Sustainable competitive advantage arising from competitive startegies adopted by low-cost airlines in Kenya: Case of Five Forty Aviation Ltd

Abstract

Background The global aviation industry is undergoing a fundamental structural shift. Aviation Industry Survey Results (2008) states that the aviation industry is faced with excess capacity, rising costs, competition and deteriorating economic climate, therefore airlines must innovate to ensure continued survival and profitability. For many airlines, survival depends on their ability to develop new business models to enable them adapt to the ever changing environment. The globalization of the worldwide economy, coupled with airline deregulation and trade expansion, has caused a boom in the air travel. This rapid growth has not been paralleled by a similar expansion in the national airspace infrastructure, resulting in congestion, delays and widespread frustrations (Ochieng, 2006). The purpose of strategy according to Ramaswamy and Namakumari (1996) is to exploit the unique advantages of the organization in facing the challenges of the environment. A strategy begins with a concern and a burden of how best to use the limited resources of the organization. The successful corporations make their strategic priority to build their core competencies and long term competitive advantages, so that they will serve the real back up for the business level strategies of the business units of the corporation. To acquire competitive advantage in any market, a firm needs to be able to deliver a given set of customer benefits at lower costs than competitors, or provide customers with a bundle of benefits its rivals cannot match. To realize the potential that core competencies create, a company must also have the imagination to envision markets that do not yet exist and the ability to stake them out ahead of competition (Hamel and Prahalad 1991; Porter 1980). Chaudhary (1979) asserts that the process of strategy formulation involves matching of opportunities and corporate capabilities, which results in the generation of economically feasible strategic alternatives. There must be a strategic fit between what the environment wants and what the firm has to offer, as well as between the firm needs and what the environment can provide (Wheelen and Hunger, 1995). Businesses become successful when they posses some advantage relative to their competitors (Pearce and Robinson, 1997).Cole (1995) observes that some firms change in response to external forces (reactive change), while others change principally because they have to implement change (proactive change). Businesses all over the world are faced with the challenges posed with the ever changing and turbulent environment. Institutionalizing strategies, allocation of adequate resources, visionary leadership, and good corporate culture, amongst others are necessary ingredients for successful business strategies. This is the essence of environmental analysis, the process by which strategists monitor the environmental sector to determine opportunities and threats to their firms (Jauch and Glueck, 1998). This paper seeks to examine the various competitive strategies being employed by Fly540 airline to remain competitive in the airline industry which has seen tremendous changes in the recent past. The organization's competitive advantage potential depends on the value, rareness, and imitability of its resources and capabilities (Barney, 1992). The increasing global nature of competition requires that the firm utilizes all of its valuable resources in order to survive and succeed. Therefore, Fly540 as an airline needs to identify and build these competitive strategies that are sustainable and will set it above other airlines in the industry as competition intensifies.