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C O N S U M E R P E R C E P T I O N T O W A R D S S E R V I C E Q U A L I T Y O F B O T H L O C A L A I R L I N E S E R V I C E S IN K O T A K I N A B A L U , SABAH

( M A L A Y S I A A I R L I N E S - MAS & A I R ASIA)

R O S A L I A M I M I N 2010532861

B A C H E L O R O F B U S I N E S S A D M I N I S T R A T I O N W I T H

H O N O U R S ( M A R K E T I N G ) F A C U L T Y O F BUSINESS M A N A G E M E N T U N I V E R S I T I T E K N O L O G I M A R A

S A B A H

J U N E 2013

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A C K N O W L E D G E M E N T

First of all, greatest thanks to God for his blessings into my life during all this time and also the guidance from God until 1 was able to accomplish this particular report with full effort and self-confidence.

Here, I also would like to take this an opportunity to express my gratitude to my advisor, Mr. Cyril Supain for all his support, guidance, encouragement, positive comments, advice, valuable suggestion, valuable consultation time and concerns throughout the completion of this research. Your supports make me able to finish up this research properly.

On the other hand, greatest appreciations also to my family because being along with me all the times, always support me, giving me their blessings, unconditional love, moral support and also financial support that help me lot in completing this project.

To my office mate at Sabah A i r Aviation Sdn Bhd, thanks to you all because being kind with me, giving me valuable information pertaining to the airline industries, being helpfulness and friendly to me as well as giving me a grateful cooperation to contribute the information which is required in my project.

Last but not least, greatest thanks from deep of my heart for those entire names who I have not mentioned in this acknowledgement, who directly and indirectly contributed to the completion of this project.

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A B S T R A C T

The purpose of this particular research which is entitled consumer perception towards service quality of both local airlines in Kota Kinabalu, Sabah (Malaysia Airlines - M A S and A i r Asia) is to investigate the perception of consumer in terms of the service quality or customer services offered by the both of local airline services. On the other hand, the purpose of this research is also to determine which one of the local airlines are more preferable by the consumer as well as to compare the pricing, on board services, facilities and so forth. This is very important to identify in order for both of Malaysia Airlines ( M A S ) and A i r Asia to compete with the new hybrid airline which is Malindo Air.

Therefore, the finding that the researcher found out through this particular research majority of the respondents or consumers are chose Malaysia Airlines ( M A S ) to be their more preferable airlines because having an excellent service quality. On the other hand, throughout this particular research there are several recommendations from the respondents in order to improve the service quality of both local airlines in Kota Kinabalu, Sabah particularly.

ix

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T A B L E O F C O N T E N T

C H A P T E R S P A G E 1.0 I N T R O D U C T I O N

1.1 Background of Study 1 1.2 A n Overview of the Company 2

1.3 Scope of Study 5 1.4 Problem Statement 6 1.5 Research Objectives 7 1.6 Research Questions 7 1.7 Theoretical Framework 8 1.8 Significance of Study 10 1.9 Limitation of Study 11 2.0 L I T E R A T U R E R E V I E W

2.1 Consumer Perception Concept 12 2.2 Service Quality Definition 12 2.3 Airline Service Concept 13

2.4 Service Quality and Customer Satisfaction (Interrelated) 13

2.5 Service Quality Gaps 13 2.6 S E R V Q U A L Model 15 2.7 The Importance of Service Quality in Airline Services 16

2.8 The Product and Services for both of Airline Services 17 2.9 New Hybrid Airlines (Malindo Air) New Competitors of the 19

Local Airlines in Malaysia

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3.0 R E S E A R C H M E T H O D O L O G Y A N D D E S I G N

3.1 Introduction 20 3.2 Research Design 20 3.3 Data Collection Method 21

3.3.1 Primary Data 21 3.3.2 Secondary Data 22

3.4 Sampling Design 23 3.4.1 Target Population 23

3.4.2 Sampling Techniques 23 3.4.3 Sampling Size 23 3.5 Data Entry and Data Processing 24

3.6 Data Analysis 24 3.6.1 Frequency Distribution 24

3.6.2 Reliability Test 24 3.6.3 Cross-Tabulations 23

4.0 R E S E A R C H F I N D I N G 26

4.1 Respondent's Gender 26 4.2 Respondent's Races 27 4.3 Respondent's Age 29 4.4 Respondent's Occupation 30 4.5 Respondent's Income 31 4.6 Airline Services that the Respondents have been used 32

4.7 Respondent's Method of Making a Reservation 33

xi

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