Industry speakers discuss opportunities and challenges
FINNAIR: PANDEMIC A ‘WALK IN THE PARK’ COMPARED TO UKRAINE IMPACT
Coping with the impact of the pandemic was “a walk in the park” compared with the obstacles faced during the war in Ukraine and subsequent Russian airspace restrictions, according to Finnair’s head of network strategy and development Aaron McGarvey.
Speaking at Routes Europe 2023 in Lodz, Poland, McGarvey explained how the oneworld alliance member had to restructure its Asia-focused network—and at one stage even considered operating a hub out of Anchorage, Alaska. “One of my favorite quotes is that our biggest asset became our biggest liability overnight,” McGarvey said, in reference to the airline’s Helsinki hub. Prior to the pandemic, Finnair’s business model focused on connecting Europe and Asia using the shorter northern route over Russia.
The carrier temporarily altered the strategy in response to COVID travel restrictions—focusing on North America—but Russia’s invasion of Ukraine and the closure of Russian airspace rendered many Asian routes financially unviable.
Since then, Finnair has restructured its network and added capacity to the Middle East, launching daily Airbus A330 services from Helsinki, Stockholm Arlanda and Copenhagen to Doha, linking the markets with connecting flights on oneworld partner Qatar Airways.
McGarvey described the routes to Doha as “the perfect holding ground” at the present time given the challenges associated with flying to some secondary Asian markets.
However, speaking about the potential for further routes to points in the Middle East, he said: “It is an interesting market for us to look into, but I don’t believe we have the correct fleet to make it work right now.”
Elsewhere, McGarvey added that Finnair sees the potential to bolster connecting service between the US and India via Helsinki given the strong traffic flows between the countries. He also said the carrier is looking to add flights to markets in Scandinavia and the Baltics to help balance the seasonality of its network.
Asked about his main learnings from the pandemic and the impact of the war in Ukraine on Finnair’s business, McGarvey said: “There’s no handbook on this—and there never will be—as everyone has been guessing. But the main learning for me is agility and we need to keep that mentality going instead of getting bogged down in the old way of doing things.”
– David Casey
AIR SERBIA TO FURTHER EXPLORE CHINA POTENTIAL
Air Serbia plans to expand its presence in mainland China after the launch of a route connecting Belgrade and Tianjin proved successful.
During a speech at Routes Europe 2023, CEO Jiří Marek announced the airline's intentions to target further growth in the country, with service to Beijing and Shanghai within the carrier’s sights.
OCEAN DRIVEN MEDIA
“Our next expansion will target the Chinese market,” Marek said. “Before the pandemic, there was already the justification for nonstop Serbia-China flights, but the COVID crisis has opened new opportunities.
“There is no visa regime between China and Serbia, which is unusual in Europe. As there is a backlog for Chinese citizens wanting to visit Europe, we’re taking the opportunity to offer Serbia as the destination. Additionally, there’s a strong labor flow as well because there’s a lot of Chinese investment going into Serbian infrastructure projects.”
Marek added that there is also the potential to boost tourism flows from China, targeting an older generation who “still remember Yugoslavia and are interested in coming to Serbia” and the younger generation who can connect through Belgrade and on to other destinations in Spain, Italy or Greece.
Air Serbia launched Belgrade-Tianjin in December 2022, initially operating once a week using Airbus A330-200s. The service saw the national carrier re-establish direct flights to China for the first time since October 2000 when predecessor JAT Airways ended its link to Beijing.
Tianjin is a municipality and a coastal metropolis in northern China on the shore of the Bohai Sea, home to a population of about 14 million inhabitants. The city is a key trade port through which Beijing is supplied, while a 117-km-long (106-mi.) high-speed rail line connects Tianjin with China’s capital in about 30 minutes.
Air Serbia’s plans to expand in the Chinese market come as the airline prepares to open a new route to the US from May 17, connecting Belgrade and Chicago O’Hare, operating twice a week using A330s before rising to 3X-weekly in June.
According to estimates, there are about 350,000 residents of Serbian origin in the Chicago vicinity, as well as inhabitants hailing from other countries of the former Yugoslavia and neighbouring Balkan states.
Alongside the Serbian diaspora, Marek said that Chicago is less seasonal than some other North American markets, such as Toronto, and has strong cargo potential.
AIRBALTIC EYES FURTHER NORDIC BASE OPPORTUNITIES
AirBaltic CEO Martin Gauss is ultimately planning to double his Airbus A220 fleet to 100 aircraft, opening up opportunities for 60 aircraft to be placed outside of his carrier’s Baltic home market.
Riga-based airBaltic, which already operates 41 A220-300s, is set to grow to 50 aircraft by summer 2024. However, Gauss has set his sights set on further fleet development.
“Subject to the successful IPO, which is planned for next year, we will place an order for more A220s,” Gauss told delegates at Routes Europe.
Gauss is planning to secure fresh equity and firm up airBaltic’s 30 options, taking it to an 80-aircraft fleet. Out of these, 26 will be wet-leased out to other airlines.
Beyond this, airBaltic will take options on 20 more aircraft, giving it scope to grow to 100 A220s.
“If you do the maths, we still have more than 40 aircraft in the Baltics. And that means there is a need for us to place aircraft outside, with the assumption that Baltics cannot take more than 40 aircraft.”
AirBaltic already has bases in all three Baltic capitals—Riga, Tallinn and Vilnius—as well as a Finnish base at Tampere.
“We put an aircraft there [Tampere] and offered the same as we do from all our other airports: We connected to business centers and hubs, and added leisure traffic. It worked in the summer. It didn't work well in the winter, so we misjudged the connectivity needs for the winter. Now the second summer is working much better.”
While Tampere’s winter performance was below expectations, this has not deterred Gauss from eyeing new Nordic bases.
“We see 40 aircraft for the Baltic states, and everything beyond that would be in the Nordics,” Gauss said. “We define the Nordics as a line north of Hamburg to the North Pole. If you look at that line between Hamburg and the North Pole, there are many cities where airBaltic can place future aircraft.”
Gauss would not be drawn on specifics, but he jokingly ruled out Hamburg and the North Pole.
AirBaltic also plans to be one of the first airlines to return to Ukraine, once conditions stabilize. “Russia, I do not see us going back. At the moment, I can't give any prognosis,” Gauss said.
– Victoria Moores
