ASSIGNMENT

INFOMAX COLLEGE OF IT AND MANAGEMENT

(AQ054-3-M)

(Statistical Decision Making)

HAND OUT DATE: (10/05/2019)

HAND IN DATE: (17/06/2019)

WEIGHTAGE: (70) %

INSTRUCTIONS TO CANDIDATES:
1. Submit your assignment at the administrative counter.
2. Students are advised to underpin their answers with the use of references (cited using the
Harvard Name System of Referencing)
3. Late submissions will be awarded zero (0) unless Extenuating Circumstances are upheld.
4. Cases of plagiarism will be penalized.
5. The assignment should be bound in appropriate style (comb bound or stapled)
6. Where the assignment should be submitted in hardcopy and softcopy, the softcopy of the written
assignment and source code (where appropriate) should be on a CD in an envelope / CD cover
and attached to the hard copy.
7. You must obtain 50% overall to pass this module.
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Introduction
Quality of service and customer satisfaction is known as a behaviour arising from a
assessment between the actual product presentation and integrated client expectations.
[ CITATION Kie06 \l 1033 ]. All service-oriented enterprises give great importance to
customer satisfaction. Without accomplishing harmony between its quality management and
quality goods, an organization is highly unlikely to assist its productivity. Service quality is
regarded as an essential measuring factor of competitiveness's valuable aspect. The critical
problem and challenges faced by the modern service industry is to provide outstanding
service quality and high customer satisfaction.
This is no exception for the civil aviation. The fiercely competitive international aviation
industry makes several airlines compete for the leading position, and the customer service is
of major significance. Providing their passengers with high quality service is quite critical to
any airline. This study focuses primarily on certain factors that affect air passenger
expectations when choosing a specific airline for travel. To achieve a greater level of service
quality, companies have to consider the experience of a client – from their preconceptions
before the experience starts to their assessment of the service. [ CITATION Leo02 \l 1033 ].

Problem Statement
Customer Satisfaction is an important goal for any airline delivering passenger services. To
withstand today's globalizing environment it is important to recognize and satisfy customer
requirements, and thereafter to be distinct from rivals. Because of the changing marketplace
and the growing need for improved customer service, it is critical for companies to deliver
outstanding service and concentrate on constant enhancement, in order to maintain the
distinctive character of their operations and to gain competitive advantages over rivals.
In Nepal, there are various safe and reliable air transporters, yet, due to the lack of aircraft
and other numerous factors, it is not able to please individuals with its services in some
extent.

The assessment can assist different airlines to concentrate on what clients prefer and how
superior client value can be created. This study project and its result can be useful for those
interested in conducting comparable field studies and analyzing other companies. This study
will address air travelling client preferences taking into account different service features. My
study's problem statement is to find out the general public's genuine needs and preferences.
Aims and objectives
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This report is aimed at determining the extent to which various factors affect people’s
preference in purchasing air tickets indomestic flights in Nepal. The objectives of this report
are:

a) To determine the customer expenditure, income level and age of customers.

b) To identity whether individuals consider way of booking air tickets and cleanliness as
important factor while choosing airlines or not.

c) To determine price of air tickets preferred by customers.

d) To analyze the association between preferred aircraft cleanliness and income level of
the customers.

e) To analyze the relationship among the dependent variable, expenditure with the
quantitative independent variables including income, price and age.

Hypotheses
In order to find how much the identified factors affect the consumer preference for airlines in
Nepal, the following research hypotheses can be designed:

Hypothesis to be tested by using Normality test of dependent variable

H0: The observed distribution fits the normal distribution
H1: The observed distribution does not fit the normal distribution

Hypothesis to be tested by using Chi-square test

H0: Aircraft cleanliness is independent of monthly income of the customers.
H1: Aircraft cleanliness is not independent of monthly income of the customers.

Hypothesis to be tested by using Multiple Linear Regression

H0: There is no effect on expenditure due to significant change in customers’ income,
customers’ age and price of air tickets.
H1: There is effect on expenditure due to significant change in customers’ income,
customers’ age and price of air tickets.
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Findings and Discussion

This research is conducted with reference to a previously collected secondary data. 50
samples of airlines customers in Nepal have been analyzed with the help of SPSS software.
The following variables were considered in this research:
 Quantitative dependent variable: Customers’ expenditure on plane ticket
 Qualitative independent variables: Monthly income of customers and Ticket fare
 Quantitative dependent variables: Aircraft cleanliness and Ticket booking ways
Statistical analysis techniques used in this research are Normality test of dependent variable,
Histogram of dependent variable, Chi-square test and multiple linear regressions whose
results and findings will be further discussed through presentation and interpretation of tables
and figures extracted from SPSS software.

A. Normality test of the dependent variable

The significance of the normal distribution is evident as it is a fundamental assumption of
numerous statistical measures. Justifying the assumption of normality is thus of vital
importance in statistical analysis while applying parametric techniques. The distribution of a
data can be concluded as normal or not normal with the help of graphical representations (Q-
Q plot, Histogram or box plot) and formal test of normality. Formal test of normality and Q-
Q plot have been used in this report to present the normality test.
By testing the normality test of the dependent variable (Customer’s expenditure), following
findings can be presented and discussed:

The Test of Normality of Customer’s expenditure on plant tickets can be presented in the
table above. As shown above, Shapiro-Wilk and Kolmogorov-Smirnov test of normality have
been used. The Shapiro-Wilk (S-W) test is applicable for small-sized sample data of 2000 or
less whereas, the Kolmogorov-Smirnov (K-S) test is applicable for large-sized sample data of
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more that 2000. Since the sample data in this report is less, the result of Shapiro-Wilk test is
preferred. S-W test shows the significance of 0.000, which is less than 0.05 level of
significance, 0.00 < 0.005, thus, we reject null hypothesis. Hence, we conclude that the data
does not fit the normal distribution.

Similarly, Q-Q Plot of Customer’s Expenditure on plane tickets is represented in the above
figure. As the data points stray from the diagonal line in the above figure, it is obvious that
the data is not distributed normally.

B. Histogram or Box-plot of the dependent variable

A histogram is a graphical representation of data, which displays the number of data elements
in linear intervals of equal size. A histogram of dependent variable (Customer’s Expenditure
on plane tickets) is constructed and presented below:
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In the above histogram, the Customer’s expenditure along the x-axis and the data frequency
is shown along the y-axis. The equal intervals of monthly expenses in the above figure as 0.5-
1.5, 1.5-2.5 and 2.5-3.5 in the x-axis represents the Customer’s monthly plane tickets
expenditure of Rs. (2000-5000), Rs. (5000-10000) and Rs. (10000-15000) respectively. The
histogram shows that among 50 sample data of customers, approximately 32 spend Rs.
(2000-5000), 11 spend Rs. (5000-10000) and 6 spend Rs. (10000-15000) on plane tickets.

C. 2-sample independent t-Test or Chi-square Test

The Chi-square test is a method that utilizes a cross-classification table to analyze the essence
of the association between two independent variables. It helps to analyze whether the
correlation found between the variables is significant enough to demonstrate that the two
variables are interdependent or not.
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The two independent variables to be tested busing the Chi-square method are Monthly
income level of customers and aircraft cleanliness. In terms of the hypothesis determined
previously, the presentation and interpretation of Chi-square test can be discussed below:

In the provided table above, Pearson Chi-square measure is shown which represents that the
value of Chi-Square statistics is 13.379. The p-value is 0.004 as shown in the Asymptotic
Significance column, which is less than the standard alpha value (0.05), 0.004 < 0.05.
Therefore, we reject null hypothesis and accept alternative hypothesis, which asserts that
Aircraft cleanliness is not independent of monthly income level of the customers.

D. Simple linear regression or Multiple linear regression

A multiple linear regression explains the strength of effect on a dependent variable due to
significant changes in two or more independent variables. Multiple regression analysis is
used in this research to explain the relationship between Expenditure of customers on plane
tickets (dependent variable) and Ticket fare, Customers’ age and Customers’ monthly income
(Independent variables). The output of Multiple Regression models including Model
Summary and Coefficients table are presented and interpreted as follows:
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The Model Summary table above, we find that the adjusted R2 of our model is 0.209 with
coefficient of determination or R2 as 0.257. This denotes that the linear regression justifies
25.7% variance in the data, which means that 25.7% of Customers’ expenditure on plane
tickets, is explained by Ticket fare, Customer’s age and Monthly income level of Customers.
In reference to previously stated hypothesis, we reject null hypothesis and hence, accept that
there is effect on expenditure on plane tickets due to significant change in income of
customers, age of customers and ticket fare price.

The above table of Coefficient shows the multiple linear regression estimates. The table
demonstrates that Monthly Income of Customers is the most significant predictor or
influencing factor than Customer’s age and Ticket fare (comparing standardized coefficients
Beta 0.594, -0.291 and -0.336 respectively). It also presents that Customers’ expenditure is
positively affected by Customers’ income (0.594) and negatively affected by Customers’ age
(-0.291) and Ticket fare (-0.336).
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Conclusion and Recommendations

The research is focused on various factors affecting customer preference for airlines in Nepal.
The total sample data for this research was 50. Various conclusions can be reached with the
help of data analysis with the use of SPSS software. The major conclusions that can be found
from this research report are:
 The data distribution of Monthly customers’ expenditure on plane tickets is not
normal.
 32 out of 50 airlines customers pay Rs.2000 to Rs.5000 for plane tickets while 11 pay
Rs.5000 to Rs.10000 and 6 pay Rs.10000 to Rs.15000.
 There is significant relationship between Aircraft Cleanliness and Monthly Income of
the customers.
 Income of customers, age of customers and ticket fare price have significant effect on
Customers’ expenditure on plane tickets.

People in Nepal do not expense much on airlines tickets and rather use bus and other land
mediums to travel, therefore various schemes can be organized by airlines company to attract
Nepalese market to use air transport. Airlines should also focus on aircraft cleanliness and
ways of booking tickets. Result suggests the higher the income level of customers, the more
they prefer Aircraft Cleanliness, therefore Airlines companies in Nepal should improve their
cleanliness standards since the living standard of Nepalese is increasing.
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