Corporate Social Responsibility. A Comparative Study of Ryannair and EasyJet

Contents

1. Introduction

2. Literature review

2.1. Corporate Social Responsibility
2.1.1. Dimensions of CSR
2.1.2. Responsive vs. Strategic CSR
2.1.3. Categorization of CSR

3. Case study
3.1. Corporate Social Responsibility
3.1.1. Easyjet
3.1.2. Ryanair
3.1.3. Comparison
3.2. Crisis Communication (CC)
3.2.1. EasyJet: Twitter Crisis
3.2.2. Ryanair: Volcano Crisis
3.2.3. Comparison of EasyJet vs. Ryanair

4. Conclusion
4.1. Key Findings
4.2. Generalization of findings

5. Discussion
5.1. Managerial implications
5.2. Limitations
5.3. Contribution to the development of communication theory

Bibliography

1. Introduction

Author of this paper has chosen to analyse two topics: 1) corporate social responsibility, 2) crisis communication. Author has chosen these two topics because of the reason that crisis communication and corporate social responsibility have a positive effect on brand reputation.

These two topics are analyzed and compared on two companies: Ryanair and EasyJet in the industry of low-cost airlines. Author has chosen these two companies because of three reasons. First, Ryanair and EasyJet are both are European low cost airlines, therefore this is a study of two “most-similar’ cases. Author has chosen Ryanair as it was the first low-fare airline in Europe, is now the second-largest low fare airline in Europe after easyJet based on revenue, but the largest when considering its value by market capitalisation. Second, there are available materials on Ryanair’s and EasyJet’s corporate social responsibility and criss communication both on their website, as well as in academic papers. Third, chosen companies for analysis are interesting in that they both are large airline companies - competitors and both have been highly visible in media.

Author has chosen industry of low-cost airlines because of the reason “the European airline industry suits this choice of topic very well as it is a business operating largely across European borders, but it has also been the center of a substantial amount of EU legislation through the deregulation of the industry and the abandonment of state aid for national carriers.” (Sørensen,2005)

The corporate social responsibility and crisis communication may be seen in several dimensions, either environmental, social etc. In this case study research is concentrated on CSR goals and practices of both of companies. Besides, In the face of crisis communication issues associated with Ryanair as well as EasyJet the importance of right corporate social responsibility management needs to be questioned.

In the further part of this paper author will compare Ryanair and EasyJet in general by providing firm characteristics. Irish low-cost airline Ryanair Holdings PLC (Ryanair), based in Dublin, has long had an image as a maverick. Ryanair is known as the Europe’s biggest discount carrier. The Dublin-based airline, is also known for its low-fare policy and business model based on flying to cheaper, smaller airports rather than the more expensive hubs used by national carriers (Patrick, 2008). From a single route in 1984 ferrying passengers from Waterford in Ireland to London, it has grown to become Europe’s largest airline. But with a horrendous reputation for customer service and a growing array of add-on charges driving customers away, it makes interesting to compare it to other airline operators. The company has always been criticized for its customer service, poor employee relations, complex fee structures, baggage restrictions and gung-ho marketing.

EasyJet Holding PLC is “Europe’s leading airline, operating on over 600 routes across more than 30 countries with our fleet of over 200 Airbus aircraft. EasyJet employs over 8000 people including 2000 pilots and 4500 cabin crew. Last year EasyJet flew over 60 million passengers. EasyJet states that their values are: safety, simplicity, one team, integrity, passion, pioneering”. (EasyJet, 2013a)

Research question: how well both airline companies correspond to existing models of CSR and reputation management?

There were proposed following hypotheses:

H1: EasyJet portrays social dimension of CSR, Ryanair portrays environmental dimension of CSR.

H2: There is need to quick response towards reputational issues both in case of traditional media (Ryanair, Vulcano Crisis) and social media (Easyjet, Disability Rights Crisis).

Aim of this paper is to explore the dimensions of corporate social responsibility by analysing two cases of European low-cost airlines: Ryanair vs. EasyJet.

There were proposed following tasks: first, to analyse concepts of corporate social responsibility and crisis communication; second, to analyse cases of Ryanair and EasyJet from the perspective of corporate social responsibility and crisis communication.

The paper consists of five parts: introduction, literature review, case analysis, conclusion and discussion.

There were used books, papers etc. written by Aras et al., Brammer & Millington,Cacioppe & Forster, Cornelius et al., Hanlon & Fleming, Hebert, Jahdi & Acikdille, Kermani, Matten, McAuley, Nielsen &Thomsen, Patrick, Poynton, Zairi etc. written mainly in the last decade, as well as Easyjet’s and Ryanair’s annual reports and provided information on their websites.

2. Literature review

2.1. Corporate Social Responsibility

Corporate Social Responsibility (hereinafter CSR) is an important issue in contemporary international debates (Aras et al., 2009) and is often discussed at a company’s highest level. “Much has changed in the last 50 years in the area of CSR since it is largely a product of the latter part of the 20th century.” (Aras et al., 2009)

“Corporate social responsibility is an approach to business that takes into account issues associated with society and the environment in addition to the more traditional business concerns of shareholders and profits. As a voluntary approach to business, CSR is strongly advocated by EU. CSR offers the potential to contribute to sustainable development without greater regulation.” (Exeter, 2013) As Zairi states corporate social responsibility is important for engaging the wider community as an important stakeholder in business activity. (Zairi, 2000)

Advocates of CSR ask companies to look beyond their decision-making impact on commercial activities and examine the effects on society and their local communities. (Kermai, 2006) CSR has the capability of improving business with the results not always being quantitative, but rather emerging in indirect and less tangible ways. These ways include brand equity, employee satisfaction, reputation, team building, and community relations. (Nielsen & Thomasen, 2007)

Over the years, the conceptualization of CSR has broadened in score encompassing both internal and external stakeholders (Capriotti and Moreno, 2007; Cornelius et al., 2008) as well as economic-legal responsibilities, ethical-philanthropic responsibilities, sustainable development responsibilities, and so forth and on a global basis (Moon et al., 2005). Traditional stakeholders may include employees, customers, shareholders, and those parties with no direct transactional connection to the organization (Matten and Crane, 2005).

2.1.1. Dimensions of CSR

Carroll (1991) points to four dimensions: economic, legal, ethical and philanthropic. Similarly, Porter and Kramer (2006) points to the “triple-bottom-line” of economic, social, and environmental performance. “triple-bottom-line”: “a sustainability goal is social, environmental and financial - people, planet and profits”. Author in this paper will focus on Alexander Dahlsrud’s (2008) proposed five dimensions (see Figure 1 Dimensions of CSR).

Figure 1

Dimensions of CSR

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2.1.2. Responsive vs. Strategic CSR

Responsive CSR has two elements:

1) acting as a good corporate citizen, attuned to the evolving social concerns of stakeholder;
2) mitigating the harm arising from a firm’s value chain activities is essentially an operational challenge.

Strategic CSR: the more closely tied a social issue is to the company’s business, the greater the opportunity to leverage the firm’s resources and capabilities, and benefit society.

2.1.3. Categorization of CSR

Kourula and Halme (2008) categorize CSR into three types, according to its relationship to the firm’s core business, the target of responsibility actions, and the benefits expected from CSP activities. Three groups are philanthropy, integration and innovation. Philanthropy means charity, sponsorships, image improvement and other reputation impacts. Integration means conducting existing business operations more responsibly. Innovation means developing new business models for solving social and environmental problems. Author will use Kourula and Halme’s proposed scheme of analysis (see Figure 2 Scheme for Analysis of Categorization of CSR).

Figure 2

Scheme for Analysis of Categorization of CSR

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2.2. Crisis Communication

“A crisis is a fluid, unstable, dynamic situatio (Flink, 1986). That brings an organisation into a disrepute and threatens it’s future profitability, growth and survival.” (Lerbinger, 1997) “Crisis communication is the dialogue between the organisation and its publics prior to, during, and after a negative event. (Fear-Banks, 2007) It is emphasized that “communicating does not simply mean being able to send messages, it also means being able to receive them”. (Lagadec, 1993) Figure 3 provides a structure of crisis communication strategy.

Figure 3

Crisis Communication Strategy

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3. Case study

3.1. Corporate Social Responsibility

3.1.1. Easyjet

Easyjet provides following information on corporate social responsibility: “at easyJet we are rightly pursuing our ambitious path towards minimising our environmental footprint both in the air and on the ground. Operating across an increasingly environmentally conscious Europe, we can justly lay claim to having one of the youngest and most fuel-efficient fleets around. We are proud of this, and proud of our role in helping shape a greener future for European aviation.”¹. On the other hand, Easyjet’s claims to have more environmentally friendly airplanes were inaccurately portrayed. (Jahdi & Acikdili, 2009)

Easyjet’s commitment to environment is a priority: (Hanlon & Fleming, 2009) “easyJet’s goal is to ensure that its existing business is as efficient as possible, both in the air and on the ground, and to strive to find ways to minimise its environmental impact in the future. EasyJet’s impact on the environment involves the following: greenhouse gas emissions: carbon dioxide (CO2), water vapour, nitric oxide and nitrogen dioxide; particulate emissions: sulphate particles and soot; waste: chemicals involved in aircraft maintenance, onboard waste and office waste; and noise.” (Easyjet, 2013b)

3.1.2. Ryanair

Also Ryanair put emphasis on environment issues. Ryanair states that “among the 20 largest airlines by passenger volume, the cleanest, Ryanair, uses barely more than a third the fuel to transport its average passenger one mile compared to the least efficient. Ryanair succeeds by ranking first or second for efficiency in load factor and seating density.”²

Furthermore, Ryanair's steady growth is being achieved in the most environmentally friendly and sustainable way by investing in the latest aircraft and engine technologies. (Aras et al., 2009) As it is stated at Ryanair’s website, “Ryanair has an outstanding 29-year safety record”. (Ryanair, 2013)

3.1.3. Comparison

In the Figure 4 Dimensions of CSR there is provided comparison of Ryanair and Easyjet in the aspect of dimensions of CSR (see Figure 43 Dimensions of CSR).

Figure 3

Dimensions of CSR

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¹ See Easyjet (2013): Corporate Social Responsibility http://corporate.easyjet.com/sustainability/corporate-soc-responsibility.aspx (last accessed 23.11.2013)

² See Ryanair (2013): About Us http://www.ryanair.com/en/about/ryanair-and-the-environment (last accessed 23.11.2013)