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Here we go again…the Permanently Failing Organization: An application to the airline industry in Eastern Europe

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  • Akbar, Yusaf
  • Németh, Adél
  • Niemeier, Hans-Martin
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    Abstract

    This paper analyzes the performance of the Central and Eastern Europe airline industry through the lens of the “Permanently Failing Organization†(PFO) framework. Based on elite interviews from management in the three airlines but also from other organizations within the industry, it confirms the salience of key theoretical features of the PFO framework by providing evidence for the persistence of short-term decision making; ongoing contradictions between articulated strategy and its poor or non existent implementation and frequently assiduous intervention by governments that rather than fostering decisive decision-making served to do the opposite. These factors contributed to reinforcing deeply held beliefs in the management that they would survive despite the obvious problems they have faced. External stakeholders – especially governments should reflect carefully on their role in fostering permanent failure.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Air Transport Management.

    Volume (Year): 35 (2014)
    Issue (Month): C ()
    Pages: 1-11

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    Handle: RePEc:eee:jaitra:v:35:y:2014:i:c:p:1-11

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    Web page: http://www.journals.elsevier.com/journal-of-air-transport-management/

    Related research

    Keywords: Liberalization and deregulation; Entry and exit; Permanently Failing Organizations;

    References

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    1. Severin Borenstein, 2011. "Why Can't US Airlines Make Money?," American Economic Review, American Economic Association, vol. 101(3), pages 233-37, May.
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    9. Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter.
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    11. Wojahn, Oliver W., 2012. "Why does the airline industry over-invest?," Journal of Air Transport Management, Elsevier, vol. 19(C), pages 1-8.
    12. Dean F. Eitel, 2004. "The Dynamics of Chronic Failure: A Longitudinal Study," Public Money & Management, Chartered Institute of Public Finance and Accountancy, vol. 24(4), pages 243-250, 08.
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