Asian boom sees Finnair reach new heights

by Andreas Spaeth
7295
January 18, 2018
Finnair growth Asia
Finnair is hitting new heights. Photo: Andreas Spaeth.

“We are currently growing as fast as never before in our history,” says Finnair CEO Pekka Vauramo as he looks out over big expansion work at Helsinki airport, the carrier’s hub.

Vauramo is referring to a northern winter schedule that is seeing capacity increase 13 percent system wide and 19 percent on long-haul routes.

This is great news for a carrier that is the sixth-oldest continuously operating airline in the world and whose predecessor was founded in 1923.

Finnair is thriving due to its booming Asia business and in 2017 narrowly missed the 12-million-passenger mark while still achieving record numbers.

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The achievement is all the more remarkable given  Finland is home to just 5.5m people and it aims to host 20m passengers by 2030, almost four times the country’s  population.

But even that will still be less than the population of Shanghai, which stood at 25m in the last census. The Chinese metropolis and six other mega-cities in the People’s Republic are linked daily to Helsinki, as are four metro-areas in Japan.

China and Japan are the two markets into which Finnair puts most of its capacity.

The airline serves up to 20 destinations in Asia, some of them seasonal, and the region accounts a new window) for 49 percent of Finnair’s capacity as measured in available seat kilometres (ASKs).

Using Helsinki’s geographical location in Northern Europe, Finnair tries to beat the  Gulf carriers at their own game, promoting its hub as the most time-saving gateway into Europe from Asia.

Elapsed flight times are indeed shorter via Helsinki than via Dubai or other European hubs.

Geography enables Finnair to serve all long haul destinations (with the exceptions of Delhi and Singapore) within 24 hours return, meaning they can be operated with just one aircraft each.

While Finnair tries to satisfy the huge demand from Asia as fully as possible, sometimes it stumbles. This happened when it had to cut down flights to Chongqing due to a lack of trained pilots and when it deployed  A330s wet-leased from Oneworld partner Iberia, triggering customer complaints.

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Nevertheless, It has achieved its goal of doubling 2010 ASKs to Asia two years earlier than planned and will reach it this year.

Finnair would prefer to operate two flights daily to Shanghai instead of one, but this is currently impossible due  restrictions in the bilaterals between Finland and China as well as the slot situation at Pudong airport.

Instead, Finnair will start serving Nanjing this summer which,  Vauramo points out, “lies at least in the Shanghai region”.

He also welcomes the fact that January sees the first Chinese airline landing in Helsinki. Lucky Air, part of the HNA Group, flies twice weekly from Kunming via Chengdu to Finland with an A330.

“We would like to see more Chinese carriers here, also in order to get more opportunities ourselves in widening our traffic rights,”  he tells AirlineRatings.

finnair asia boom
Finnair offers a convenient gateway to Europe. Photo Andreas Spaeth.

The opportunities in Japan are better. Finnair already serves Tokyo Narita would like to serve Tokyo’s Haneda airport from summer 2018, depending on slot availability.

JAL also flies the Narita- Helsinki route but Finnair takes pride in being the biggest operator on each of the long haul sectors it serves.

The slot situation on Asian airports has had an impact on Finnair’s fleet planning.

While the airline rules out operating any A380s, mostly due to a lack of cargo capacity, it  still favors a pure Airbus fleet.

It was the first European A350 operator in October 2015 and,  up to September, 2017,  had received 11 A350s. Eight more are due to join the fleet to  2023.

“We could convert some of the upcoming deliveries into A350-1000s, depending on slot availability in Asia, but we rather stick to a pure A350-900 fleet,”  Vauramo adds.

Finnair has recently grown its long-haul capacity more than planned. In February 2017, the last of seven A340s left the fleet and the plan was to get rid of two of the eight A330s once the first A350s were in operation.

Instead, all of the A330s stayed on and will remain until early next decade. From 19 A330/A350 aircraft today, the wide-body fleet will grow to 22 in 2020 and 26 by 2023.

Vauramo is pleased by the A350 and its performance, noting fuel burn is much better.

The airline is are flying much more than before, he says, but it burns just 3-4 percent more fuel.

But not everything about the A350 is pure joy.

“We were very disappointed by some cabin issues, Zodiac had to re-build part of the cabin furnishings,”  he says.

Finnair asia boom
A Finnair A350 is welcomed to Helsinki. Photo: Finnair.

Overall, however,  the A350 is still a big success and milestone for Finnair.

“Usually customer satisfaction for airlines is in the 25-30 percent range, but we achieved 52 per cent since the introduction of the A350.”

The Finnish airline is introducing a second cabin version with a smaller business class offering, yielding a total of 336 seats on the A350 versus 297 in all current aircraft. It is also weighing the introduction of an enhanced business class product.

“We have to look at compartments with sliding doors, such as Delta has introduced on its A350s,’’ Vauramo notes.

Also of utmost importance to the Finnish airline on long-haul routes is the oneworld alliance.

“Especially our JVs to Japan with Iberia, JAL and British Airways as well as the transatlantic JV with Iberia, American and BA are hugely significant, bringing us about 20 percent of our business,”  the CEO says.

He nominates the next important fleet decision for Finnair as the replacement of almost all of the narrow-body fleet.

“We are looking at 30-plus aircraft, the decision will be made between the A320neo or Boeing 737MAX families in the next one to two years,” he  says. “I am glad we don’t have any A320neos on order as of yet, as the engine issues have to be solved first.”