Viking Wars: Norway Wants To Boycott Ryanair, But Oslo Has Problems With Its Own Low-Cost Carrier, Too

 @Gooch700
on May 24 2013 10:29 AM
Ryanair CEO
Michael O'Leary, CEO of Ryanair, during a news conference in Brussels. Known for his colorful personality, O'Leary said in a recent interview he was impressed with Chinese jet technology Reuters

Ryanair Ltd. (LSE: RYA), the controversial, low-cost Irish carrier run by the colorful and profane Michael O’Leary, has hit strong headwinds in Norway, where the prime minister's disdain for the airline has become pointed and personal.

In support of some Norwegian unions and politicians, Prime Minister Jens Stoltenberg has vowed that he will never fly on Ryanair and called for a boycott over accusations that O’Leary treats his employees like "slaves," underpays them and maintains poor working conditions.

The issue came to a head after two female former flight attendants of Ryanair (who are domiciled in Norway) revealed their plan to sue the company for wrongful termination and for breaching labor laws.

The women, who were employed by Irish agencies and not directly by the airline, claimed that a “culture of fear” predominates at Ryanair and that cabin crews have no job protection, reported EuroNews.

One of the plaintiffs, an Italian woman named Alessandra, complained: “I live in a country [Norway] that is the most expensive ever and I have the same payment as a southern [European] country wage, and even they don’t pay me for sickness.”

Vegard Einan, a senior official of Parat, the Norwegian civil aviation union that is helping the two women with their lawsuit, told local media: "It was a contract of slavery,” according to Agence France Presse.

Norway’s largest labor group, The Norwegian Confederation of Trade Unions (LO), also said it will support the lawsuit against Ryanair.

“Ryanair has put "social dumping" into the system, and this lawsuit is of great social significance,” Trine Lise of LO told the Norwegian news agency, NTB.

“It’s important for all employees that this form of operation be stopped.”

["Social dumping" generally refers to companies using cheaper labor based in other countries.]

In response, O’Leary jetted to Oslo to deny the accusations. He told reporters at Rygge Airport (where Ryanair has a base) he was victimized by “false claims.”

“They [the plaintiffs] just invented these false claims some six months after they were dismissed: one for breach of safety regulations, and [the other was] dismissed because she wouldn’t turn up for work during her 12-month probation,” he added.

He also asserted that his airline observes and satisfies all applicable Irish and European Union labor laws.

But Ryanair has long endured criticism over its policy of imposing extravagant fees for options like carry-on luggage and food -- measures that tend to undermine its stated purpose of providing low-cost air travel. The company faces a number of other lawsuits from both customers and ex-employees.

Along with Prime Minister Stoltenberg, Norway’s Foreign Minister Espen Bart Eide has also declared his refusal to fly on Ryanair until its labor issues are resolved.

But the ongoing controversies apparently has not hurt Ryanair’s bottom line.

Earlier this week, the carrier reported that its after-tax profits jumped by 13 percent to €569 million while revenue rose by a similar amount to €4.88 billion in its latest fiscal year -- all despite higher fuel costs. Passenger traffic also climbed by 5 percent to 79.3 million.

Moreover, Norway’s own low-cost carrier, Norwegian Air (OSE: NAS) -- which competes directly with Ryan Air -- is engulfed in its own problems.

Norwegian Air is also fighting Norway’s labor unions and politicians over plans by the company’s chief executive, Bjørn Kjos, to use low-wage Asian crewmembers on Norwegian-registered aircraft -- a measure that has been scuttled by Oslo officials.

In response, Kjos said he will register his new Boeing 787 Dreamliner jets in Ireland (where Ryanair is based) -- a move that would allow him to hire low-paid Asian staff and thereby circumvent Norwegian laws.

Kjos has complained that he cannot compete with Asian airlines and others if he must pay his workers Norwegian-standard salaries.

“This is our way of living with Norwegian law,” Norwegian Air spokeswomen Anne-Sissel Skånvik told the Norwegian newspaper Dagens Næringsliv.

“We of course must comply with the Norwegian authorities’ demand that aircraft with foreign crews must be foreign-registered. We haven’t had any desire to register our aircraft abroad, but this is [because of] the old decision the current government has chosen to hang onto.”

Even a senior Norwegian government official admitted that if Kjos wants to register aircraft in Ireland, Oslo is helpless to prevent it.

“As long as Norwegian [Air] has a Norwegian AOC [Air Operators Certificate] the company’s activities are… subject to Norwegian legislation. There is however nothing Norwegian authorities can do to prevent Norwegian [Air] from moving its AOC to Ireland or another country,” an official at the Ministry of Transport told The Foreigner newspaper.

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