Title: Examining trade-offs in the airline industry

Authors: Alka Ashwini Nand; Prakash Singh; Ananya Bhattacharya

Addresses: Department of Management, Monash Business School, Monash University, Australia ' Department of Management and Marketing, University of Melbourne, Australia ' Department of Management, Monash Business School, Monash University, Australia

Abstract: Firms develop and manage their operational capabilities to improve efficiency and competitive positioning. However, as the theory of performance frontiers (TPF) suggests, there are limits to these gains. As firms become more efficient, they are likely to be trading off capabilities rather than pursuing them simultaneously. A key question that arises is whether these trade-offs are beneficial for firms. In this paper, we apply the TPF to firms in the airline industry. Specifically, we address whether a firm's efficiency levels are associated with trade-offs and if level of efficiency subsequently affects the firm's market success. We employed the data envelopment analysis (DEA) methodology to analyse operational capabilities and determine the efficiency of all airlines operating domestically in Australia over a ten-year period. The results show broad support for TPF. Firms that demonstrated efficiencies were trading off capabilities with associated market success.

Keywords: theory of performance frontiers; TPF; trade-off model; cumulative model; data envelopment analysis; DEA; services; airlines.

DOI: 10.1504/IJSOM.2023.134801

International Journal of Services and Operations Management, 2023 Vol.46 No.3, pp.322 - 345

Received: 24 Mar 2021
Accepted: 24 Jun 2021
Published online: 13 Nov 2023 *

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