Sustainability of Tanzania Low Cost Airline Transportation, Appraisal of the External Environment They Operate in

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SUSTAINABILITY OF TANZANIA LOW COST AIRLINE TRANSPORTATION, APPRAISAL OF THE EXTERNAL ENVIRONMENT THEY OPERATE IN

RIDHIWANI KASSIMU MBA 31091

Abstract Air transport to most of Tanzanians has been observed as luxurious transport system that is meant not for the majority but rather for the certain class of people who are wealth. The costs for air transport to many destinations have been high about five to six times the cost of road transportations to those particular destinations. For example, the return ticket from Mwanza to Kilimanjaro, which is almost equal distance with the route from Dublin to London (about 250 NM) is around Tzs 320,000/= . While bus fair from Mwanza to Kilimanjaro is about Tzs 35000/= to 45,000/=. But the airfare between Dublin to London return ticket costs £70 to £80 which is like TZS 192000/=. Currently we have witnessed the coming of FastJet, a low cost airline with fair ranges from tzs 86,000/= for a return ticket to different destinations. Before fastjet, other airline companies tried to do the same but these companies did not last long. We could remember the case of community airline and fly 540 when it started. So this aricle is intended to explore the Tanzania air transport business environment and see if the establishment of low cost transport could be sustainable, and is intended to three groups of people, mainly investors, who may desire to invest in this low cost airline business at any level, to the passengers, if they can plan and rely to these airlines hoping to last long, and to the academicians in the fields of strategic management and economics, as the cases can be observed in the aspects of strategic management and economics.

Keywords: low cost airline, competitiveness, sustainability

INTRODUCTION Business environment consists of both external and internal factors. Environment must be scanned so as to determine development and forecasts of factors that will influence organizational success. Environmental scanning refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment. It helps the managers to decide the future path of the organization. Scanning must identify the threats and opportunities existing in the environment. While strategy formulation, an organization must take advantage of the opportunities and minimize the threats. A threat for one organization may be an opportunity for another. In external environment analysis, three correlated environment should be studied and analyzed, these are immediate / industry environment, national environment and broader socio-economic environment / macro-environment Examining the industry environment needs an appraisal of the competitive structure of the organization’s industry, including the competitive position of a particular organization and its main rivals. Also, an assessment of the nature, stage, dynamics and history of the industry is essential. It also implies evaluating the effect of globalization on competition within the industry. Analyzing the national environment needs an appraisal of whether the national framework helps in achieving competitive advantage in the globalized environment. Analysis of macro-environment includes exploring macroeconomic, social, government, legal, technological and international factors that may influence the environment. The analysis of organization’s external environment reveals opportunities and threats for an organization. In appraising the environment for low cost airline services in Tanzania, I will take an outside view as I am not among the management of any of the airline company. So this article will focus the airline business from the outside perspective, considering mainly the external environment and how they affect these businesses. Also in doing this I will employ SWOT analysis, but from the outside view, and I will use porters five forces model as a tool in appraising the...
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