Strategic Cost Management and Differentiation Strategy in Enhancing Competitive Advantage in the Indonesian Airline Industry

Abstract

The Indonesian airline industry faces increasing pressure to manage complex operating costs while maintaining service attributes that differentiate airlines in an increasingly competitive market. This study examines how Strategic Cost Management (SCM) and Differentiation Strategy can be integrated to strengthen Competitive Advantage. An integrative literature review was conducted by analyzing peer-reviewed studies published primarily between 2020 and 2024, focusing on strategic management accounting, airline digital transformation, service quality, customer satisfaction, and data analytics. The findings indicate that SCM contributes to competitiveness when cost information is strategically connected with value-chain activities, resource optimization, operational efficiency, and long-term business positioning rather than merely focusing on short-term cost reduction. Meanwhile, Differentiation Strategy enhances customer value through service reliability, digital innovation, customer trust, convenience, and data-driven personalization. The study highlights that competitive advantage is achieved when cost efficiency and differentiation are developed as complementary capabilities. Cost savings generated from non-value-added activities can be redirected toward improving high-value services, while digital technologies support process optimization and enhanced customer experiences. This study proposes an integrated framework combining efficiency, customer value creation, and sustainable competitive positioning for Indonesian airlines in a dynamic aviation environment.