An Illustrative Evaluation of External Factors That Affect Performance of an Airline

Abstract

Since the beginning of globalisation and open sky policies, airlines experience intense competition, and their performance get affected by many external factors in addition to internal issues. Fuel price fluctuation, aircraft maintenance, labour and aircraft technical operations cost are primary factors that significantly drain the budget of an airline while exerting strong impact on its operational performance. However, this study focused on effects of external factors, such as political, economic and legal mandates on an airline performance. Therefore, relationships between these factors and airline operational performance are identified and analysed in this paper. Kenya Airways has been chosen as a representative airline for this study. Nevertheless, examples from other airlines are also included for the analysis. Data for this research were collected though a descriptive survey designed according to a qualitative mixed approach. Consequently, focused interviews and questionnaires were used, and reliability of obtained results was checked using Cronbach’s alpha method. The results indicate strong positive correlations between the external factors and performance of an airline. This study therefore confirms that performance of an airline can be influence by market driven fluctuations or intentionally altered external factors discussed in this project.