Do struggling airlines take more safety risks than profitable ones? It’s not that simple, says Peter M. Madsen of Brigham Young University. In a study of records from all large US commercial airlines operating from 1990 to 2007, he found that the incidence of accidents is highest when airlines are hitting their profitability targets and lower when they’re significantly missing or surpassing these goals. Decision-makers may have a subconscious tendency to reduce attention to safety when their firms are performing near their profitability aspirations.
(Source: Journal of Management)
Published in Dawn, Economic & Business, March 2nd , 2015