Financial Supply Chain Management and Operational Performance in the Low-cost Airline Firms in Kenya

Abstract

In every rapid business setting, FSCM is crucial. Kenya's economic development vision for 2030 emphasized the aviation industry as the expansion of the economy model (GoK, 2020). Kenyan low-cost airlines have been profitable; nevertheless, fierce competition, high operating expenses, and corruption have created uncertainties in the near future (GoK, 2020; Lock et al, 2010). In 2012 for example, Kenya Airways' earnings fell by half in 2012, and it lost Kshs. 7.5 billion, Kshs. 13 billion, and Kshs. 36.57 billion for 2018, 2019, and 2020, respectively. (Kenya Airways, 2020; Jambojet, 2019). The airlines therefore, needed urgent and priority measures to regain competitive advantage and to gain relevant global competition. The study's overall goal was to ascertain the impact and level of adoption of Financial Supply Chain Management on operational performance among Kenya's low-cost airline companies. Research on FSCM in the airline industry cannot be over emphasized because most studies have focused on the general performance of SCM with little attention to FSCM and its implication on the performance of the low-cost airline firms. A descriptive research approach was used in the study. Descriptive study allows researchers to obtain accurate and systemic primary data from several low-cost airline companies in a set period of time. The target population for the study was 33 low-cost airlines operating in Kenya. The researcher gathered information through primary and secondary sources. Descriptive statistics such as the mean was used to estimate the average score of each airline and to determine the FSCM solutions adopted by the Kenyan low-cost airlines. A linear regression was generated since it reveals statistical relationships between research variables and can assist in estimating the behaviors of these variables. The study found that, FSCM has a favorable impact on organizational performance. As a result, the study advises that FSCM be applied in businesses to improve operational performance. The study also recommends that low-cost airlines must maintain an optimum working capital, cash conversion period, capital expenditure policies, P2P cycles as well as conduct regular demand and supply analyses as FSCM strategies so as to enhance operational performance and increase business competitiveness in the aviation industry.