The effect of cost reduction and asset retrenchment on organisational sustainability of Airlines in Nigeria

Abstract

The Nigerian aviation sector reveals high prospects for economic growth and development. However, recurrent operational inefficiency and frequency of collapse of local airlines cede competitive advantage to foreign airlines. Airline operators had introduced strategies for recovery in recent times. This study investigated the effect of turnaround strategy dimensions on organizational sustainability of domestic airlines selected from Nigeria’s aviation sector. By means of multi-stage sampling technique, 9 airlines with operational base in Lagos were drawn into the study. Primary data were gathered by means of research questionnaire. Stratified and random sampling techniques were adopted for the sample selection, and 323 respondents constituted the study sample size. The study employed multiple regression analysis and linear model was estimated using Pooled Ordinary Least Square (OLS) regression technique. Cost reduction strategies were found to have had a positive and significant effect on the sustainability of selected airlines. Similarly, asset retrenchment strategies demonstrated a strong positive effect on sustainability. In conclusion, both cost reduction and asset retrenchment have shown significant effect on the sustainability of domestic airlines within Nigeria’s aviation sector. Nevertheless, it is recommended that the government should intervene by giving a directive to reduce multiple levies in the aviation sector.