Strategic responses of airlines operating in Kenya in the face of changing environmental conditions

Abstract

In business, firms must utilize strategy - be it explicit or implicit, in order to survive especially, in an ever-changing environment. In today's global village, the levels and intensity of competition faced by firms can be extremely high. This research endeavored to establish the strategic responses being utilized in the airline industry, which has of late become both increasingly global and has faced rather turbulent environmental conditions. While the study set out to conduct a census survey of all the regional and international airlines represented at the country's leading airport, it had to make do with a sample due to reasons of accessibility. The researcher collected data through the administration of a structured questionnaire. 8 out of the targeted population of 16 airlines participated in the study. The study established that airlines had been undergoing a period of considerable environmental turbulence- " indeed, even the initial target population of 18 airlines decreased to the above mentioned 16 during the course of data collection due to the exit of two airlines. The turbulence level in the environment in which airlines operate increased to an unpredictable level due to the surprising events of 11th September 2001. Apart from the unfortunate incidents on the above day, airlines operating in Kenya had been experiencing challenging environmental conditions. Vlll The study documented the following changes in the environment in which airlines operate: 1. Globalization of world markets 2. World-wide economic recession 3. Increased competition due to strategic alliances/partnerships 4. Increased operating costs Further, from the research study, it became evident that the major challenge facing airlines was not only how to maintain or improve profitability but even how to survive in an increasingly unattractive industry. Strategic responses by airlines were therefore geared toward keeping costs low to increase profit margins and improvement of product/service offering to increase airline attractiveness hence turnover. The study documented the following key responses by airlines to changes in " environmental conditions: 1. Expansion of networks through alliances 2. Shelving of unprofitable routes 3. Productivity improvements to cut costs 4. Continual improvement of services The above environmental changes and responses are some of the study's key findings. Further, as airlines respond to environmental changes, there has been an ix increased tendency toward the use of collaborative rather than competitive strategy; with one collaborating block of airlines competing against another.