Finnair will never be able to compete in terms of home market with Lufthansa’s home market of more than 80 million people, Kaldahl conceded. However, given Helsinki’s location and Finnair’s growing network of connecting choices to major Asian cities, the airline feels it can increasingly draw connecting passengers from other northern and mid-European countries.
The airline’s status as a member of the oneworld alliance will help here, said Kaldahl. Finnair’s oneworld membership has already become a “critical” part of its competitive posture. Oneworld membership particularly helps Finnair because other members’ hub airports which Finnair serves act as “pseudo-hubs” for the Finnish carrier itself.
“Finnair gets a disproportionate advantage from connecting customers at London Heathrow and British Airways gets the same at Helsinki,” said Kaldahl. “The alliance has a very significant effect on our revenues.”
Kaldahl said Finnair should win additional connecting traffic when oneworld partner Japan Airlines begins serving Helsinki from Tokyo four times a week with Boeing 787-8s in March 2013.
Also likely to help will be the potential addition of a few more destinations in Europe to add to the connecting possibilities between Europe and Asia. Although Finnair finds its services south from Helsinki to Madrid and Barcelona present some scheduling difficulties, because the airline can’t get two daily round-trips from the routes, it does carry €35 million ($44.25 million) of business a year of connecting traffic a year between Madrid, Barcelona and Asia.
“There are a couple of cities south of the Alps that we will continue to look at as additions to the Helsinki hub,” said Kaldahl.
From the related viewpoints of flight distance and the eco-conscious traveler, Finnair reckons Helsinki also offers a compelling connecting point from New York and Toronto – its only two destinations in North America – to southern Asia destinations such as New Delhi and Singapore.
However, Finnair’s most important tool in building connecting possibilities from its short-haul network to Asia is likely to be its joint venture with Flybe, Flybe Nordic. This is a regional carrier renamed from Finnish Commuter Airlines, which Flybe and Finnair bought in 2011. Flybe Nordic has aspirations to become the leading regional carrier throughout the Baltic and Scandinavian regions.
Faced with cost problems like every other European airline, Finnair is in the midst of a major restructuring which, among various other measures (most of which involve outsourcing of non-core functions), has seen the airline reduce the size of its short-haul fleet.
Today Finnair is operating 10 fewer short-haul aircraft (six Embraer 170s and four A320-family jets) than it was a little over a year ago, although the carrier has only dropped two European destinations (Stuttgart and Kiev); and the carrier has recently decided to have Flybe Nordic take over operation of Finnair’s fleet of 12 Embraer 190 jets as well.
Flybe Nordic has already expanded some of Finnair’s former flying from airports such as Stockholm-Bromma Airport, to Copenhagen, Oslo and Tallinn. Recent bankruptcies of Scandinavia-based carriers such as Cimber Sterling, Skyways and City Airways are presenting new opportunities in a market which in any case is growing, according to Mika Vehviläinen, Finnair Group’s president and CEO.
“The vision is, the regional market is ripe for consolidation and there is really room to expand,” said Vehviläinen.
Flybe Nordic already has bases at several Finnish airports, as well as at Tallinn and Stockholm-Bromma Airport. However, said Vehviläinen, “We are going to open more bases. There will be bases in Scandinavian countries as well.”
Ultimately, Flybe Nordic’s aim is to have a network which criss-crosses the entire Baltic region from various Nordic and Scandinavian base airports, allowing it “to utilize aircraft more efficiently”, according to Vehviläinen.