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Ryanair’s Secret

Europe’s biggest airline says it has outcompeted its rivals with its low fares. But its real success lies in slashing workers’ rights and crushing pilots’ unions.

Pilots of discount airliner RyanAir gather at the headquarters of the pilots' labor union Vereinigung Cockpit during a 24-hour strike by the pilots on August 10, 2018 in Frankfurt, Germany. Thomas Lohnes / Getty Images

In just three decades Ryanair has spread from one small secondary airport in Ireland to become Europe’s biggest airline. With thirteen thousand staff, it operates two thousand scheduled flights a day from eighty-seven bases across Europe. Underpinning its robust business model is its low fares. The ticket price covers a seat on the plane and a carry-on bag; all extra items, from checked-in luggage to a drink on board, come at a cost.

At the outset, many commentators argued that Ryanair would never last, but by the mid-2000s the Irish airline was bidding its competitors farewell. Raised to prominence by its rise, outspoken CEO Michael O’Leary has at every turn courted controversy, with the scope for polemics increasing as the airline expanded. He has used media to orchestrate PR stunts and cultivated a corporate culture where Ryanair’s brand is synonymous with highjinks.

All attempts to question this narrative or Ryanair’s culture are met head-on, including through merciless litigation. O’Leary portrays pilots’ trade unions as mere proxies acting on behalf of envious competitors who seek to undermine Ryanair’s edge. Last February he told investors that the unions are a “mob whose day is largely dead.” Over three decades Ryanair has worked hard, and largely succeeded in evading and frustrating their efforts.

This is also key to understanding Ryanair’s success. While it is easy to explain its rise in terms of the ease of online booking or its use of secondary airports, these options have long also been available to other low-cost carriers. On closer inspection, we see that Ryanair stole a march on its competitors by reducing its operating costs. Decisive to this has been its development of a sophisticated employment model, not only cutting costs but also keeping trade unions at bay. Yet as unions have begun to turn the corner over the last year, the foundations of Ryanair’s success no longer look so secure.

Making the Atypical Typical

To an extent happenstance is important to explaining Ryanair’s success, and in particular being domiciled in a lax regulatory environment like Ireland. Comparatively speaking, from a legal standpoint Irish trade unions have exceptionally weak rights in terms of recognition.

There are historical reasons for this, but in recent decades Ryanair’s own action has cemented the unions’ weakness. Actively shaping the Irish context to fit its own interests, Ryanair has been well placed to export a business-friendly environment around Europe. After all, despite working and residing in other European states the vast majority of Ryanair staff are on Irish employment contracts.

A great deal of Ryanair’s ability to remain union-free owes to its employment model, which it developed in the late 2000s. The preferred hiring method for cabin crew is through labor intermediaries, while pilots are coerced into a more convoluted arrangement which precludes them from having a say in the running of the company.

So-called atypical employment, defined as fixed-term work, temporary agency work, or self-employment,­ is in fact by no means unusual in aviation. But while other low-cost airlines such as Norwegian also use atypical employment, they unlike Ryanair remain willing to engage with unions.

Ryanair, on the other hand, has based its rise on pioneering employment contracts. Simply put, these contracts allow for a pretend form of self-employment for workers who are in fact Ryanair employees. This is a clear attempt at social engineering so as to undermine any sense of collective identity between pilots and keep the fiendish unions at bay. To boot, there is a financial incentive to this as Ryanair does not have to pay social insurance, which includes income tax and pension contributions, when engaging the services of contract pilots.

According to recent survey based-research, the incidence of atypical labor in the cockpit has increased significantly. The so-called Ghent Report, the most extensive study to date, surveyed over six thousand pilots across Europe. Ryanair has only 34 percent of its pilots on permanent contracts. In other words, among Ryanair staff at least the atypical is now typical. Unlike the likes of Norwegian, which uses labor intermediaries in a more straightforward fashion, Ryanair designed a model of its own which blurred the lines between employer and employee.

Before hiring their services exclusively to Ryanair, via a piloting agency, a pilot must have established (or joined) a limited company (with other pilots), typically registered in Ireland. It is estimated that almost one thousand such companies exist. In doing so, risk is shifted from the airline onto the pilot with the latter being subjected to terms and conditions associated with zero-hour contracts. Furthermore, Ryanair is no longer responsible for paying pilots’ social and pension contributions. Consequently, these latter represent only a small proportion of Ryanair’s employment costs, around 5 percent in total in 2014.

From a management perspective, there is another advantage to such a model. Employee relations in Ryanair are managed through an in-house Employee Relations Committee (ERC) system. This system precludes those on atypical contracts from participating in discussions about the airline’s day-to-day operations and future plans. Hence, pilots are effectively at the mercy of management when it comes to base placements, stand-by, holidays etc. The autonomy and choice typically enjoyed by contractors is clearly not available to Ryanair’s supposed contractor pilots.

Ryanair management regularly reminds the public via tweets or its website that their pilots enjoy “leading pay and excellent working conditions” and have the most generous rest periods. Many of these “perks,” however, will be withdrawn if there is even a hint of collectivism.

Take a typical contract: “If Ryanair is forced to recognize any pilot trade union or association at [base name], or if there is any industrial action of any kind at [base name], then the roster will revert to 5 days on 3 days off with 5 on 2 off six times per annum and the annual allowance will be withdrawn.” Given the stress associated with working for Ryanair, it is perhaps unsurprising that the average service of a pilot is only 5.2 years. Anecdotally, pilots have been leaving in their droves to join competitors.

Rather than engage with their workers, Ryanair would rather abandon a base in which unions begin to sink roots. This is what happened in Denmark. Upon announcing the opening of two bases in Denmark in October 2014, Danish unions requested talks with Ryanair. Unsurprisingly, the airline declined. Subsequently, the unions asked the Labor Court to decide whether taking industrial action against Ryanair was lawful. The Labor Court found that Ryanair must recognize the legal right of the union to discussions, and if unwilling the union is perfectly entitled to issue a strike notice.

With strike action imminent, Ryanair, rather than engage with unions, chose to close its bases at Copenhagen and Billund. Doing so, however, did not preclude the airline from operating flights to and from Denmark, which it continues to do on a daily basis. This is because as part of the European Union’s liberalization of aviation, airlines can operate routes, under the freedom to provide services, without having a physical presence in a particular country.

Hence, Ryanair can easily move its operations elsewhere without having to sacrifice service capacities. Furthermore, in light of a number of controversial rulings by the European Court of Justice, known as the Laval Quartet, waging collective action against the airlines could carry significant risks as it might be interpreted as preventing the freedom to provide services.

So the combination of being domiciled in a lax regulatory environment, namely Ireland, and the abuse of atypical labor has allowed Ryanair to operate across Europe, outstrip its rivals and thwart attempts by unions to engage the airline. In essence, Ryanair has, through the extension of its bases, effectively exported the business-friendly Irish labor relations system to other more labor-friendly countries. However, Ryanair has played a very active role in shaping this context so that it serves its own ends.

Shaping the Landscape

Ryanair may be a veritable transnational corporation with dozens of bases across Europe, yet it just so happens to be domiciled in Ireland. This is critical to positioning the rise of Ryanair in a broader European context. However, Ryanair’s actions have also had a lasting impact on Irish industrial relations in general and in particular trade union recognition. Two examples illustrate this.

In 1998, a number of Ryanair baggage handlers sought to be represented by Ireland’s largest trade union, the Services Industrial Professional and Technical Union (SIPTU). Ryanair refused point-blank to engage with the union. Hourly work stoppages ensued, with numerous flights being cancelled.

But in a telling episode, Ryanair pulled off a public relations coup by making sure its grounded flights did not appear on airport monitors. Engaging the “doyen of the public relations industry,” Murray Consultants, the no-fills airline perpetuated a myth of being unaffected while producing reams of anti-union propaganda in the media. Through the art of spin, Ryanair would create its own external reality and portray it as the truth.

The dispute escalated so far that Ryanair even had ground-staffs’ airside security clearances revoked, thereby effectively locking them out. When the airport police turned a blind eye, a High Court injunction was taken against the baggage-handlers restricting them from accessing their workplace. Pickets were organized at the three entrances to Dublin airport.

Ryanair’s management and the unions were now on a collision course. Other airport staff, as well as bus and taxi drivers, began refusing, of their own volition, to pass the baggage handlers’ picket and when firefighters withdrew their labor, in solidarity with the striking baggage-handlers, the collective action culminated with Dublin airport being forced to close. Despite setting a historical precedent, Ryanair were not for moving.

As chaos ensued, concern abounded, particularly in government circles, regarding not only reputational damage caused by the airport’s closure, but also the future of social partnership. The relatively new CEO Michael O’Leary not only had “troublesome” workers placed under surveillance, but he also had the gumption to snub the government and refused to respond to the Labor Court, despite a plea from then-prime minister Bertie Ahern.

Fearing a breakdown in social peace and reputational damage would result in a loss in foreign direct investment, the government intervened directly to broker a deal between Ryanair and SIPTU. After immense pressure, O’Leary finally agreed to speak with Ahern by phone. The following day the airport re-opened. O’Leary was livid. Siobhán Creaton, author of Ryanair: How a Small Irish Airline Conquered Europe wrote that his “appetite for revenge” was “insatiable.”

Eager to prevent a repeat, the government commissioned a report on the episode, which turned out to be a farcical exercise. The workers interviewed were hand-picked by Ryanair management. Furthermore, many of the interviews were conducted in the presence of the company’s legal adviser or other management figures.

Unsurprisingly perhaps, the report concluded that the majority of Ryanair workers “have a negative attitude to trade union recognition” and are proud and supportive of the company’s culture and management. This line of argument would constitute the kernel of Ryanair propaganda in the future.

In light of the fallout resulting from the baggage handlers strike in the late-1990s, new legislation was introduced empowering the Labor Court to issue legally binding solutions to trade disputes. Not before long, this newfound provision was being used against Ryanair. This brings us to the second illustration of how the airline has actively shaped Irish industrial relations.

The case began when Ryanair’s eight most senior captains lodged claims with the Labor Relations Commission (LRC) over training costs on a new fleet of aircraft. The LRC found that a “trade dispute” existed between the airline and its employees. Ryanair disputed this finding and refused point blank to recognize the Irish pilots’ union. The case went via the High Court and eventually ended up in the Supreme Court.

Whereas the former ruled against Ryanair, the Supreme Court ruled in favor. The decision was a major setback for trade union recognition. While employees are theoretically free to join a trade union, the Court ruled that an employer cannot be obliged to negotiate with the union. This differs to the US context, whereby under the Railway Labor Act an airline is legally obliged to recognize a union, provided a majority of employees vote for representation. This recently happened with a Norwegian cabin crew.

The utterances of the Supreme Court Judge about Ryanair’s “right to operate a non-unionized company” have been cited over and over again. Other remarks by the judge have gone largely unnoticed, but today have even greater resonance. The ruling noted that “There is an obvious danger however in a non-unionized company that employees may be exploited and may have to submit to what most reasonable people would consider to be grossly unfair terms and conditions of employment.” In other words, Ryanair, with its avoidance-control strategy, was sowing the seeds of discontent from within.

All that was needed to mobilize this discontent was the right conditions, which would materialize a little over a decade later. In the meantime, Ryanair management continued to nurture a culture of fear, a large part of which involved challenging detractors, from within or without, with an army of lawyers.

The Art of Litigation

The Supreme Court marked a high point in Ryanair’s longstanding strategy of litigation. This is because it shaped the industrial relations landscape from where it would launch its price war. In addition, the case served to sow fear into the hearts of its employees who were made patently aware that the airline will not rest until it gets the verdict it wants.

The Ryanair brand, epitomized by its CEO, rested on the idea of no frills; should anybody seek to publically undermine the Ryanair reputation, the response will most likely involve a court date. Winning is not necessarily the objective, so much as to send a clear message that dissenters will be engaged in a prolonged legal battle against a resource-rich adversary.

This was apparent in the mid-2000s when a number of pilots created an online group known as the Ryanair European Pilots Association (REPA). To guarantee confidentiality and limit reprisal from management, pilots used passwords and pseudonyms. The airline managed to infiltrate the group; however, it was unable to reveal the identities of the pilots who took part. Incensed, Ryanair sued for alleged harassment. However, the High Court turned the harassment allegation against Ryanair, when it found its evidence as “baseless and false” and that management’s approach towards its employees “bore all the hallmarks of oppression.”

In the first half of 2013, Ryanair filed five defamation cases in the Irish High Court against a number of former pilots as well as members of the Ryanair Pilots Group (RPG), which in all essence is the successor of REPA. To do their bidding, the airline hired Belfast-based Johnson solicitors, a firm with a considerable reputation for representing celebrities in high-profile defamation cases. Well resourced, these lawyers will exhaust the court system in a bid to grind down an adversary. In one case, Ryanair’s legal team alleged defamation against three pilots for having questioned Ryanair’s market integrity in an email to other Ryanair pilots.

The case lasted seven weeks and within this time a number of former pilots detailed their treatment by Ryanair after they had themselves raised safety concerns. In one account, a former pilot tellingly spoke of how he and his colleagues were treated “like robots.” “It was go to work, we don’t want to hear from you, whether it is personal or safety issues, we don’t want to hear about it.”

Tellingly, a serving Ryanair pilot refused to take the stand, for fear of losing their job. Also illustrative in this regard was the example of Captain John Goss. Despite having served at the airline for twenty-six years, including as chief safety officer, Goss was unceremoniously sacked for “gross misconduct” days after appearing on a TV documentary in which he raised concerns over Ryanair’s safety and fuel policy.

Three other pilots made damning contributions but Goss waived his anonymity. Once fired, Goss became the face of the RPG. The jury returned a “not guilty” verdict on the charge of defamation. In a statement Ryanair stated: “We are disappointed with the ruling . . . and have instructed our lawyers to immediately appeal.”

The New Southwest of Europe?

The Ryanair story in fact goes back much earlier, to the 1980s. Shortly after joining Ryanair, O’Leary headed to Dallas, to study the much-heralded success story of airline liberalization in the United States, namely Southwest Airlines. The Texan airline had revolutionized the US aviation market by using a single type of aircraft, perfecting the timely turnaround and choosing less-congested secondary airports, with lower airport charges.

The Southwest model inspired O’Leary and after his return home he sought to replicate it in the European context. Rather conveniently, however, O´Leary chose to overlook a key detail of the Southwest model: its consensual employee culture. This aspect is often overlooked in media coverage of Ryanair, something which is remarkable given Southwest’s long record of being highly unionized and at the same time highly profitable. And its success has been striking: in addition to having the highest unionization rate in the aviation sector, Southwest was the only major airline not to file for bankruptcy after 9/11.

While celebrating Ryanair’s thirtieth birthday in 2015, O’Leary was presented with a card by the RPG. The card urged the airline to “grow up,” abandon its adolescent anti-union phase and engage with unions. Then the unimaginable happened. The man who had once stated that “hell will freeze over” before Ryanair ever engages with unions, spectacularly abandoned his stance.

This owed to the events between September and December 2017, as Ryanair was calamitously forced to cancel thousands of flights due to a rostering crisis. On the back of this fiasco, pilots were presented with a unique opportunity, which they were not going to pass up. Sensing the uniqueness of the opportunity, unions in Ireland, Portugal, Spain, Italy, and Germany issued the airline with strike notice.

O’Leary was faced with a stark choice to either recognize and engage with pilots’ unions or to have planes stranded at one of the busiest times of the year. The prospect of a transnational strike was enough to bring about a U-turn of historic proportions, forcing Ryanair to end an over three-decade-long anti-union stance.

However, there remains much to be revealed. For instance, will atypical employment remain a feature of the airline? As always, the devil will reside in the detail of future collective agreements. According to one of the first agreements signed with the British pilots union (BALPA), it will now be “the sole representative body for Ryanair employed pilots in the UK.” Ryanair’s chief people officer Eddie Wilson said: “we are pleased to announce this UK recognition agreement with BALPA on behalf of our directly employed pilots in the UK.”

While some might herald this agreement as “historic,” others will see it as a parody on the very idea of collective bargaining given the fact that the vast majority of its pilots are not covered by this agreement, and, as noted above, cannot so much as raise concerns through the internal ERC system. In addition, does signing this selective agreement not fly in the face of “BALPA believes that every professional pilot is entitled to a collective voice meaningful negotiations and proper contracts of employment”?

Whether this agreement represents a stepping-stone towards a more meaningful engagement, or even a European Employee Relations Committee remains to be seen. What the next phase appears to hold for employment relations at Ryanair is collective agreements that are negotiated at the national level. The danger here is that Ryanair will engage whipsawing tactics and play one base off against another.

Ryanair’s anti-union model no longer looks so strong as it once was. But now more than ever, a transnational coordination between the pilots’ and cabin-crew unions will be decisive to resisting its cavalier approach toward its employees.