At a recent shareholders’ meeting in Dublin, Michael O’Leary, the chief executive of Ryanair, slumped into a leather chair and issued a mea culpa. Under his watch, Europe’s biggest low-cost airline had bungled its fall vacation schedule for pilots. Over 2,000 flights would have to be canceled.
To contain the crisis, Ryanair might cut a week of vacation from the airline’s 4,200 pilots — many of whom aren’t full-time employees but independent contractors. If they “misbehaved” by declining to help, he added, they would get no “goodies” in the future.
It wasn’t the first provocative comment from Mr. O’Leary, a pugnacious leader who transformed Europe’s airline industry with an aggressive cost-cutting approach that extended to the work force.
But this time, he prompted an outcry within Ryanair’s ranks. Days later, Mr. O’Leary was forced to announce an additional 18,000 flight cancellations, after some pilots balked about returning to the air.
Employees have banded together to demand collective bargaining and more secure contracts, touching off a fresh clash with management. Last week, 59 pilots representing employees across Europe renewed those demands, adding that “pilots have had enough.”
The tensions at Ryanair are flaring at a time when labor practices are being debated across Europe. As businesses look to squeeze costs, around a third of the European work force is now employed under contract, rather than as full-time, regular employees. Such employees don’t usually require the same level of benefits for health care, retirement and unemployment.
The European Commission is pushing for tougher social protections for this increasingly flexible work force. While the scrutiny has focused on gig economy companies like Uber, it is increasingly extending broadly to a contractor class that includes construction workers, accountants and even pilots.
Ryanair controls its expenses by using a mix of full-time employees and self-employed pilots recruited through outside agencies. It also issues Irish work contracts to cabin crew and senior pilots around Europe, arguing that they work in Irish-registered aircraft and not in the countries where they are based.
The approach helps Ryanair sidestep labor regulations and high social security taxes in many of the 33 countries where it operates, making its labor costs among the lowest in the European industry. Those costs run around 2 euros per employee per hour flown — less than half the costs of two rivals, easyJet and Norwegian Air.
European regulators have been investigating the employment agencies Ryanair used to recruit new pilots. In Germany and Britain, authorities are examining alleged tax evasion at the agencies. Ryanair’s use of Irish labor contracts have faced legal challenges in several countries that have accused the carrier of failing to pay social security.
The company’s practices are also feeding employees’ frustrations. In interviews, more than a dozen current and former pilots and crew members described demanding work conditions and atypical employment arrangements that made it difficult to voice complaints. Most agreed to speak on condition of anonymity, citing nondisclosure agreements in Ryanair contracts and concerns about jeopardizing their jobs.
“If travelers can fly for just 10 euros, they should know that part of that cost comes from the labor conditions of the airline personnel,” said Yves Jorens, a professor of social law at Ghent University and the co-author of an extensive 2015 report on work conditions in the European aviation industry.
The uproar over vacations has emboldened employees to assert themselves. Hundreds of Ryanair staffers have sought to join European airline unions, form informal collectives and create a Europe-wide representative body to push for change. Unions at Southwest Airlines and American Airlines are offering help.
Ryanair has vowed not to meet with or recognize any union. Its concern is that rivals are capitalizing on the flight cancellation episode to organize Ryanair’s pilots and crew members — a move that analysts say would hurt the company’s advantage in low labor costs.
Mr. O’Leary declined requests for an interview. But in letters and public statements, he repeatedly blamed airline unions and competitors, saying they tried to “demean and disparage our collective success,” a charge he has renewed in recent weeks.
Yet as rumors swirled that pilots were defecting to other carriers after the flight cancellations, Mr. O’Leary issued an impassioned plea. “Ryanair’s pilots are the best in the business,” he said in a message to employees last month, in which he also promised improved pay and better contracts. “I urge you to stay with Ryanair for a better brighter future.”
When Robertus Van Boekel applied for a pilot’s job at Ryanair in 2009, he interviewed at Brookfield Aviation, a British personnel agency.
Ryanair rarely hired new pilots directly. Instead, they were told to take the unusual step of applying to Brookfield or McGinley Aviation, another British recruiter, and declare themselves as self-employed. I
Brookfield handed Mr. Van Boekel, who was based in Belgium, a list of Irish accounting firms and told him to choose one, according to a 2013 lawsuit that Brookfield brought against Mr. Van Boekel when he resigned to work at another carrier. The accountants made him a shareholder and director of a Dublin-based “service company” called Winged Foot Ltd. Brookfield then arranged for the company to supply Mr. Van Boekel’s piloting services to Ryanair, the suit said.
After German authorities began investigating Brookfield, Ryanair last summer turned to a new employment company to contract pilots, BlueSky Resources, set up by an agency called Crewlink that the carrier uses to hire flight crew. McGinley Aviation and Crewlink declined to comment. A spokeswoman at Brookfield, Elaine He, said it was no longer handling pilot recruitment for Ryanair.
The labor setup is key to an elaborate cost-cutting strategy that Mr. O’Leary pioneered in the mid-1990s, when the European air travel market was liberalized. Until then, big national carriers like Alitalia, Air France and Lufthansa had commanded the Continent, with a corps of unionized pilots.
Mr. O’Leary followed the low-cost model of Southwest Airlines in Dallas, now the world’s biggest airline in terms of passengers. Southwest had minimized operating costs and lured fliers from legacy carriers by offering cheap, bare-bones flights.
He honed the approach for Ryanair, putting hubs in inexpensive European locales that generated new tourism and jobs. Fuel costs were rigorously managed, and turnaround times for flights squeezed to the fastest in the industry. The company uses only Boeing jets to reduce engineering costs, and leases part of its fleet to recoup tax write-offs. And it avoided unionization, a strategy that some low-cost European rivals have copied, along with Ryanair’s tactic of using contract pilots to cut costs.
Mr. O’Leary cultivated a brash image, poking competitors, pilots and Ryanair’s own customers. At the shareholders meeting, he angered pilots by saying they had an “easy job.” He once proposed charging passengers to use the toilet, and placing higher fares on “fat people.”
None of that happened. But Ryanair’s ticket prices — as low as €10 from London to Rome — were a game changer. Ryanair is now Europe’s biggest carrier, and the fifth largest in the world, with 117 million passengers in 2016. Profits tripled over the past decade to €1 billion and remain robust even after Ryanair refunded €25 million to 700,000 passengers recently for the cancellations.
Ryanair is also a fast-track opportunity for young pilots and crew members to accumulate experience and jump to another airline. Those promoted to captain can earn a six-figure salary on a full-time contract.
But employees were often blindsided by the labor setup once they were inside, according to the current and former Ryanair pilots and crew members.
Thousands of new Ryanair pilots went through the same process as Mr. Van Boekel. Some were required to form limited liability companies in several countries with pilots they didn’t know.
As contractors, they didn’t receive standard benefits for pensions or health insurance. Pilots and flight attendants on Ryanair’s Irish contracts weren’t always protected by labor laws in the countries where they worked. Ryanair said its contracts complied with labor laws in Ireland and the European Union.
Pay has been another concern. Self-employed pilots and aircrew members are paid only for hours flown, but not for time spent preparing for a flight, or when they are delayed or canceled. Minimum monthly work hours were promised though not guaranteed.
Contractor pilots paid their own transportation and costly hotel bills when assigned to fly from different airports. Like flight crews, they shelled out for uniforms, food and even drinking water on flights. Ryanair’s go-to employment agencies required job seekers to pay for qualification training, starting at around €2,500 for flight attendants and about €30,000 for pilots.
When tax authorities raided Ryanair’s German sites as part of their investigation into alleged tax evasion by Brookfield Aviation, they also questioned pilots who had signed contracts with Brookfield. That set off a mild panic among Ryanair pilots elsewhere in Europe with the same contracts.
Pilots, in interviews, said they felt discouraged from raising workplace concerns, which could lead to being called into Dublin for tense meetings with managers. Others recounted being pressured to limit their fuel consumption and fearful of being reprimanded if they complained of fatigue. Flight attendants reported coming to work ill and scrambling to fulfill sales quotas on flights for lottery cards, perfumes and other items to avoid rebuke by managers.
One former pilot recalled protesting after being told to pay for a costly taxi ride to another airport to fill in for a colleague. Managers suggested he could be demoted if he didn’t comply. It created a culture of fear, he said.
Robin Kiely, Ryanair’s spokesman, said that claims of workplace pressures were “false and invented,” fomented by unions seeking to undermine Ryanair. “There is no pressure on people here,” he said. “We certainly work hard, but we work smart.”
Mr. Kiely said employees enjoyed favorable conditions and unmatched job security. “We have 13,000 employees,” he said. “If it was so bad, they wouldn’t be working here.”
Ryanair employees have made various attempts to unionize. Each time, the effort has been rebuffed.
James Atkinson, a pilot who flew with Ryanair for eight years, said that when he started in Rome in 2006, the company pressured crew members who tried to organize.
People who participated in those organizing efforts were reassigned to other airports outside of Italy where Ryanair operates. Those who refused to relocate were fired; others eventually retracted their demands, he said.
Later, Mr. Atkinson created his own website to try to organize Ryanair employees. Soon after, he said, Brookfield declined to renew his contract. Today he is a pilot at a rapidly expanding airline in China.
In 2011, Belgium-based Ryanair flight attendants on Irish contracts sued for the right to claim Belgian pay and entitlements in the nation’s courts. Ryanair had claimed that disputes involving Irish contracts could be heard only in Ireland, where benefits like unemployment insurance and social security were less favorable than in Belgium.
One attendant, Virginie Mauguit, approached a local union for advice. She distributed union leaflets to crew members describing their rights under Belgian labor law. Two weeks later, Ms. Mauguit said, she was fired.
“People don’t have the right to complain,” she said. “It was dangerous for your job.”
The European Court of Justice ultimately ruled in September that aircrew could pursue their rights in the country where they work.
Mr. O’Leary declared victory because the court didn’t bar Ryanair from continuing to issue Irish contracts. But in his letter to employees, he said Ryanair might close gaps in benefits between Irish contracts and local labor laws.
The autumn scheduling breakdown brought the issue to the forefront again, hitting not only morale but also the corporate suite.
Amid the tumult, Ryanair dropped a bid to buy the ailing airline Alitalia. Mr. O’Leary hired a former top executive to address the turmoil, started a recruitment drive and warned pilots about “misinformation” from competitors’ unions. A message sent to former pilots to try to hire them back said Ryanair was working to “significantly transform and reward the way we interact with our pilots.”
Staff members at Ryanair have continued to fight back, calling on Mr. O’Leary to change the contractor model and improve working conditions. Growing numbers are pressing Ryanair to conduct collective bargaining and recognize a Europe-wide management committee that they organized, rather than negotiate through managers at each Ryanair site.
Pilots in London and in Madrid recently revolted against an offer for pay increases on the condition that they agree to continue negotiating with Ryanair directly. Many are now trying to spread the message more widely via WhatsApp and Facebook.
“Pilots have said enough is enough: we like this company but we don’t accept the terms and conditions any more,” said Dirk Polloczek, president of the European Cockpit Association, representing more than 38,000 pilots across Europe.
“They think Ryanair can be a good employer,” he added. “All they have to do is have a dialogue with their pilots.”