Introduction
Specific economic outcomes in the context of resolving moral problems associated with business operations and management are related to the balance of certain benefits in contrast to costs as it is valued in society. According to Hosmer (2011), the balance of benefits and costs determines the economic aspect of a certain moral issue, and this principle is also known as Pareto Optimality. This concept means the most efficient allocation of materials or resources for achieving a certain goal when any improvements in this balance lead to worsening a situation in relation to another aspect of the system (Yadollahi, Abd Majid, & Mohamad Zin, 2015). Therefore, it is important to analyze economic outcomes related to the case of Continental Airlines in the context of Hosmer’s (2011) model and the idea of Pareto Optimality.
Main body
Firstly, it is necessary to discuss the underlying principles of economic outcomes or benefits and disadvantages for society. The principle of determining material consequences for specific ethical situations works with reference to the idea that “more is better than less” (Hosmer, 2011, p. 8). However, this statement is applicable to ethically controversial economic situations only when the involved markets are competitive, customers and suppliers are informed about all available options and their characteristics, and all associated costs are taken into account (Hosmer, 2011). Secondly, it is required to apply these ideas to the situation with Continental Airlines.
Although the passengers of Continental Airlines flight 2816 were provided with a refund for their tickets and certificates to cover future flights because of the experienced delay, these measures cannot be viewed as appropriate outcomes in the context of the overall problem of delays on tarmacs in the United States (Chen, Rose, Prager, & Chatterjee, 2017). Passengers were not allowed to leave the plane for six hours because of problems in the organization of the work with diverted flights and because of the lack of effective policies to control the period of delays (Hosmer, 2011). As a result, it is possible to determine negative economic outcomes for Continental Airlines and Express Jet: the necessity of covering passengers’ costs, changes in schedules leading to more delays and refunds, and decreases in customer loyalty among others.
The problem is that the absence of any nationally adopted policy about delays and procedures to follow in such situations creates problems for all airlines and airports in terms of potential costs for addressing passengers’ needs and compensations. The proposed solution to this problem that can contribute to improving economic outcomes is the implementation of a “hard and fast timeline for returning to the gate” for planes and passengers (Hosmer, 2011, p. 102). However, the Air Transport Association does not support this solution because of other possible negative outcomes for airlines and changes in customers’ loyalty.
Conclusion
As a result, it is important to state that economic outcomes related to the discussed case are negative with reference to the balance of benefits over costs because the analyzed situation with delays and their consequences does not allow airlines and passengers to receive economic bonuses. Moreover, the possible adoption of the policy regarding delays is also not a guarantee for achieving economic stability regarding this issue with the focus on addressing all stakeholders’ interests. Still, it is possible to expect more positive economic outcomes if the emphasis is put on customers’ interests which need to be fully addressed to increase demand and loyalty to achieve higher gains.
References
Chen, Z., Rose, A. Z., Prager, F., & Chatterjee, S. (2017). Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis. Transportation Research Part A: Policy and Practice, 95, 207-226.
Hosmer, L. T. (2011). The ethics of management: A multidisciplinary approach (7th ed.). New York, NY: McGraw Hill/Irwin.
Yadollahi, M., Abd Majid, M. Z., & Mohamad Zin, R. (2015). Post-Pareto optimality approach to enhance budget allocation process for bridge rehabilitation management. Structure and Infrastructure Engineering, 11(12), 1565-1582.