The Impact of Labor Union Recognition on Ryanair's Business Model

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MANAGING PEOPLE IN AVIATION
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Executive summary
Management and leadership are often considered as a key success driver for an organization. It is
essential to get understand the concept of leadership and management, ssince they create
remarkable behavior within an organization. In this respect to this paper has illustrated case
scenario of Ryanair in context of leadership and management. A 33 years old airline company,
Ryanair has been recognized their labor union for the first time. They faced various difficulties in
achieving this approach, as none of companies in UK airline industry has involved in this
approach. Including labor strike of Portugal as well as Irish Union, Ryanair announced to
consider a particular time of industrial action. A range of advantages along with the
disadvantages are included in this reports. Recognition of labor union also effect on price
comparison and passenger of this airline company.
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Table of Contents
Introduction......................................................................................................................................1
Recognize labor union in aviation...................................................................................................1
Pros and cons of labor union...........................................................................................................3
Conclusion.......................................................................................................................................5
Reference list...................................................................................................................................6
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Introduction
Ryanair is a limited airline company of about 33 years old in airline industry of UK. This offers
various passenger transportation services in Ireland as well as internationally. At the year 1984,
company incorporated it’s headquarter in the city Swords of Ireland. This airline is involved in
servicing about 2000 flights daily from more than 84 bases. 226 distinctions are connected in 37
countries with Ryanair. We are intending to analyze the labor union recognized by recent boss
Michael O'Leary of Ryanair in this study. This person could able to prevent various disputes and
strikes through this recognition. Various advantages and disadvantages of this approach are
aiming to discuss in this study.
Recognize labour union in aviation
Two organizations are there to represent the pilots in the whole area of Europe that includes
Ryanair. This organization recognized labor union for the first time. The workers of European
transport federation those are known as ETF as well as transport federation of international
aviation those are known as ITF recognizes the pilots in Europe, however, the recognition on all
workers is important. The owner of Ryanair, Michael O'Leary declared that the same recognition
to pilot union officially will be given (Farrell and Davis, 2018). During the current dispute of
airline, a break from the long-standing policy of budget has referenced iteratively.
At the last time pilots of Italy, as well as Ireland and Portugal, announced to consider and plan
specific days for industrial action. This action will include the labor strike of Portugal, as well as
Irish union in December. Moreover, attendance of pilots along with the flights in Italy was
engaged in strike of four days in the last week of December. However, action taken by industry
was just to call after announcement of Ryanair. They recognized the labor union by following
Ryanair. The Boss of Ryanair, Michael O'Leary stated that Christmas flight is the most vital to
their customer. In addition, Michael O'Leary wished to remove it. Pilots, who are involved in
industrial action may concern or worry about this topic (Adu-Gyamf, 2016). The CEO of
Ryanair mentioned this as a best way in order to achieve recognition of labor union process.
Their preparation according to this was going on. Along with that, they invited labors in written
and verbal appeal. For the Christmas week, they asked to cancel all threatened action in industry.
For this reason, the boss Michael O’Leary noticed a significant change in Ryanair. This person
stated that, through giving importance to their customers, as well as ignoring industrial
disruption. This person could able to recognize labor union. Moreover, for this reason, the CEO
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could conduct a deal with pilots of Ryanair. Michael O'Leary’s expectation was to agree with
Ryanair's pilots at the very first of the New Year.
The general secretary of ITF named Steve Cotton identified this as a great opportunity to achieve
success and progression. His decision was to continue this process of recognition on pilots.
Moreover, Michael O'Leary mentioned that labor union recognition is an elementary right of
every worker of any industry. The CEO wished to extend this approach to every level of
employees. In this context, it was identified that this approach will take sufficient time to
establish trust. The reason for this is this has not happened in Ryanair’s 33 years history.
Ryanair added that in order to deal with all the labor union issues, they will build an effective
committee. However, Ryanair was not wanted to involve with competitor airlines in Ireland or
another country. In order to conduct a discussion about labor union and their threat, they called
members of other six countries. With the association of Irish airline named as Ialpa, initially,
they announced to plan action. They wished to keep it limited within a small group of labors
those are engaged there.
Pros and cons of labour union
Two individual ways are there to see the change of Ryanair's 33 years history of labor union. For
the nicer companies, this recognition was as a typical shift in order to be an all-rounder
(Hartshorn, 2018). Some of the other companies mentioned it as a marker of outside pressure of
Ryanair, as it used to face various disturbances. This is a great change, which may afoot the
company (Bergqvist, 2017).
Pros: The decision of recognition of labor union is a continuation of getting a better programme
that is launched in March 2014. This is a revolutionary change in the history of labor union of
Europe. For famously disrespected consumers of the airline, this approach was an emphasis to
make them happy. For this procedure, they introduce some more additions, such as allocation of
seat and betterment of cabin baggage allowance (Li, 2019). Moreover, the addition makes
booking procedure much convenient. Previously, the company spends more effort within the last
30 years for listening to their customers. For the attitude of Ryanair's owner, they could handle
100 canceled flights. They provide demand to affected customers according to the advice of the
Civil Aviation Authority. Michael O'Leary mentioned that this approach is a part to avoid
disruption as well as meet customer's demand. However, the pressure from Ireland, Germany as
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well as Spain and Portugal was continued. The low-cost strategy of this airline was on the
ground of a long negotiation of labor union.
Figure 1: Ryanair passengers (millions)
(Source: tcd.ie, 2017)
Moreover, this impacts on cost per seat figures. This airline enjoyed a great gap in per seat cost
figures with competitors of airline industry. A high volume business model they could able to
maintain for labor union recognition (Bishop, 2017). They expected to carry about 200 million
passengers within the year 2024.
Figure 2: Price comparison
(Source: tcd.ie, 2017)
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In addition, they found a healthy expansion in offering. In form of market development,
transatlantic services were integrated into Ryanair's desired forecast.
Cons: Motivation of this approach taken by Ryanair, consequences as two successive set of a
disappointing result. This result includes a couple of profit warning. However, the airline Easy
jet exceeded its financial expectation. Managers of this airline are distracted by the attention of
Alitalia takeover, which was also related to air poaching of Norway. Therefore, the recognition
of labor union causes much external pressure. The worst moment of this approach was viewed in
Christmas rush. In this time, passengers are more intended to book their ticket in advance for
summer vacation. This results in flight uncertainty at all time (Ojala, 2016). The most effective
impact can be seen in Ryanair’s share price. This was fallen by almost 8%. This fall wiped more
than about 1 billion of the company's value. The union was mostly represented by the cabin crew
as well as ground along with other categories staff. For this reason, the management of Ryanair
took much time to agree with this deal.
In this context, Peter Bellew, who was the chief operating officer of Ryanair, provided various
valuable advices. The reason for person was posted in Malaysian Airline previously. Some
agreements of collective bargaining pushed up estimated cost. Ryanair faced warning of
necessity of new 6, 00,000 pilots and other staff in order to meet the demand.
Conclusion
Based on this discussion it can be concluded that a range of factors is involved in the
contribution of adaptation of labor union recognition approach. This contribution includes a free
market ideology as well as human resource strategy and business model alignment. This can be
concluded from this study that the union suppression strategy was effective and successful for
Ryanair's union recognition. The cost effect, as well as increment of passenger, is also
considered in this context. However, involvement of union is necessary for over viewing
effectively the holistic approach of employee well-being ad that is applicable for the Ryanair as
well. Thus, it is customary to say that better late than never and Ryanair has embraced this
ideology of accepting the importance of union involvement in its business practices.
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Reference list
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Engineering At Work, 49(10), pp. 32-37.
Farrell, S. And Davis, R. (2018). ‘Ryanair strike: unions accuse airline of breaching labour laws’
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at https://www.theguardian.com/business/2018/aug/09/unions-accuse-ryanair-of-breaching-
labour-law-after-crews-go-on-strike [accessed 22/03/2019]
Hartshorn, I.M., 2018. Global Labor and The Arab Uprisings: Picking Winners In Tunisia And
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Americas. Politics And Governance, 5(4), pp. 30-39.
tcd.ie . 2017. What Ryanair's recognition of unions means for the future of the airline. Available
at https://www.tcd.ie/business/news-events/ryanair-recognition-of-union.php [accessed
22/02/2019]
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