Raynair is an Irish airline, founded in 1985 with a staff of 25 people. The airline is commonly known for its ‘low cost’ services. It has a fleet size of 298 Boeing, and employs about 8,500 pilots, counter workers and flight attendants…
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Four years later, the company lost $20 million dollars. Later in 2011, the company had grown to attract 75.8 million passengers who boarded their planes, leading to generation of a whopping $4.2 billion in revenues. After years of exponential growth, the company finally resolved to offer their customers very low airfare rates, though a storm sparked when the company introduced many unreasonable charges.
Raynair unmatched low prices brought the company to a status of global fame, because its services were 2-3 times cheaper than what similar companies charged. However, the truth of the matter is that this airline company had introduced so many hidden fees and services to boost its revenue and recover from the extremely low prices. This issue attracted a lot of controversy regarding the legality of what Raynair was doing and whether its business plan and procedures was really ethical. In a nutshell, Ryanair’s hidden charges are certainly unethical. It is very strange, for example, to realize that a customer is charged a fee for not checking-in online. Raynair introduces so many hidden charges and hides them under their “low priced tickets”. This unethical practice, unfortunately, can taints its reputation and reduce its customers base.
If Raynair’s purpose is to maximize shareholder’s returns, violating the rights of employees and customers to achieve its goals is a violation of its ethical responsibility. Raynair airline is a corporate entity, which is legally considered to be a corporate person, entitled to rights and responsibilities, just like any other person. Theorists, such as Milton Friedman has maintained that corporate executives are free to maximize the profits of their entities the way they want, but by making sure they conform to their basic rules of the society, including those embodied in the ethical customs and those embodies in law (Friedman, 1970). However, the case of Raynair is a case of total disregard to these laws and ethical customs. While the company generates about $500 million, over 20 percent of this revenue comes from sources other than airline tickets. Some of the additional revenue sources include $208 charged for passengers who change names on their boarding pass, excessive luggage fee of $28 per kilo, a boarding pass fee of $40, a reserved seat fee of $13, credit card use fee of 2%, a checked musical instrument fee of $83, a bottle of water that is sold to customers at $3.50. These and many other types of fees that are charged in the cabin have attracted a lot of controversy, regarding their legality and ethical grounds. The employees of Raynair are also not left out in the ethical controversy that surrounds their employer. They are the ones who are forced to charge the customers these controversial charges. According to Friedman, maximizing of the company’s profits without regards to workers or customer’s welfare is an unethical act of individualism (Gallagher, 2005). In regards to this, Raynair is engaging in individualism because its central motive is maximizing profits, notwithstanding what it will take to achieve that goal. Following its reactions, it was estimated that the company would save millions of money, at the expense of 400,000 passengers. The fact that there are numerous customers who lodge complaints after experiencing different ordeals, but their concerns are hardly addressed, is a further testimony
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