Strategic Management Journal · 1993 · 315 citations · 12 references
BusinessStrategic ManagementStrategyBusiness StrategyOperations StrategyPerformance MeasurementOperational Performance MeasurementOperations Performance MeasurementPerformance MeasuresPerformance MetricsProfitability AnalysisStrategic Performance MeasurementData Envelopment AnalysisLeasing Income From Aircraft OperationsOperating Performance AnalysisOperational Performance AnalysisOperational Performance AssessmentPerformance EstimationProfitability DriversProfitability Measurement
International airline performance is hard to assess using financial data because of extensive leasing and varying accounting rules, so nonfinancial measures such as available ton‑kilometers are considered but face unit‑conversion challenges. The study introduces a novel method for measuring operational performance to address this gap in airline strategy research. Data Envelopment Analysis was applied to data from 15 airlines to evaluate and compare their operational performance. The analysis identifies strategic factors that correlate with high profitability and superior performance in the airline industry.
Abstract This study presents a new approach for measuring operational performance, an important facet of performance missing in the current literature concerned with international airline strategy. International performance assessments of airlines from published financial information are difficult, because (1) most airlines lease a substantial fraction of their aircraft, and (2) different accounting and taxation rules in various countries result in different impacts of leased assets on profit and balance‐sheet information. A possible solution are nonfinancial data. For example, the number of available ton kilometers may reflect aircraft capacity more accurately than flight equipment depreciation. However, different units of measurement introduce new difficulties. Drawing on data from 15 airlines, this study utilizes 'Data Envelopment Analysis' as a technique to analyze and compare operational performance of airlines. The study concludes with an analysis of strategic factors of high profitability and performance in the airline industry.
12