Influence of System Alliance on the Performance of Kenya Airways Limited

Abstract

Business alliances are seen as stepladders to lessen the threats associated with foreign market expansion. Through alliances, foreign firms get easily accepted by foreign governments and the people. Due to the diverse nature of alliances, organizations joining tend to access diverse views of business operational approaches that boost chances of profitability. This research aims to determine the influence of SkyTeam alliance on the performance of Kenya Airways limited. The study has set out two objectives: to determine the nature of the alliance between SkyTeam and Kenya Airways Limited and to determine how the alliance between Kenya Airways Limited and SkyTeam Alliance has influenced the performance of Kenya Airways Limited. The study was anchored on three theories; Business Alliance theory, Stakeholder theory, and Resource dependence theory. The study targeted the senior management of Kenya airways limited who are the Chief Executive Officer, Chief information officer, Non-executive director, Chief financial officer, Fleet and asset development director, and The Kenya Airways Limited section heads as informants. A case study design was used for this study and interview guide as the data collection instrument. Content analysis was used to analyze the primary data obtained. The research established that the involvement of Kenya Airways limited with SkyTeam alliance was a strategy by the airline to open up international hubs, reduce cost of operation and increase profitability through the avenues provided by the alliance. The respondents recounted that Kenya airways adopted the business policy and procedures for SkyTeam alliance. These included the codeshare agreement, share of airport lounges with member alliances and round the world ticket policy. The benefits derived from the consortia included; venture for international growth, economies of scale, economies of density, economies of scope, branding and marketing benefits and controlled barrier of entry. The respondents also observed the negative influences of the alliance to the operation of Kenya airways which included domination in decision making by well-established airlines that are in the alliance and being that Kenya airways joined the alliance after it had formed and it tends to tow in to the original strategy of the alliance rather than operate within its organization strategy. The study found out that Kenya Airways Limited had gained a competitive advantage through its association with Sky Team alliance through the enhancement of its operations. It was concluded that Sky Team alliance had in fact positively influenced the performance of Kenya Airways Limited.