The Effect of Electronic Commerce on the Financial Performance of Airlines in Kenya. A Case Study of Kenya Airways

Abstract

Electronic commerce has been widely used with the emergence of internet. The growth of internet over the years has changed business models on how they conduct their businesses. Advantages and disadvantages of e-commerce have been widely discussed, together with its impact in organizations performance. The study looked at the impact of e-commerce in financial performance. The overall objective of the study was to investigate the impact of e-commerce on the financial performance of airlines in Kenya, and in this case Kenya Airways. The study analyzed the impact of e-commerce using Return on assets and Net income as the dependant variables while the web passenger numbers and agency commission were the independent variables. Secondary data was collected from the company‘s published financial statements and other relevant financial reports. Data analysis was done by use of descriptive statistics, regression analysis and correlation tests with results being presented in tables. This analysis included descriptive information and the relationship between the return on assets and net income as the dependent variables and the number of passengers booked via web and the agency fees as the independent variables. Tests were carried out without and with fuel cost as the control variable. The output from data analysis showed that there was a weak positive impact of the independent variables on the dependent variables and this may be because currently the percentage of online bookings in relation to the total number of passengers is low for it to have a great impact. The study recommended that other measures of e-commerce can be analyzed in further studies. These may be non-financial benefits that also affect performance of the airline and other yardsticks that can be used to measure performance. Also, further studies may be done in global markets like Europe, Far East and Middle East where internet use is wide so that the impact of e-commerce can be analyzed since the markets have a high percentage of online bookings.