Adoption of Strategic Alliances as a Competitive Strategy by Kenya Airways Limited

Abstract

The airline industry today has fast developed into a global village bearing fruits of stiff competition, an outcome of the liberalization of the aviation industry. This makes it twice as hard for airlines to earn revenues as airlines compete to increase their market shares. Companies in industries that are already globally competitive are challenged to come up with strategies for competing successfully in foreign markets (Thompson, Strickland and Gamble, 2007). Airlines are faced with the challenge of competing on a service level basis, face pressure to lower their ticket fares and consequently have to strive to lower their total costs. The objective of this study was to determine the extent to which Kenya Airways Limited (KQ) has adopted strategic alliances as a competitive strategy and the challenges the company lives to combat in these relationships. The study sought to have a thorough understanding of the phenomenon from the perspective of KQ through a case study. Data was gathered from interviewing the relevant personnel. Findings of the study showed that indeed KQ has adopted quite a number of strategic alliances such as joint ventures, code shares and is a member of SkyTeam global alliance. These strategic alliances have placed the airline at a strategic competitive position .Increase in revenues, ease of new market entry and extended lounge access for passengers are some of the benefits gained from these alliances. The findings of the study were consistent with the theories put forth on strategic alliances namely resource dependency theory, transaction costs theory, strategic behavior theory and competition as the drive to formation of strategic alliances. Resource constraints of time and finances were a limitation in carrying out this study .The study recommends that in deed airlines should adopt strategic alliances, but only after having clear objectives of what they want to achieve from these strategic alliances, after which those adopted should be closely monitored for corrective measures.