Today competition is not only rife, but growing more intense constantly. However, companies need to start paying keen attention to their competitors, they must understand their customers.Airlines are suffering from each competition. They have to believe customers as core concept of their business; customer satisfaction is what guarantees the future of air lines and it is achievable by taking up their services and passengers’ needs. In other words, service quality is typically defined in terms of consumer satisfaction. The purpose of this study is to measure the service quality and its subsequent effect on customer satisfaction at Ethiopian airlines using a model that describes various dimensions of service quality. To this purpose the researcher has studied the service quality of the airline using SERVQUAL model. Convenience sampling technique was used in the study to take a sample from the infinite population. A total sample of 150 respondents who have made a flight with Ethiopian airlines were taken as a respondent. A questionnaire was designed based on the model in order to examine all the five factors of service quality in the model for airline industry. It is inclusively concluded that passengers of EAL are not satisfied with the perceived services of three dimensions of the model and it warns the airline to focus on passengers expectations. Tangibles, assurance, responsiveness, reliability and empathy are five features of the model and in tangibles and reliability the passengers are satisfied, but in the remaining three passengers feel dissatisfied. Managers should train employees, improve visually attractive facilities and coordinate all people, departments and organizations involved with the services. Finally, managers at EAL should measure passengers’ satisfaction and service quality seasonally to keep the services corresponded with customers’opinions.