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Analysis Of The Conflict Between Ryanair And The Pilots Union IALPA

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Introduction

This analysis / evaluation outlines the conflict between Ryanair and the Pilots union IALPA (Irish airlines pilots association) during their recent period of unrest in the summer of 2018.

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Ryanair appointed Michael O’ Leary as chief executive officer in May 1994. From the outset O’Leary sought to develop the low-cost model Ryanair adopted from Southwest airlines in the US. This saw the inauguration of the ancillary revenue movement meaning that O’Leary planned to make most of Ryanair’s profits not from ticket sales but from the sale of additional items and charges to the customer, a controversial method. O’Leary grew the business by driving competitive advantage and also by keeping costs to a minimum while expecting an aggressive workload with questionable conditions for staff. This problematic employment model and his drive to generate maximum profit at any cost was the basis for numerous conflicts over the years between Ryanair and one of its key stakeholders the pilots. The recent dispute centred around conditions for base transfers, command upgrades relating to seniority principles and annual leave arrangements which O’Leary on several occasions prior to the recent dispute had dismissed. Ryanair up to the time of the dispute had a management approach of relocating a portion of their Irish captains to main land European and African bases in order to fulfil backlog and develop new routes without justification to the individual pilots. The pilots due to this claimed there was a lack of a transparent system that was supportive of pilot retention and development and wanted change. 2. Definition of Ryanair and pilot conflict.

Differentiating between the root causes and symptoms of conflict is the key to understanding the management of conflict. In order to understand the origins of this conflict, we must first analysis the various elements that created the conflict, the first being Michael O Leary and Ryanair’s management strategies and policies. O’Leary head of the organization has always had an appetite for conflict and generating outlandish statements, some soon to be rejected as soon as they were spoken. He demonstrates a no-nonsense management style based entirely on delivering results at any cost. Prior to the strikes O’Leary did not recognise the pilots union the IALPA as he believed unions were detrimental to the Ryanair’s business model and impeded achieving results. This was the first element that needed to change in order for the process to proceed. Ryanair’s business model and policies therefore can be seen as the root cause and a major symptom in the conflict.

The second element in the conflict were the Pilot and their union IAPLA represented by Forsa. It is worth noting that only ninety-four of the Dublin based Pilots went out on strike, this was only around one quarter of all Ryanair’s pilots based in Dublin. Although the strike did not involve all the Ryanair Dublin based pilots it can be seen as an organisational conflict. The pilots according to O’Leary were methodically tightening the screw on Ryanair’s for months by looking for unreasonable demands. An example of conflict I can relate this to through my own work is the FBI-Apple encryptioncase. Apple being similar to O’Leary and Ryanair, the FBI similar to the Pilots. The FBI in this example wanted Apple to change their policies and provide them with data from a mobile phone that was blocked in order to resolve a murder case. Apple however had privacy policies in place to prevent staff members from accessing the public’s private data and claimed they couldn’t complete the request. The FBI proceeded to bring the case to court much like the pilots going on strike, the case conclude when the FBI reneged their request ending the conflict.

Stakeholders

There were many stakeholders involved in the conflict with varied levels of interest. The most noticeable stakeholders were Ryanair, the pilots, passengers, investors, suppliers and the union’s.

The four day strike action due to the conflict hit the most noticeably stakeholder Ryanair with the cancellation of nearly eighty flights from Irish airports with an estimated fourteen thousand customers impacted in Ireland alone (Source: Reuters). Profits were also hit hard with the share price falling 16. 5% (€2. 59) during the period of Irish strikes and this coupled with Ryanair announcing that the first quarterly results had dropped 20% in after tax profits showed a bleak picture for engaging in the conflict with the Pilots.

A general environment example where conflict was counter-intuitive recently was Donald Trump’s trade war with China. Trump imposed trade tariffs on several Chinese goods being imported into the US, the Chinese reacted to this by imposing their own tariffs on America goods to the same net value as Trump’s original sum. This can be related to O’Leary’s business model dealing the Pilots that his policy backfired on him.

For the pilots the conflict was more personal and the reason behind this strike were elements which not only effected them but more importantly their family units, relocation without prior warning or reason. This they saw as being unfair and not transparent. An example of a similar conflict to this in Ireland today would be the housing crisis where the government the key stakeholder is under increasing pressure not only from those directly affected but other outside lobbying groups looking to resolve the issue who are claiming the housing development process is not transparent and unfair to lower paid members of society.

Customers / Competitors

In Ireland alone, the total amount of customers that were affected was roughly fourteen thousand over the four days of strikes, this when compared to the additional strikes in Europe was only a fraction with hundreds of thousand customers effected in total. Ryanair at the beginning of the strikes refused to give customers compensation stating it as result of extraordinary circumstances, this was backed by a Spanish court who stated compensation did not need to be paid, but this was later counteracted by a European court ruling where Ryanair would have an obligation to compensate passengers for the disruption. The competitors on the other hand prospered during the strikes with Aer-lingus announcing additional sales during the period of strikes. This tit for tat conflict can be seen in the same regard as the “backstop” negations between the British and Irish governments regarding a hard border and the longer term trade agreements between the two countries with both sides agreeing and then disagreeing.

Mediation

At the beginning of July IALPA/Forsa expressed their willingness to meet to discuss the conflict suggesting a confidential neutral venue but stated the first of the strikes will still go ahead, this was accepted by Ryanair but due to the failure at these meetings to gain agreement from both parties and a threat by Ryanair to relocate three hundred of its staff from Dublin to Poland, Forsa suggested both sides require mediation. This was agreed and Kieran Mulvey was appointed.

Mediation brokered a deal which covered base transfers and command upgrades relating to seniority principles. A similar example of this would be the negotiations between the GAA and Michael O Flynn to hoist the Liam Miller tribute football match in Pairc ui Chaoimh. This centred around the GAA’s policy of not allowing football to be played in their stadiums and required mediation to resolve, both issues are similar as they were a first major concession for both organisations.

Environment

The general environment both O’Leary and Ryanair management created for themselves is one driven by being efficient and effective. This has a large part in how their internal environment reacts to them, with unions calling on investors and shareholders during the strike to challenge Ryanair at the next AGM to change their employment model which could no longer be accepted by employees (Source: RTE), however Ryanair counter claimed this saying two thirds of Dublin based pilots did not strike and were happy with their employment conditions.

As a result of the conflict and strikes there is also the concern by some stakeholders that the management have being in place too long, although I believe you could argue this point as their profits would suggest the management are doing a good job at least for the company and shareholders.

Ryanair have created an unique external environment that saw some issues due to the conflict. The main being the legal issue with the EU imposing a ruling that made them liable to refund customers, however the strike opened up new markets to them when they agreed to unionise portions of their workforce, most noticeably France and Scandinavian markets. The strikes may also have benefited their competition Aer Lingus but this was only a short term as they attached different segments of the market.

Conclusion

Ryanair’s are a company that have won many conflicts both internally and externally through their long lasting policy of manipulation and coercion. This type of policy can be both effective but also ineffective depending how it is managed and delivered. The fundamental issue with a policy such as this is, it is very difficult to control when employees bargain collectively. This is what the pilots achieved during the conflict. Although the strikes in Ireland didn’t have a major financial impact on the company, nor would it lose Ryanair any completive advantage in Ireland, collectively the strikes in Ireland and Europe if left to continue may have.

To bring the conflict to a conclusion, Ryanair had to concede in opening up the channels of communication through mediation, on this occasion however this can be seen as a positive thing too for Ryanair as changing their structural approach to management being more open, transparent can developing their workforce and create an environment of cohesion and job empowerment.

I believe this conflict can be seen as positive for both parties if Ryanair embrace a culture of cooperation and communication and avoid the bullying tactics of the past.

15 July 2020

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