW COST CARRIERS AND FULL SERVICE CARRIERS Product features Brand One Fares Distribution Check-in Connections Low cost carrier Brand: low fare Simplified fare structure Online and direct booking Ticketless Point-to-point Full service carrier Brand extensions: fare + service Complex fare structure + yield mgt Online, direct, travel agent Ticketless, IATA ticket contract Interlining, global alliances Two class (dilution of seating Complementary extras Medium to high: union contracts Low turnaround: congestion Multiple integrated products Multiple types: scheduling Generous pitch, offers seat Full service, offers reliability Extensions: e.g., cargo

Class segmentation One class (high density) In-flight Pay for amenities

Aircraft utilization Very high Turnaround time Product Aircraft Seating Customer service 25 min turnarounds One product: low fare Single type: commonality Small pitch, no assignment Generally under performs

Operational activities Focus on core (flying)

(J.F. OConnell, G. Williams / Journal of Air Transport Management 11 (2005) 25927)

33

CHAPTER THREE
3.0 METHODOLOGY This discusses the procedures, methods, etc employed in collecting the requisite information needed for the study. Besides, it explains how the study was conducted. This includes method of data collection and description, sampling technique used, population, instrumentation and the statistical tests used in data analysis.

3.1 RESEARCH STUDY AREA The research was carried out in the Brong Ahafo Region (B/A) of Ghana, precisely Ghana Airport Company Limited (GACL) Sunyani Airport. Some of the departments and sections under GACL Sunyani and other reachable airline passengers were selected for the research.

3.2 DATA DESCRIPTION The information for the study of this research work was obtained by making use of both primary data and secondary data.

3.3 PRIMARY DATA Questionnaires were designed, in open and closed formats in collecting primary data. This exercise involved the views and opinions of some workers at Sunyani Airport and air travelers (customers). The questionnaire included information about the age, job status, monthly income level, airlines service and customer satisfaction etc.
34

3.4 SAMPLING METHOD The passengers for the sample were selected using convenience sampling technique. Questionnaires were distributed among passengers waiting in the departure lounges of Low Cost Carrier Terminal (LCCT) at Sunyani Airport. A total of 150 questionnaires had being distributed but only 120 completed questionnaires were usable for further analysis. This sample size should be considered adequate for exploratory analysis in discovering Airline Service (LCC) to Customer Satisfaction and a larger sample would be needed to validate the study (Bejou et al. 1998).

Convenience sampling is a non-probability sampling technique where subjects are selected because of their convenient accessibility and proximity to the researcher. The subjects are selected just because they are easiest to recruit for the study and the selecting of subjects do not actually serve a representative of the entire population. In all forms of research, it would be ideal to test the entire population, but in most cases, the population is just too large that it is impossible to include every individual. This is the reason why project of this sort rely on sampling techniques like convenience sampling. Many researchers prefer this sampling technique because it is fast, inexpensive, easy and the subjects are readily available. This sampling technique is also useful in documenting that a particular quality of a substance or phenomenon occurs within a given sample. Such studies are also very useful for detecting relationships among different phenomena.

The convenience sampling technique was used due to time and budget constraints. Due to the fact that there was no incentive offered to the respondents, their decision to participate fully was out of pure interest.

35

3.5 METHOD OF ANALYSIS Logistic regression analysis was employed in the data analysis. Simple descriptive statistics was also applied to analyze the data. The analysis of these statistical techniques will be made possible by the use of three statistical software packages called Statistical Analysis System (SAS), Statistical Package for Social Sciences (SPSS), and Minitab. Regression

analysis estimates an equation that describes the existing relation between one or more response variables (also called the dependent variables, predicted variables, explained variables, or regressands) (usually denoted Y) and independent variable (also called predictors, explanatory variables, control variable, or repressors) (usually denoted by X). The response variable in this work is air passenger satisfaction which is binary (dichotomous) thus Yes or No in nature. Logistic regression is widely used to model outcomes of categorical dependent variable. The dependent variable in this study is Air passenger (customer) satisfaction which

is binary (i.e. satisfied or unsatisfied); since one of the objectives of this study is to determine the satisfaction of air passengers to airline service industry, (i.e. satisfied or unsatisfied) nine variables were used in the model as independent. The dependent variables passenger satisfaction has two levels: 0 if the passenger is unsatisfied and 1 when the passenger is satisfied. For the explanatory variables (independent variables) some were continuous and others were categorical. The independent variables used in this study are the factors that contribute to air passenger satisfaction which include: age, job status, income level, educational level, sex, PRICE, SEFRB, TOT, and DISTANCE. Stepwise selection process of logistic regression was applied in this study. The goal of this process was to remove any insignificant variables from the model before adding a significant variable to the model, based on the Wald statistic or the

36

p value procedure. The specific form of the logistic regression is in the form;

() =

() 1+ ()

Where () stand for the dependent variables as:

() = + 1 1 + 2 2 + 3 3 + 4 4 +
This is called the logit or the log odds of the dependent. Logistic regression determines the coefficients that make the observed outcome (satisfied or unsatisfied) most likely using the maximum likelihood technique. The logistic model used is:

( ) = ( = 1) =

() 1+ () () 1+ ()

And

( ) = ( = 0) = 1

37

3.6 HYPOTHESIS The project work (research) is aimed at testing the significance of the below hypothesis at 0.10 level of significance. HO : There exist no significance relationship between passenger satisfaction (satisfied, unsatisfied) and the related factors. H1 : There exist a significant relationship between passenger satisfaction (satisfied, unsatisfied) and the related factors.

This is stated mathematically as: Ho : = 0 H1 : 0, for at least one of the i

38

CHAPTER FOUR

4.0 DATA ANALYSIS AND PRESENTATION This chapter deals with analysis of data collected on low-cost airlines passengers satisfaction, related factors to their rate of proliferation and the socio-economic impact in Sunyani. The research captured 120 respondents from Sunyani Airport under the study. The first section is the preliminary analysis followed by logistic regression analysis which is the further analysis. 4.1 GENERAL DESCRIPTION OF VARIABLES The data collected was coded into SPSS, SAS, Minitab and other statistical packages where appropriate analysis was made. The data was coded under twenty two variables with their respective meaning and number of levels displayed in the table below. Table 1: DESCRIPTION OF VARIABLES NAME VARIABLE OF DESCRIPTION NUMBER OF LEVELS Sex Age Household Education Marital Status Gender of the airline passenger. Age groups of the airline passenger. Household size of the airline passenger. Level of education of the airline passenger. Marital status of the airline passenger. 2 6 3 4 2

39

Job Status Monthly Income Air Travels Low-Cost Airlines Reason to fly Ticket

Job status of the airline passenger. Average monthly income of the airline passenger. Does the passenger travels by air within regions of Ghana. Which low-cost airline mostly used by the passenger. Reasons why passengers use low-cost airlines. Factors considered in buying airline ticket.

5 5 2 6 4 5

Price to Quality of How satisfied are you on price to quality of low cost carrier 5 LCC services Departure Arrival time Quality Reliability Booking Ticket General Future and Passengers satisfaction with the airline quality and 5 reliability of service. Passengers satisfaction with regards to booking ticket. Passengers satisfaction in general. 5 2 service. and Passengers satisfaction with the departure and arrival time. 5

Is a passenger willing to travel with low-cost airline in 2 future?

4.2 Preliminary Analysis The information for the accuracy of this section of the analysis was obtained from 120 respondents with 62% being males while the remaining 38% were females. The age distribution of respondents referenced in Appendix A shows that about 15% out of the total are aged 15-24, 13% of them are aged 25-34, 22% are aged 35-44 whiles 39% are of age 45-54, 10% of age 55-65 and 0.8% are aged 65+. Descriptive statistics on various airlines, reasons and times of fly are outlined in appendix A.
40

In attempt to find out the percentage of air passengers satisfied with the services of the low-cost airlines in general referenced in appendix A, shows that 82.5% of passengers were satisfied whiles 17.5% of passengers were dissatisfied. Descriptive statistics on future patronage of lowcost airlines by passengers reviewed that, 91.7% of 120 respondents are willing to travel with low-cost airlines whiles 8.3% are not willing.

4.3 Testing the Association between Satisfaction and Gender of Airline-Customer To investigate the association between satisfaction and sex of airline customer it was observed that about 43.33% of the males were satisfied whiles 18.33% of them were dissatisfied. Also about 30.83% of the females were satisfied and 7.50% of them were dissatisfied.

From Table 1 a chi-square test of independence indicated that the null hypothesis should not be rejected since the test gives a p-value of 0.37 which was greater than the significance level of 0.05. Hence there is an insignificant association between satisfaction and sex of an airline customer. Table 2: Table Showing the Test of Association between Gender and Satisfaction Sex of Respondent The General Satisfaction Total Yes Male Female Total 52 37 89 No 22 9 31 74 46 120 p - value = 0.133

Chi-square value = 2.253,

41

4.4 Testing the Association between Satisfaction and Educational status Also testing for the association between satisfaction and respondent educational status it was observed that about 66.67% of the respondents with tertiary educational status were satisfied and 24.17% of them were dissatisfied. About 7.67% of those with secondary educational status were satisfied and 1.67% was dissatisfied. Whiles respondents with basic educational status were not observed during the administration of the questionnaire although it was a specified level of factor. From table 2 below, a chi-square test of independence indicates that the null hypothesis should not be rejected since the test gives a p - value of 0.543 which is greater than the significance level of 0.05. Therefore there is an insignificant association between satisfaction and respondent educational status.

Table 3: Table Showing the Test of Association between Satisfaction and Education Educational level of Respondent The General Satisfaction Total Yes Tertiary Secondary Total 80 9 89 No 29 2 31 109 11 120 p - value = 0.543

Chi-square value = 0.370,

4.5 Testing the Association between Satisfaction and Job status of customer Again testing for the association between satisfaction and respondent job status it was observed

42

that about 15.83% of the respondents being civil servants were satisfied and 3.33% were dissatisfied, 10.83% of tourists were satisfied whiles 2.50% were dissatisfied. About 13.33% of unemployed respondents were satisfied and 5.00% were dissatisfied. Whiles respondents with self employed status were 18.83% satisfied and 9.17% dissatisfied. Finally 15.83% representing other levels of jobs were satisfied but 5.83% were dissatisfied. From table 2 below, a chi-square test of independence indicates that the null hypothesis should not be rejected since the test gives a p - value of 0.684 which is greater than the significance level of 0.05. This implies that there is an insignificant association between satisfaction and respondents job status in respect with airline service and customer satisfaction.

Table 4: Table Showing the Test of Association between Job Status and Satisfaction

Job Status of the Respondent

The General Satisfaction Yes No 6 11 4 3 7 31

Total

Unemployed Self employed Civil Servant Tourist Others Total

16 22 19 13 19 89

22 33 23 16 26 120

Chi-square value = 2.283, p value =0.648

43

4.6 Testing the Association between Satisfaction and Income status of customer
Again testing for the association between satisfaction and respondent income status it was observed that about 15.83% of the respondents with average monthly income of 0-500 were satisfied but 4.17% being dissatisfied. 1.67% of 501-1000 income earners were satisfied and 2.50% were dissatisfied, 5.00% of 1001-1500 were satisfied whiles 0.83%% were dissatisfied. About 20.83% of 1501-2000 average income earners per month were satisfied and 6.67% were dissatisfied. Whiles respondents with an average monthly income of 2001+ consisting of 30.83% were satisfied and 11.67% dissatisfied. From table 2 below, a chi-square test of independence indicates that the null hypothesis should not be rejected since the test gives a p - value of 0.684 which is greater than the significance level of 0.05. Hence there is an insignificant association between satisfaction and respondents income status in respect with airline service and customer satisfaction. Table 5: Table Showing the Test of Association between Satisfaction and Income levels Income Levels of the Respondent in GH Cedis 0-500 501-1000 1001-1500 1501-2000 2001+ Total The General Satisfaction Yes 19 2 6 25 37 89 No 5 3 1 8 14 31 24 5 7 33 51 120 Total

Chi-square value = 3.960, p value = 0.4114

44

4.7 Further Analysis 4.8 Formulating Mathematical Model for an Airline Customer Satisfaction In this section of further analysis, logistic regression technique is employed to analyse the data statistically. The formulated model should be able to forecast level of satisfaction given related factors or independent variable being significant to customer satisfaction. Logistic Regression has categorical or binary variables. Below are the specified independent variables in regressing satisfaction model: Income, Job, Price, Job, Quality of Service, Booking of ticket, Availability of ticket, Long Distance and Time of Travel. And the dependent variable in binary form is stated as: 0 - Dissatisfied 1 - Satisfied From the table 5 in appendix A the contributory factors or the most significant factors (variables) are illustrated with their chi-square values, likelihood ratio chi-square and p-values. The most contributory or significant variables are selected or identified based on the p value.With a given independent variable, it requires a significant level of 0.05 to allow a variable to enter the model and 0.10 to stay. Series of step-wise selection are used to add significant

variables to the model and either backward selection or deleting technique is applied to remove in significant variable. For instance, with the above stated independent variables like job, income, booking, availability of ticket, others are removed from the model considering the p value and

45

variables like price, safety and reliability, quality of service, long distance having the required significant values are allowed to remain in the model or regression equation. Below is the summary of the stepwise selection output for seven independent variables.

Table 6: Illustrating the Summary of the stepwise selection Variables in the Equation Parameters Estimate Step 1a Price of ticket Safety and reliability Quality of service booking Long distance Availability of ticket Time of travel Constant 2.048 2.572 2.489 1.766 2.516 0.816 1.579 -6.041 S.E. 0.701 0.715 0.786 0.848 0.767 0.683 0.730 1.147 WaldChisq 8.543 12.939 10.027 4.338 10.762 1.428 4.675 27.742 DF 1 1 1 1 1 1 1 1 Pr-Chisq Exp(B) 0.003 0.000 0.002 0.037 0.001 0.232 0.031 0.000 7.753 13.088 12.052 5.845 12.383 2.261 4.848 0.002

46

Table 7: Showing an analysis of Maximum Likelihood Estimates for the Satisfaction Model

Variables in the Equation Parameters Step 2a Price of ticket Safety &Reliability Quality of service Long distance Constant Estimate 1.870 2.004 1.803 1.742 -3.707 S.E. 0.602 0.604 0.612 0.573 0.646 WaldChisq 9.638 11.022 8.693 9.223 32.917 DF 1 1 1 1 1 Pr-Chisq Exp(B) 0.002 0.001 0.003 0.002 0.000 6.485 7.422 6.071 5.706 0.025

a. Variable(s) entered on step 2: price of ticket, safety and reliability, quality of service, long distance.

From the table 6 above, final result of the stepwise selection of the most significant independent variables in respect of their estimate, the wald chi-square statistic, standard errors and their p values are accurately analysed. The estimates illustrated in the table above shows that the factors with (p values < 0.05) such as price, safety and reliability, quality of service, long distance of p values 0.002, 0.001, 0.003, 0.002 respectively contribute significantly to satisfaction. Meanwhile other variables like time of travel, availability of ticket, booking of ticket, income, and job status do not have significant influence of airline service to customer satisfaction modeling. Let W = Price of ticket, X = Safety and Reliability, Y = Quality of service and Z = Long distance. W.X.Y.Z contributing significantly to satisfaction at 0.1 significance level. Having Logistic Model as:

47

 () =

() 1+ ()

Where () stand for the dependent variables as:

() = + 1 1 + 2 2 + 3 3 + 4 4 + - The intercept, - the independent variables and - white noise term of error.
This is called the logit or the log odds of the dependent. Logistic regression determines the coefficients that make the observed outcome (satisfied or unsatisfied) most likely using the maximum likelihood technique. Simplifying the above expression:

ln |

| =

() = + + + + +

Implying that:

() =

+ 1 1 + 2 2 + 3 3 + 4 4 + 1+ + 1 1 + 2 2 + 3 3 + 4 4 +

Where () is the dependent variable being modeled as customer satisfaction. Now an airline-service to customer satisfaction is modeled under this study as below:

() =
() =

+ 1 1 + 2 2 + 3 3 + 4 4 + 1+ + 1 1 + 2 2 + 3 3 + 4 4 +

3.71+ 1.871 + 2.002 + 1.803 + 1.744 + 1+ 3.70+ 1.871 + 2.002 + 1.803 + 1.744 +

48

Since;

ln |

| =

() = + 1 1 + 2 2 + 3 3 + 4 4 +

The satisfaction model is simply expressed as: () = . + . + . + . + . + Where () is the dependent variable or Satisfaction level, Intercept ( ) = -3.71 W = Price of an airline Ticket X = Safety and Reliability Y = Quality of an airline service Z = Long Distance = the white noise or an error term, assumed to be constant value zero.

49

4.8 Using the Derived Model of Satisfaction to Forecast with Discussions

Having; () = 3.71 + 1.87 + 2.00 + 1.80 + 1.74 + () = 3.71 + 1.87(1) + 2.00(1) + 1.80(1) + 1.74(0) + 0 () = 1.96 Hence

() =

() 1+ ()

is obtained as

() =

1.96 1+ 1.96

= 0.88

[ = 1] = 0.88 or 88% level of satisfaction

From the above result, the probability of an airline customer being satisfied is 0.88 given respondent 33. Whiles the probability of his dissatisfaction is given as;

[1 = 1 ] = 0.12 or 12% level of dissatisfaction with respect to:

1 for yes satisfied 0 for no dissatisfied For the related significant variables such as W- price of airline ticket, X- safety and reliability, Yquality of service and Z- long distance which influence the derived low-cost airline customer satisfaction model.

50

CHAPTER FIVE
5.0 CONCLUSION AND RECOMMENDATION

5.1 CONCLUSION Considering the result obtained from the use of chi-square test of independence in determining the association between an airline customer satisfaction and its related factors such as job, income, gender and educational status, the chi-square value and the p values relatively to each factor was statistically insignificant in association with an airline customer or passenger satisfaction. Therefore from this study, it can be concluded that an airline customer satisfaction in general with respect to Sunyani Airport (Brong Ahafo Region) airline service does not significantly depend on a customers or passengers job, income, gender and educational status. Besides, this study considered only domestic flights as well as short-haul trips in less developed region and therefore the resulted underlying dimensions of an airline service to customer satisfaction might not be applicable to the long-haul trips or international flights. Certainly, logistic regression analysis was employed to formulate the model in this study. The analysis was accurately done at 0.10 level of statistical significance. The result used to formulate the satisfaction model in this work show that the model provided a reasonable statistical fit. Using the concept of p-value together with wald-statistic and likelihood ratio chi-square the study variables were subjected to significance testing. It resulted that W- Safety and Reliability, X- Price of ticket, Y- Long distance, and Z- Quality of service were the most significant factors presented in order of their significance levels. (p values of W.X.Y.Z.). It is clear from the study

51

that low-cost airlines cannot hope to compete on price alone for long since Safety and Reliability has the most significant value than price followed by Service Quality.

5.2 RECOMMENDATIONS Low-Cost airlines (Antrak air, Star bow, Fly540, city Link, African world and others) used under the study have to find ways to differentiate themselves positively in terms of providing safety and reliability in their services for their customers. The airlines should not underestimate the importance of safety and reliability for the customers. Since the survey results showed that safety and reliability ranks as the most significant factor to influence satisfaction of the respondents. For instant delays, cancellations, etc of freights should be minimized. Comfort in various terminals should also be ensured since most airline customers assess their value for money. It is suggested that smoking, noise making, switching in between queues where it exist should not be allowed. Although results from the findings shows that price is not the most significant variable to influence customers satisfaction which is contrary to the claim of written literatures, for instant (Dobruszkes, F, 2006)., descriptive statistics of the respondents income from the study shows that most air passenger must have higher average monthly income to afford air travel cost. Therefore it is recommended that managers of competitive airlines should cut down cost of air travel to attract an average income earner. Future researchers should employ principal component or factor analysis to compare how best fit this derived satisfaction model.

52

REFERENCES

Doganis, R., 2001. The Airline Business in the 21st Century. Routledge, London. Aviation Strategy, 2003b, Continental Barriers to LCC Expansion, Aviation Strategy, January, 2.

Proussaloglou, K., Koppleman, F., 1995. Air carrier demand: analysis of market share determinants. Transportation 22, 371388.

Crompton, J.L. and Love, L.L. 1995. The predictive validity of alternative approaches of evaluating quality of a festival. Journal of Travel Research. 34, 1, pp.11-24.

Rust, R.T. and Oliver, R.L. 1994. Service quality, insights, and managerial implications from the Frontier, in Rust, R.T. and Oliver, R.L. (Eds), Service Quality: New Directions in Theory and Practice, Sage Publications, Thousand Oaks, CA, pp.72-94.

Datamonitor (2011) Industry Profile: Global Airlines, www.datamonitor.com IATA.org, Simplifying the business - industry revolution kicks off, Press Release no. 31 (2004), available at http://www.iata.org/pressroom/pr/pages/2004-11-16-02.aspx,

[17.4.2012] OConnell, J.F. and Williams, G. Passengers perceptions of low cost airlines and full service carriers: A case study involving Ryanair, Aer Lingus, Air Asia and Malaysia Airlines, Journal of Air Transport Management, 11, 4, pp.259-272.

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Fourie, C. and Lubbe, B., 2006. Determinants of selection of full-service airlines and low-cost carriers: A note on business travelers in South Africa, Journal of Air Transport Management, 12, pp.98-102.

Saha, G.C. and Theingi. 2009. Service quality, satisfaction, and behavioral intentions. A study of low-cost airline carriers in Thailand Managing Service Quality, 19, 3, pp.350372.

Ghana Airport Company Limited, Handbook 2006, pp.1-11. Lederman Mara and Silke Januszewski. 2003. Entry Patterns of Low-Cost Airlines, Massachusetts Institute of Technology. This Draft: August 8,

www.rotman.utoronto.ca/mara.lederman/entry.pdf. Gorin, Thomas and Peter Belobaba. Assessing Predation In Airline Markets With LowFare Competition, International Center for Air Transportation, Massachusetts Institute of Technology, Cambridge, MA 02139, USA Submitted to Transportation Research Part A: Policy and Practice. http://web.mit.edu/ipc/sloan05/Gorin&Belobaba.pdf. Piga, C.A. and Filippi N., 2002, Booking and Flying with Low-Cost Airline, International Journal of Tourism Research, Vol.4,pp.237-249. Wikipedia, www.wikipedia.com. Easy Jet becomes the biggest Low-Cost Airline in Europe, http:

www.icmr.icfai.org/casestudies/catalogue/business%20strategy1/BSTR057.htm. Hardy, F.W., (2009). Air Arabia, the world's most profitable airline: The low cost model that outperforms other discount and legacy airlines.

www.airplanes.suite101.com/article.cfm/air_arabia_the_worlds_most_profitable_airline.

54

Binggeli, U and Pompeo L., 2002, Hyped Hopes for Europes Low Cost Airlines, The McKingsey Quarterly, Number 4

Wikipedia, www.wikipedia/ghanaairlines/antrak.com USairways.com,FS,2012 Alloway, T., (2008). Ryanair profit falls 85% on fuel prices. Retrieved 14 September 2009 from: http://www.independent.ie/business/ryanair-profit-falls-85on-fuel-prices-

1442287.html. Benson, M., (2008). Bankrupt low cost airlines = redundant overseas property hotspots, Retrieved 10 September 2009 http://www.nubricks.com/archives/1066/bankrupt-lowcostairlines-redundant-overseas-property-hotspots. Wensveen, J. (2007). Air transportation: A management perspective. 6th edition. England: Ashgate Publishing Ltd. Dobruszkes, F., 2005. Compagnies low cost et aeroports secondaires: quelles dependances pour quel developpement regional? Les Cahiers Scientifiques du Transport 47, 3959. Sheehan, J.J. (2003). Business and Corporate Aviation Management: On demand air transportation. New York: McGraw-Hill. Dale, B. (2009). Is transport an effective tool for sustainable development? Sustainable development, 17(4), 210-219. Air Transport Action Group. (2008). The Economic and Social benefits if air transport.

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APPENDICES
Appendix A Distribution of respondents by gender Gender Male Female Total Frequency 74 46 120 Percentage 61.7 38.3 100 (Source; Field Survey, 2013)

Age distribution of respondents Age 15-24 25-34 35-44 45-54 55-64 65+ Total Frequency 18 16 26 47 12 1 120 Percentage 15 13.3 21.7 39.2 10 0.8 100.0 (Source; Field Survey, 2013) Income distribution of respondents (GH Cedis) Income 0-500 501-1000 Frequency 24 5 Percentage 20 4.2
56

1001-1500 1501-2000 2001+ Total

7 33 51 120

5.8 27.5 42.5 100 (Source; Field Survey, 2013)

Job distribution by respondents Job Unemployed Self employed Civil servant Tourist Others Total Frequency Percentage 22 18.3 33 27.5 23 19.2 16 13.3 26 21.7 120 100 (Source; Field Survey, 2013)

Low-Cost Airlines Market share at Sunyani Airport Type of Airline Antrak Air Star bow Fly 540 City link African world Total Frequency 80 22 9 7 2 120 Percentage 66.7 18.3 7.5 5.8 1.7 100 (Source; Field Survey, 2013)

57

General satisfaction by respondents Predicted in general are you satisfied with the services rendered to you by the airline Percentage Yes no Correct 89 31 0 0 100.0 00.0 74.2

Observed in general are you yes satisfied with the No services rendered to you by the airline Overall Percentage

a. Constant is included in the model. (Data-SPSS) b. The cut value is .500

Summary of stepwise selection Variables in the Equation Parameters Estimate Price of ticket Safety and reliability Quality of service Booking Long distance Availability of ticket Time of travel Constant 2.048 2.572 2.489 1.766 2.516 0.816 1.579 -6.041 S.E. 0.701 0.715 0.786 0.848 0.767 0.683 0.730 1.147 WaldChisq 8.543 12.939 10.027 4.338 10.762 1.428 4.675 27.742 DF 1 1 1 1 1 1 1 1 Pr-Chisq Exp(B) 0.003 0.000 0.002 0.037 0.001 0.232 0.031 0.000 7.753 13.088 12.052 5.845 12.383 2.261 4.848 0.002

58

Maximum Likelihood Estimates for Airline Customer Satisfaction WaldChisq 9.638 11.022 8.693 9.223 32.917

Parameters Price of ticket Safety &Reliability Quality of service Long distance Constant

Estimate 1.870 2.004 1.803 1.742 -3.707

S.E. 0.602 0.604 0.612 0.573 0.646

DF 1 1 1 1 1

Pr-Chisq Exp(B) 0.002 0.001 0.003 0.002 0.000 6.485 7.422 6.071 5.706 0.025

Odds Ratio Estimates

Effect Price safRety Quase Timtvr Longdis

Point estimates 0.136 0.100 0.143 0.158 0.094

95% wald confidence 0.039 0.027 0.039 0.041 0.025

Limits 0.475 0.370 0.526 0.615 0.361

Appendix B SAS OUTPUT

The SAS System 20:06 Friday, May 1, 2009 3

The LOGISTIC Procedure Model Information Data Set Response Variable Number of Response Levels Model Optimization Technique SASUSER.A SATISFACTION 2 binary logit Fisher's scoring

Number of Observations Read Number of Observations Used Response Profile Ordered

120 120

Total

59

Value 1 2

SATISFACTION 1 0

Frequency 89 31

Probability modeled is SATISFACTION=1. Model Convergence Status Convergence criterion (GCONV=1E-8) satisfied. Model Fit Statistics Intercept Intercept Criterion Only AIC SC -2 Log L R-Square 0.3984 139.114 141.901 137.114 and Covariates 88.142 104.867 76.142 0.5850

Max-rescaled R-Square

Testing Global Null Hypothesis: BETA=0 Test Likelihood Ratio Score Wald The SAS System Chi-Square DF Pr>ChiSq <.0001 <.0001 <.0001 2009 4

60.9717 5 47.4385 5 28.8943 5 20:06 Friday, May 1, The LOGISTIC Procedure

Analysis of Maximum Likelihood Estimates Parameter Intercept Price SafRety Quase Timtvr Londis DF 1 1 1 1 1 1 Standard Estimate Error -3.7069 1.8654 2.0322 1.8035 -1.8446 1.7421 Wald Chi-Square 29.6546 9.7699 11.9221 8.5549 7.0840 11.8801 Pr>ChiSq <.0001 0.0018 0.0006 0.0034 0.0078 0.0006

0.9183 0.6390 0.6668 0.6652 0.6930 0.6853

Odds Ratio Estimates Effect Price Quase Timtvr Longdis Point Estimate 0.136 SafRety 0.143 0.158 0.094 95% Wald Confidence Limits 0.039 0.100 0.039 0.041 0.025 0.475 0.027 0.526 0.615 0.361 0.370

Association of Predicted Probabilities and Observed Responses Percent Concordant Percent Discordant Percent Tied Pairs 89.8 8.0 2.2 2759 Somers' D Gamma Tau-a c 0.818 0.836 0.316 0.909

60

Appendix C UNIVERSITY FOR DEVELOPMENT STUDIES FACULTY OF MATHEMATICAL SCIENCES DEPARTMENT OF MATHEMATICS A questionnaire used to solicit data on the topic; PROLIFERATION OF LOW COST AIRLINES This is purely for academic purposes and as such, responses will be used sorely for that purpose. Your opinion will be treated confidential. Please if you have questions about this survey, you may contact the researcher at ankamahjacob@yahoo.com Thank you. Serial Number (SA) . Part 1: passenger profile: basic 1. Please indicate your Gender? Male [ ] 2. Please indicate age? 15-24 [ ] 25-34 [ ] 35-44 [ ] 45-54 [ ] 55-65 [ ] 65+ [ ] Female [ ]

3. Please indicate your marital status? Married [ ] Single [ ]

4. Household size .. 5. What is your educational status? Tertiary [ ] Secondary [ ] Basic education [ ]

others.. 6. Job status: Unemployed [ ] Self- employed [ ] Civil servant [ ] Tourist [ ]

others

7. What is your approximate monthly income?

61

GH0-500[ ] [ ]

GH501-1000[ ] GH1001-1500[ ] 1501-2000[ ]

GH2001+

Part two: passenger profile: airline 8. Have you traveled by air between regions in Ghana? Yes [ ] No [ ]

9. Which airlines (please tick as many as possible) you use most often? Antrak air [ ] Starbow [ ] fly 540 [ ] City link [ ] African world [ ]

others 10. Your main reason to fly: Business [ ] Leisure [ ] Personal reasons [ ]

others. 11. How many times have you traveled by air for the last 12 months 1 -3 [ ] 4-6 [ ] more than 10 [ ] as many as

12. What factors do you consider before buying an airline ticket (Please tick possible) [ [ [ [ [ [ ] ] ] ] ] ] Availability of the ticket Price of the ticket Quality of Service Safety and Reliability Time of travel Long distance

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Part three: airlines service 13. How would you rate the price to the quality of service of low-cost airlines? Very Satisfied [ ] Satisfied [ ] Dissatisfied [ ] Uncertain [ ] Dissatisfied [ ] 14. Are you satisfied with departure and arrival time? Very Satisfied [ ] Satisfied [ ] Dissatisfied [ ] Uncertain [ ] Very Dissatisfied [ ] 15. Are you satisfied with the level of reliability and safety? Very Satisfied [ ] Dissatisfied [ ] Satisfied [ ] Dissatisfied [ ] Uncertain [ ] Very Very

16. How satisfied are you with regards to booking ticket at the airport? Very Satisfied [ ] Satisfied [ ] Dissatisfied [ ] Uncertain [ ] Very Dissatisfied [ ]

17. In general were you satisfied with the services rendered to you by the airport? Yes [ ] No [ ]

18. Are you willing to travel with low-cost airlines in the future? Yes [ ] No [ ] If yes please

why? .

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