Ryanair’s low-cost soul at stake as pilots gird for fight

Bloomberg

Michael O’Leary built Ryanair Holdings Plc into Europe’s most valuable airline by being cheap, right down to charging pilots for coffee on their own flights. Now those aviators are pushing back.
A group of disgruntled flight crew is demanding more pay, better conditions and the ability to bargain collectively across Europe. They’re emboldened by rising demand for pilots at rivals and a scheduling foul-up that forced Ryanair to scrap more than 20,000 flights, unleashing an outcry by aggrieved customers and a rebuke from Britain’s aviation regulator.
That’s left O’Leary caught
between his rebellious pilots, whose demands threaten to erode Ryanair’s low-cost advantage over rivals, and the potential wrath of investors should he make concessions that undermine the airline’s business model. He’s responded by offering his cockpit crew a raise while recruiting aggressively and vowing to remain union-free.
“Frankly, most of the shareholders would rather say Ryanair doesn’t fly any planes for six months than the workforce becomes unionised,” said Barry Norris, who oversees about $500 million at Argonaut Partners in London, including Ryanair shares.
Pilots, who often enjoy a privileged position at airlines, have never been exempt from Ryanair’s penny-pinching. In private discussions, current and former aviators who asked to remain anonymous said that many crew members are employed as contractors on a month-to-month basis and must foot the bill for uniforms, mobile phone use, ground transport and hotel costs when working from other bases as well as other costs typically covered by an airline. A Ryanair spokesman disputed those claims.
In a letter, a group of 59 aviators said their pay and conditions fall short of the industry standard. In particular, they complained that an “overwhelming majority” of Ryanair contracts permit the carrier to move them to any base in Europe, without notice or relocation payments.
“We simply want to be represented with one collective voice,” the pilots wrote. “We seek direct negotiations with the company management.” Ryanair, in a written response, said the airline “will not engage” with this or “any other group fronting for the pilot unions of competitor airlines.”
For decades the Dublin-based carrier’s low-cost, low-fare philosophy has fuelled growth and profitability. Yet even O’Leary has learned to adapt. As other low-cost carriers around him started to be more accommodating to cater to the business crowd and travellers looking for a fuller service, Ryanair followed suit. It went on a push dubbed “Always Getting Better” that touted improved customer service and did away with some of the most aggravating requirements, like charging sky-high fees to print out a boarding pass.
But at its heart Ryanair air remained laser-focussed on its discount roots. The limits of that bare-bones approach were exposed in September, when management admitted to botching annual holiday planning, leaving it with too few pilots to fly its planes. Bumping more than 700,000 people from their flights unleashed a backlash from consumers and forced Ryanair to trim its growth forecast. The carrier posted the slowest pace of customer expansion in three years in October.
Yet now cheap tickets are starting to win back customers and the network hiccups have subsided, leaving the uprising by flight crew as O’Leary’s biggest headache. The aviators want to upend a divide-and-conquer approach that has defined Ryanair’s employee relations.