Determinants of Airline Business in Aviation Industry: A Case Study on Ethiopian Airlines
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Date
2017-01
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Addis Ababa University
Abstract
In spite of the cutthroat competition, changing business models, thin profit margins and other turbulent industry nature, Ethiopian Airlines continued to register a successful record since its establishment. Its growth and success is significant especially in recent decades while many African and global airlines are registering bankruptcy, continues loss, layovers and other serious problems. Yet the industry is very interesting to study, despite its challenges and dynamism.
The main purpose of this research paper is to identify factors that determine the success of airline business. The specific objective of the study was to identify the determinant factors for the success of Ethiopian Airlines and to establish how and to what extent each factor understudy affects its success. These factors are: implementation of low-cost factors, influence of national culture, integration in airline Alliances, sate influence and privatization and market liberalization influences ET‟s success in airline business and to sustain same success in the years to come.
The target population was 415 management and senior level employees of Ethiopian Airlines working at outstations and head quarter. The research adopted mixed research approach. A mixed approach is selected in order to validate data sources. Descriptive and explanatory research (mixed) designs were employed. Stratified convenience sampling was employed to divide senior and management employees as the researcher deemed to have more relevant data in relation to the study. The study used mostly primary data source and secondary data sources as well as required. The Primary data collection instruments were questionnaires, interview and personal experience as aviation professional while secondary data was obtained from books, the internet and journals and articles. The model used in this study is the conceptual framework developed by Maik Huenttinger on: “what determines the business activities in the airline industry? A theoretical Framework”, in 2013. The researcher is interested to test this model in Ethiopian airlines context using these variables as a key success factors for its operation in the industry. As far as the researcher‟s knowledge is concerned, no prior research has been conducted to test in Ethiopian airlines context both conceptually and empirically.
The result of the research paper showed that Alliance, Low-Cost structure, Market Liberalization, Government and Privatization and National Culture influences Ethiopian Airlines Business Success in Aviation Industry as well.The result also indicated that State (Government) Influence is the most important factor influencing Ethiopian Airlines success most in areas like allowing industry experts to freely manage the airline, in allowing the airline to reinvest its profit with no tax payment, etc, followed by membership in Star Alliance, implementation of low-cost strategy, Market Liberalization dimension and national culture respectively.
Keywords: Airline Success factors, Aviation industry, determinants, national culture, low- cost, Airline Alliance, Airlines, Market liberalization,, value addition.
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Keywords
Airline Success factors, Aviation industry, determinants, national culture, low- cost, Airline Alliance, Airlines, Market liberalization, value addition