To paraphrase Daniel O’Connell, Aer Lingus’s difficulty should be Ryanair’s opportunity. In the normal way, you would expect Michael O’Leary to be rubbing his hands at the prospect of a prolonged work to rule or worse by Aer Lingus pilots over the key summer months.
July to September is when both airlines make the bulk of their profits. Aer Lingus made €196 million of its annual operating profit of €236 million between July and September last year. For Ryanair, the summer months accounted for €1.7 billion of its €2 billion operating profit.
The decision of Aer Lingus pilots to adopt a work-to-rule from next Wednesday, rather than an outright strike, is in theory particularly beneficial from Ryanair’s perspective. It means the disruption to Aer Lingus’s schedule will not be entirely predictable. Flights will be delayed and cancelled in an ad hoc fashion as pilots stop showing the flexibility that is necessary to keep an airline on schedule over the busy summer.
[ Work to rule will be more disruptive for Aer Lingus than one day strikesOpens in new window ]
Among other things, this may mean bigger payouts for affected passengers. But the real damage is that many passengers will opt to fly with another airline rather than take the risk of their holiday being ruined at the last minute. Ryanair is the obvious alternative.
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The icing on the cake for O’Leary, you would think, is the opportunity all this affords him to indulge his penchant for sledging his rival.
Instead, the Ryanair boss has adopted what for him could be considered a reasonable and measured position.
[ Aer Lingus talks on industrial action unlikely for daysOpens in new window ]
He has described the pay rise on offer from Aer Lingus as “more than fair”, noting that it is ahead of inflation. Rather than lambast management, O’Leary has directed his ire at pilots, saying they are very well paid to begin with. He let drop the claim that senior captains are earning €250,000 a year, which is unlikely to engender much sympathy for them from the travelling public.
O’Leary also downplayed the impact of the strike, indicating that Aer Lingus regional flights will not be affected because they are operated by a separate company. He also predicts that other airlines in the IAG group — which owns Aer Lingus — such as BA and Iberia will be able to plug some of the gaps.
His final point was that Ryanair had spare aircraft that could be deployed at short notice. “I strongly urge Aer Lingus to stand up to these pilots. And I would strongly urge Aer Lingus pilots if you’re getting €250,000 a year and the labour court has awarded you 9.25 per cent, take it, and negotiate again next year,” he said. Not what you would expect from a chief executive whose reputation is built on, among other things, a robust approach to industrial relations.
Industrial action at Aer Lingus: How will it affect passengers?
The reason for his uncharacteristic emollience is not too hard to fathom. Big pay rises for Aer Lingus pilots are bad news for Ryanair.
The airline industry globally is experiencing a shortage of pilots as the recovery in air travel from the impact of the Covid pandemic continues. Just how serious the problem is depends on who you ask. Airlines play it down pilots play it up. Aircraft manufacturer Boeing believes that 649,000 new pilots will be needed over the next 20 years, which is probably as close as you can get to an objective assessment.
Whatever the true extent of the shortage, it is part of the backdrop to the demand by Aer Lingus pilots for a pay rise that is more than double the 9.25 per cent recommended by the Labour Court. They know that, for the moment, they have significant leverage.
[ Bookings with Aer Lingus have flatlined since pilot vote, say travel agentsOpens in new window ]
The only thing that can be said with some certainty about the pending industrial action is that it will eventually be resolved and that it will involve some concession from both sides. This is bad news for Ryanair as it will put pressure on it to increase the amount it pays its pilots or risk losing them to Aer Lingus.
There is also a risk that the dispute could drag on over the summer. Aer Lingus — thanks to the backing of its €37 billion parent IAG — is in a position to take a substantial amount of pain.
Aer Lingus will likely look at a seat sale or some other form of discounting to try and attract passengers. If the discounts are sufficiently large, people will be willing to run the risk of a last-minute delay or cancellation, particularly if they are entitled to compensation or alternative arrangements. A seat sale would amount to damage limitation on the part of Aer Lingus in pursuit of its wider goal of reaching a deal with its pilots. For Ryanair — which would have to respond — cutting prices as demand peaks would just be damage.
It seems paradoxical, but an Aer Lingus pilot strike is the last thing O’Leary needs.