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In the News

Ryanair - the gift that keeps on giving

Penny Brooks

22nd September 2017

As long as you are not one of the would-be passengers who is suffering the loss of a holiday due to Ryanair's current problems, then surely this is going to become one of those case studies that we refer back to again and again. So much so that it may well be worth giving over a display board on the classroom wall to trace a time-line through the story as it has developed over the last week and half, so that students can relate topics to it as we teach them later in the year.

One obvious issue is the impact on costs, as the airline has to pay compensation to customers and bonuses to staff - should you treat these as fixed or variable, and how do they impact on breakeven point? 

Then there are so many stakeholder issues. Just to highlight a few of them suggested by one of this morning's reports on the BBC website:

Image and reputation - will this mess-up deter customers from booking again next time they want to travel, or is Ryanair's low price attractive enough to overcome any reluctance?

Management - how did this "significant management failure" with planning staff rosters come about, what are the external influences from regulations that airlines have to comply with, and how will Ryanair ensure it doesn't happen again?

Industrial relations - will pilots accept the money being offered in return for postponing their holiday? O'Leary suggests that, as there is no union representation, they will not be able to take mass action - but he may not be taking the power of social media into account, as staff reps at Ryanair's 30 bases around Europe are talking on WhatsApp to coordinate their response.

Stakeholder power - will shareholders revolt and push out Michael O'Leary (who owns 4% of the company himself) or support his admission of managerial mistakes and apology to customers, but tough stance with staff? Will the pilots accept the money being offered in return for postponing a week of their holiday, and if not, how will they act? They are clearly seeing an opportunity to force the company to give them more generous pay, or better employment conditions.

Rival airlines - how should they act to take advantage of Ryanair's problems? They might poach the staff, advertise their flights to customers who need to re-book, alter their marketing  to reflect greater reliability, check the way in which their own staff planning takes place to ensure that the same problems don't engulf them...

Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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