Globalization and the Development of the Airline Industry: Analyzing the Case of Kenya Airways

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Abstract:

The main objective of this study was to examine how globalization had affected the development of the airline industry by using Kenya Airways as a case study. The specific objectives included the following: To examine the positive impact of globalization on the development of Kenya Airways; To examine the negative impact of globalization on the development of Kenya Airways; To examine the effect of globalization on Kenya Airways market expansion strategies. This research was a case study on Kenya Airways. Both qualitative and quantitative methods were utilized. The positive impacts include the expansion of global airline markets to which other local and international airlines can access. For Kenya Airways, this means the expansion in passenger numbers, resulting in the expansion of the airline's annual revenues. The negative impact of globalization on the airline sector on the development of Kenya Airways include high costs of operations, high costs of fuel, increased domestic and international competition, and restrictive and stringent BASA agreements. The main strategies used by Kenya Airways to develop in the face of globalization include Route expansion, airports expansion and modernization and strategic alliances. This study concludes globalization has had a more positive impact on the development of Kenya Airways than negative effects. This study recommends that Kenya Airways should engage in fuel hedging that is pegged 5% volatility margins above and below the market rate to avoid huge losses attributed to fuel costs and mitigate the cost of failures of previous open-ended hedging that was disastrous for the airline.

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Globalization and the Development of the Airline Industry: Analyzing the Case of Kenya Airways

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