Relationship Between Cost Leadership Strategies and Performance of Domestic Airline Firms in Kenya

Daniel Kiprotich Kiprop, Sr. Dr. Lucy Wanza and Mr. Robert Githinji
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Daniel Kiprotich Kiprop: The Catholic University of Eastern Africa
Sr. Dr. Lucy Wanza: Lecturer, The Catholic University of Eastern Africa
Mr. Robert Githinji: Lecturer, The Catholic University of Eastern Africa

International Journal of Research and Scientific Innovation, 2023, vol. 10, issue 8, 38-52

Abstract: The business strategy or combination of strategies adopted by a firm has to fit the firm’s resources and competencies in addition to being responsive to the environmental dynamisms to achieve the desired competitive advantage. The objective of the study was to investigate the relationship between cost leadership and organizational performance of domestic airlines in Kenya. The study employed a correlational research design. The study targeted all the 48 domestic airline firms licensed and operating within the Kenyan borders. The study setting was the three airports in Kenya including JKIA, Wilson Airport, and Moi International Airport Mombasa. From each of the airlines, the target was to engage utmost five individuals holding management positions within the airline management structure. Stratified random sampling technique was used to arrive at a representative sample where Slovin’s formula was used. Primary data was collected using structured questionnaires while secondary data was gathered by use of a document analysis guide. A response rate of 90.23% was realized. Most of the respondents (44.85%, N = 87) were from airline with 11 to 20 staff. In terms of flight types, 40.72% (N = 79) indicated they offer non-scheduled flights. On nature of services 51.55% (N = 100) of the respondents indicated they offer both passenger and cargo hauling flights. Majority held that revenue for the company has been on the rise (60.3%, N = 117) and customers served increased annually comparing 2018 and 2019 (44.3%, N = 86). Pearson correlation test showed a weak positive correlation between cost leadership strategy and revenue generated by the airlines (N = 194, p = 0.005, r = 0.199 at 95% CL) and same to volume of cargo hauled (N = 194, p = 0.000, r = 0.255 at 95% CL) for the period of 2018 and 2019. Regression analysis revealed that cost leadership strategy had a 4% and 6.5% influence on revenue and volume of cargo hauled respectively implying Cost leadership is associated with performance of domestic airline firms in Kenya. The study recommends a longitudinal study in diverse industries to ascertain the relationship more so in the post Covid -19 pandemic.

Date: 2023
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