The battle for Britain
The first Monarch plane took off in 1968; the last landed this month. For just under half a century the airline stayed in the air by investing in modern planes, flying to (then) exotic destinations like Tenerife, and adapting to changing consumer demands.
Ryanair, founded two decades later, gloried in undercutting the prices of its rivals. The airline seized the opportunities presented by the opening up of the EU market and its expansion eastwards. It adopted a ‘no frills’ approach even floating the idea of taking toilets out of planes to fit in more seats and imposing a ‘fat tax’ on overweight customers.
Ryanair also refuses to recognise unions, perhaps allowing it to avoid costs seen by other airlines. Instead, it deals with Employee Representative Committees (ERCs) from individual airline bases – raising questions over whether the airline is using a ‘divide and conquer’ approach to employee relations.
In 2014, Ryanair CEO Michael O’Leary began to acknowledge that perhaps this hard-nosed profit seeking culture had gone too far. After Irish newspapers carried a story of a surgeon that was charged £160 for an early flight home upon hearing that his entire family had been killed in a house fire, O’Leary said that Ryanair would henceforth try not to ‘unnecessarily piss people off’.
That same year, Greybull Capital acquired 90% of Monarch for a token £1 (sound familiar?) following two years of heavy losses, a 30% staff pay cut and a £660m pension fund shortfall. The bloated airline had been undercut by competition from ‘no frills’ operators including Ryanair and Jet2. Now in new hands, Monarch would cease long-haul and chartered flights, transforming itself into a low-cost short-haul airline and attempt to compete with Ryanair on its home turf.
Fast-forward to 2017, and Monarch’s collapse has triggered 2,000 job losses and the greatest peace time repatriation in British history; yet analysis from the FT suggests that the owners could still make a profit. Ryanair has cancelled the flights of more than 700,000 customers while BALPA (British Airline Pilots Association union) blames cancelations on poor retention of pilots due to poor treatment of staff.
Whatever the cause, the outcome for Britain is dire, and politicians from both sides of the aisle are waking up to the benefits of criticising the actors in these crises. Labour MP Frank Field has called for a change in the law to make sure that Greybull Capital does not profit from the collapsed airline while £7.5m is missing from the pension pot. Not wanting to miss out on the action, Chris Grayling, Transport Secretary, has said that Greybull Capital should pay for some of the costs of repatriation of Monarch customers left stranded by the airline’s collapse.
Both political parties are increasingly signalling their commitment to cleaning up the corporate world. While the Conservatives are exploring the limits to which they can reshape markets, Labour are questioning whether some markets have the right to exist at all.
Politicians are increasingly getting tougher on social irresponsibility by corporates. These companies need to change their behaviour before politicians step in and force them to do so – particularly as intervention often brings a host of unintended consequences. In order to curb this increasing clamour, those companies that shirk their social obligations need to make a new deal with the UK quickly - one in which they can make sustainable profits whilst contributing to the ecosystem that sustains them.