Finnair CEO Topi Manner explains more about how the airline is realigning its network.
By KURT HOFMANN
Finnair CEO Topi Manner discusses the oneworld alliance member’s shift in strategy as it seeks to build a more geographically balanced network. The Helsinki-based carrier previously exploited a niche of connecting Europe and Asia via the short northern route, but the closure of Russian airspace due to the war in Ukraine has weakened the viability of such services.
How is Finnair performing?
Business is getting better. Demand is good and we are looking forward to a strong summer, both for aviation at large and specifically for Finnair. We were, of course, hit by the double crises—first the pandemic, and as a result of our focus on Asia we were more affected than the average airline in Europe because of Asia’s slower reopening. Additionally, the Russian invasion in Ukraine and the subsequent closure of Russian airspace disrupted our strategy, forcing us to change our course. However, we are now on that road, and our initial results have been encouraging. We have returned to profitability and successfully rebalanced our network, which was not an easy task. Overall, things are looking good.
For decades, Finnair's strategy was to connect Europe with Asia via the shortest route through Russia, but that is no longer possible. Can you elaborate on what this has meant for your network?
Finnair is committed to maintaining its presence in Asia, and to compensate for the closure of Russian airspace we are increasing our focus on the Middle East, specifically Doha, through a commercial partnership with Qatar Airways. We are also expanding our long-haul flights to the United States. By making these changes to our long-haul network, we have been able to preserve our short-haul network within Europe, which is crucial as it serves as feeder traffic to and from the Finnair hub in Helsinki. Currently, our fleet consists of about 80 aircraft, and we do not anticipate any significant changes to our fleet in the near future.
What percentage of your business was generated by Asian traffic?
Previously, Finnair's Asian traffic accounted for 50% of our revenue, which was a significant portion. However, due to the closure of Russian airspace and other factors, Asia now represents about 30% of our revenue. However, we are looking forward to increasing the number of flights to China, particularly in the third quarter of this year, with more frequencies to Shanghai and the anticipated reopening of Beijing.
Do you expect this situation to continue indefinitely?
Estimating the future is challenging, but I prefer to be optimistic. Eventually, we hope there will be peace, and it is crucial for us, as Westerners, to support Ukraine in achieving a genuine and lasting peace on terms they can agree upon. Once this happens, I believe the closure of Russian airspace should be one of the first sanctions to be lifted. The situation would then be completely different, and we would consider adding more destinations in Asia. However, it is essential to emphasize that this can only occur under the condition of lasting peace.
FINNAIR
Is it a secret how much Finnair paid for overflight fees to Russia?
Russia's overflight fees were a significant cost for Finnair. However, it is worth noting that circumventing Russian airspace is far more costly for European carriers. However, Chinese carriers continue to fly through Russian airspace. The situation differs in markets like Japan or Korea, where local carriers also avoid Russian airspace. This creates an uneven playing field and presents an additional disadvantage and cost for European carriers. Nevertheless, Finnair is able to operate these flights profitably due to strong demand. Other carriers are also avoiding Russian airspace, and yield levels have been adjusted to accommodate this reality.
How many destinations has Finnair lost in Asia where it no longer makes economic sense to fly due to the longer flight routes?
Basically, we have lost several secondary cities. In Japan, these include Sapporo, Fukuoka and Nagoya. In China, we are talking about cities like Nanjing, Guangzhou and Xian.
Can you tell us more about the new Doha connections?
Finnair offers daily flights from Helsinki, Stockholm and Copenhagen to Doha. Our partnership with Qatar Airways has been off to a great start, and we are very happy with it. Doha, as a hub, is gaining increasing significance in connecting the East and the West. Through this partnership, Qatar Airways provides connectivity for Finnair passengers to Africa, Southeast Asia and Australia.
And what about the strategy shift to North America?
Our transatlantic flights are performing well, and we are benefiting greatly from our partnerships with oneworld partners in the US. American Airlines and Alaska Airlines have a strong combined market share in the US, and we are being boosted by their distribution power. Interestingly, we are selling more tickets for Atlantic flights in the US than in Europe.
Finnair is celebrating its 100th anniversary. Can you tell us more about it?
We are extremely proud to be the sixth-oldest airline in the world. The past 100 years have been a history of adaptation, and now we are adapting more than ever. We envision ourselves as a fast, nimble and agile airline, prioritizing strong operational quality, safety culture and top-notch service for our customers.
Is the worst over for Finnair?
Probably, yes. I would like to think so, but there is still a lot of work to be done.
