No other airline is probably more affected by the closure of Russian aerospace like Finnair. The Oneworld Alliance member, which celebrates its 100th anniversary this year, has to adjust its strategy. Offering for many years the shortest flight route between Europe and Asia, this became now obsolete.
Following Finnair as a correspondent for around 20 years, it was good to speak with Topi Manner, the CEO of the Helsinki-based carrier, at the sidelines of the recent Airlines 4 Europe summit in Brussels about the latest developments.
“Business is getting better, demand is good and we are looking for a strong summer, for aviation at large and that certainly goes for Finnair as well, we are out course hit by the double crises, first hit by the pandemic and hit more than the average airline in Europe because of our focus to Asia“, Topi Manner explained to Sam Chui CEO talks. “Then the Russian invasion in Ukraine and the subsequent closure of Russian airspace smacked right into the middle in Finnair´s strategy and it needed to change its strategy“, he said.
Russia issued a NOTAM on Feb. 28 regarding the closure of Russian to Finnish aircraft.
“Now we are on that road and our first results are really been encouraging, we are back to profitability, we have been successfully rebalancing our network, which has not been an easy thing, but that's good“.Topi Manner, CEO, Finnair
Finnair will keep its foothold in Asia and is increasing its presence in the Middle East, to Doha, based on a commercial partnership with Qatar Airways. “We are also increasing long-haul flights to the US. On the back of these changes to our long-haul network, we had been able to keep our short-haul network to Europe intact“, he said. This is important, as feeder traffic to and from the hub Finnair are potential to serve the entire network.
“Our current fleet is about 80 aircraft, we don't foresee any significant changes in our fleet“. Before the pandemic Finnair´s Asian traffic was 50 % in terms of Revenue, this was really significant. And it was all about connecting Europe with Asia via the short Northern route, via Russia, most notably Siberia.
“Now Asia is currently 30% of our revenue, still China not being opened. We look forward to increasing the number of flights to China, during the course of the summer, especially in Q3, more frequencies to Shanghai and the reopening of Beijing“.Topi Manner, CEO, Finnair
How long this situation will remain, is of course very difficult to estimate. “I like to be an optimist in that sense, I would like to think eventually there will be peace“. From Finnair´s perspective, it remains of course very important, as from the West, to support Ukraine to reach a lasting peace in the kind of terms they could agree on and once that happens, hopefully, Russian airspace should be one for the first sanction that will be lifted. If so, with the opening of Russian airspace one day, the situation will be completely different when there is would be peace. And I think therefore we are talking about lasting peace “, the CEO said.
The Doha Connection
Finnair offers daily flights from Helsinki, Stockholm and Copenhagen to Doha in partnership with Qatar Airways. “This cooperation has really started with the right foot, we are very happy with the partnership“, Manner said. Doha as a hub is increasing its significance between East and West, Qatar Airways provides connectivity for Finnair passengers, to Africa, South East Asia and Australia.
Regarding the closure of Russian airspace, Finnair has lost some destinations which make no economical sense anymore to fly to, because, with the long flight around Russia, it is impossible to be profitable. Which destinations have been lost? “Basically all secondary cities which Finnair has been operated to. In Japan it is Sapporo, Fukuoka and Nagoya, in China we are talking about cities like Nanjing, Guangzhou, and Xian“, Manner said.
Meanwhile, as part of the adjusted strategy, Finnair increased its presence on the North Atlantic. “The Atlantic flights are working well for us and we are greatly benefiting our oneworld partners in the US. American Airlines and Alaska Airlines have a strong combined market share in the US, we are benefiting from their distribution power. More of the tickets of our Atlantic flights will be sold in the US than in Europe“.
Russia´s overflight fees were a significant cost as such for Finnair, but on the other hand, going around Russian airspace is far more costly, also for European carriers as well. The Chinese carriers are flying through Russian airspace. The situation is different in comparison to markets like Japan or Korea where the local carriers also go around Russian airspace. It is an unfair playing field and therefore it is an additional disadvantage and additional cost to the European market. However, Finnair is able to operate profitably on those flights as demand is strong. “All the other carriers going around (Russia) as well, the yield levels has being adjusted to this reality“, Manner said.
“Once there is a lasting peace and then we would be considering (to add more destinations in Asia again) that but only with that preconditions we need to be clear about that“.
“Finnair is turning 100 years at this point. We are the sixth oldest airline in the world we are very proud of that. The 100 years, it has been a history of adapting. Now we are adapting more than ever. I think we will be a very sort of fast, nimble, agile airline going forward with very sort of strong operational quality and safety culture and top service for customers“, the CEO said. As for the last question, is the worst over for Finnair? “Yes probably. I like to think so, but still a lot of thongs to do“, Manner concludes.