European low cost airline Ryanair, to misquote Shakespeare, is experiencing very much a Summer of Discontent. It’s been a season of strikes, hundreds of cancelled flights and general ill-will between management and employees, particularly flight crew.
In addition to the region experiencing some of the hottest temperatures on record, for the airline the European Summer of 2018 has flared up from an increasingly deteriorating industrial relations tinderbox. Perhaps not unsurprisingly, a little more than six months after Ryanair’s agreement to recognise unions for pilots and cabin crew, Ryanair is yet to conclude collective agreements with any of them across the Continent.
Instead there has been a breakdown of the collective negotiations and Ryanair’s response to ensuing industrial action is concerning. This has been demonstrated by the language used by its CEO, billionaire businessman Michael O’Leary. It seems he would rather deal with short-term disruption than give in to union demands that would undermine Ryanair’s business model.
This is in extraordinary contrast to Southwest airline, across the Atlantic. With a similar low-fare, low-cost business model, Southwest continues to be highly successful year-on-year – and yet has a highly unionised workforce with engaged and productive employees. It has also been held up by global business gurus as one of the truly great companies of the new economy.
The heavy-handed (and potentially illegal) response by Ryanair management to the lawful industrial action has included threats of dismissal, relocation, stripping productivity bonuses and negative impacts on promotion and transfer opportunities. This, coupled with the apparent lack of meaningful engagement with the unions, would indicate that a new approach is needed for Ryanair, and one which involves a culture change from the very top.
As Southwest has demonstrated for some time, low-fare, low-cost business models and high levels of workforce unionisation, engagement and productivity do not have to be mutually exclusive concepts. It’s operators such as Ryanair that need to move away from the out-dated shareholder value model of governance where the sole purpose of a corporation is to maximise shareholder-value, and instead balance the needs of all its stakeholders – including its workers.
The problem with shareholder-value thinking is that workers are viewed as expendable commodities in pursuit of corporate profits, rather than important and valuable contributors to the creation of real and sustainable corporate wealth.
Atypical employment arrangements, the use of doubtful contractual jurisdiction clauses and exercising other ‘loopholes’ to deny workers their legal rights are all examples of practices used to pursue shareholder value over all else. They facilitate placing profits over the welfare of workers and society, and in the aviation industry this can put safety at serious risk.
We cannot allow these types of practices to take hold in New Zealand and NZALPA is working hard to identify and address atypical arrangements (such as bogus self-employment contracting) impacting our members. More often, but not exclusively, these working arrangements can be found already in the local general aviation sector.
We are keen to work with more operators in order to support sustainable business models that not only deliver New Zealand aviation operators growth and profits, but also lift terms and conditions of employment for its workers.
With Ryanair, it looks like we are witnessing a flashpoint moment, where its current industrial relations problems signal serious problems with its governance and overall business model.
Although on a smaller scale, at NZALPA we have experienced our share of similar corporate behaviours in the past. But due to hard work, particularly over the last decade, we have been able to help build constructive relationships with employers who recognise the importance of balancing the needs of all stakeholders.
Our thoughts and support are with our IFALPA colleagues as they strive to resolve their grievances and conclude meaningful improvements to their working conditions at Ryanair.