Trading safety for profit? Sjekk studien

A new study by a BYU business scholar finds that airlines are at their great risk of an accident when they are meeting their financial goals, shedding new light on organizational risk taking relative to profitability. Photo courtesy of Brigham Young University.

BYU scholar finds safety risk highest when airlines are closer to financial targets

By Brian Maffly

The Salt Lake Tribune

First published Dec 28 2011 11:30AM
Updated Dec 28, 2011 10:21PM

A new statistical analysis by a Brigham Young University business scholar has found that the closer an airline comes to meeting its financial targets, the more likely it is to crash a plane. Yet as profitability increases beyond expectations, the accident rate goes down, confounding the notion that airlines trade safety for profits.

"Risk tapers off when airlines move away from their target in either direction," said study author Peter Madsen, assistant professor of organizational leadership and strategy at BYU. "Once you are operating beyond your goals there is less pressure to operate as efficiently as you can."

Madsen studies the association between profits and risk-taking in many industries. Aviation lends itself to this pursuit thanks to a wealth of available data. Even privately held airlines must disclose financial results, and federal agencies track all safety-related incidents.

"The true implication of this work is that organizational profitability impacts safety risks in predictable ways and that this effect occurs even in very safe industries," Madsen writes in the study, to be published in the Journal of Management and available online. "The analysis presented here clearly demonstrates that safety fluctuates with profitability relative to aspirations, such that accidents and incidents are most likely to be experienced by organizations performing near their profitability targets."

Airlines for America, a Washington-based trade group, is reviewing the study.

"Safety is the foundation on which our industry was built and remains our No. 1 priority," spokesman Steve Lott said in an e-mail. "Airlines never compromise on safety and the impressive record speaks for itself. Our skies are the safest they have ever been in modern history."

Madsen examined data generated by 133 U.S. airlines between 1990 and 2007. All were large commercial carriers with more than $20 million in annual revenue. Madsen excluded smaller carriers, such as charters and air taxis, because they are not required to report the data he needed to construct the variables his study required.

During those years, the airlines experienced 915 accidents, 54 of which resulted in fatalities. Accidents were defined as collisions that resulted in injuries or structural damage to the aircraft. Sjekk http://tinyurl.com/d789eqb