Professor Loizos Heracleous, expert in business strategy from Warwick Business School, shares his views on the enforcement action being taken against the airline Ryanair for refusing to compensate passengers for strike disruption:
“Ryanair’s financial success derives from a pure cost leadership strategy and aggressive growth, that is for the most part well executed (barring the pilot roster mix-up of last year for example). This strategy led to a 20% net margin on revenues of Euros 7.15 billion during the 2018 financial year. The cost leadership strategy demands robust and often ruthless cost reductions and cost vigilance, while delivering an acceptable level of service that is safe and responds to customer expectations.
"The issue in this case is that even if courts in particular European countries have ruled that strikes are exceptional circumstances and therefore Ryanair does not need to pay compensation to flyers who suffered financial and personal inconvenience, customers still do not think this is fair for them. Further, there is a chance that UK courts do not follow these particular judgements of European courts.
"Ryanair certainly has the financial resources to compensate these customers if the company chooses to do so. Otherwise, we will need to wait and see what the UK courts decide. But in any case, Ryanair will not be doing itself any favours reputation-wise if this issue has to be adjudicated by the UK courts.”
Kim Ingram, Assistant Press Officer
E: K dot Ingram dot 1 at warwick dot ac dot uk
T: 02476 (5) 75601