Is Ryanair an Ethical Business?
Hodges, Faye, Teaching Business & Economics
Businesses, like people, have to make ethical choices. Ethics are becoming more important to businesses in an ever more ethically aware society. Many large businesses want to show that they are ethically responsible on a range of issues, from production to suppliers, workers, customers, competitors, products. This article considers if Ryanair, the 'low fare, no frills' airline, operates in an ethically sound manner, considering specific ethical areas such as customers, suppliers, competition and workforce.
Ryanair's code of business conduct and ethics 2010 document states 'Ryanair is committed to conducting business in an ethical fashion that complies with all laws and regulations in the countries in which Ryanair operates.' 1 However, 'critics of ethical codes believe them to be public relations exercises rather than genuine attempts to change behaviour. What is not in doubt is that the proof of their effectiveness,' 2 can only be measured by how Ryanair actually behaves and how this is interpreted by stakeholders, not by what Ryanair writes or says.
Robert C. Solomon observes that discussions about the Tightness and wrongness of aspects of business life go back to the earliest writings. 'Aristotle approved of household trading as an essential part of the society, but he considered trade for profit as wholly devoid of virtue and he considered the people who did it to be parasites.'3 The chief executive officer of Ryanair, Michael O'Leary, has put into place a business model which revolves around keeping operating costs as low as possible, whilst running an efficient and reliable service. Ryanair, like many businesses, could be looked at as a profit maximiser. Are profit maximisation and ethical behaviour incompatible? Is Ryanair prepared to sacrifice profit for ethical reasons?
Some businesses are particular about the type and class of customer associated with the brand. It is evident that Ryanair provides an economy class service for an economy class price, which clearly appeals to a socio-demographic range of people. It is widely documented that Ryanair has a number of 'hidden costs'. These hidden fees can be found in the Ryanair terms and conditions whilst booking online, which make them in fact visible, not hidden. Some of the hidden costs are:
*£5 online check in fee per person per flight;
* euro40 for forgotten boarding pass per person per flight;
* £5 card payment handling fee per person per booking;
* fees to check in a second bag to the hold.
During 2008/2009 4 these hidden fees netted Ryanair half a billion dollars. Customers may feel cheated when all the fees add up. It is argued that this 'cheating' can reduce trust and makes consumers question the actual proposition.
The obvious question to ask at this stage is, 'Has Ryanair pushed the cost saving approach too far for consumers to accept?'. Interestingly, a BBC Watchdog customer survey conducted in 2008 found that more people said they would never fly with Ryanair again, compared to the small amount of people who said that said they would. 5 How accurate is such a survey?
The business model in place strives to reduce face value costs of tickets. To be able to do this the 'hidden charges' must increase accordingly to cover the shortfall, meaning the consumer faces the financial burden, not the airline.
Recently, Ryanair's business decisions came under scrutiny in a Spanish court. A judge in Barcelona ruled that, under international air travel conventions, Ryanair can neither demand passengers turn up at the airport with their boarding pass, nor charge them euro40 (£34) if they do not. 6 Ryanair's destination airports have been questioned many times by consumers. Often the destination airport is a substantial distance from the city centre; this is because airport landing charges are less at less congested airports. This is a benefit for Ryanair, but more costly for consumers who may have to hire a car to travel to the destination required. …