Rapidly growing Finnair is focusing its business strategy on becoming the undisputed top airline in the Nordic countries and becoming the most desirable option for travelers between Asia and Europe.
At present, some 40 million passengers travel between Europe and Asia annually and traffic is growing at a rate of 6 to 10 per cent a year, according to Gregory Kaldahl, senior vice president of resource management for Finnair.
About half of these passengers do not fly non-stop, but connect to or from an Asia flight at some intermediate airport in Europe or the Middle East, said Kaldahl, speaking at Finnair’s annual International Press Briefing in Helsinki.
According to Finnair, in flight-distance terms Helsinki-Vantaa Airport has the best geographical location in Europe for flights from northern and mid-Europe to all destinations in the Far East at least as far south as Hong Kong.
So one of Finnair’s main marketing pitches, ‘Via Helsinki’, is that Helsinki-Vantaa Airport – which offers achievable connection times of just 40 minutes – is the ideal place at which travelers on flights between Asia and Europe should transfer to their ultimate destinations.
In route-analysis modeling, “a Helsinki connecting itinerary would be scored quite highly,” said Kaldahl. “We don’t get a great share of the total [Europe-Asia] market,” which would include non-stop services as well as connecting itineraries, “but we do get a disproportionate share of connections.”
Finnair’s recent decision to begin service to Chongqing in China – becoming the first European carrier to do so – was predicated entirely on the strength of Helsinki as a connecting hub to destinations in the northern and mid-Far East. (Finnair also serves Bangkok, New Delhi and Singapore in southern Asia, but Helsinki’s distance advantage as a connecting hub from Europe vanishes for routes between southern Asia and southern Europe.)
“Chongqing wouldn’t have been successful as an origin-and-destination market,” said Kaldahl. “The main reason we went into the market was for the traffic to all cities in northern Europe.”
Passenger growth of 6 to 10 per cent a year between Europe and Asia means traffic will double in the next 10 years. In parallel with this growth, Finnair’s goal is to double its Asia traffic over the same period.
If this sounds ambitious, consider that in 2005 Finnair served just five destinations in Asia, but today it serves 11. Additional destinations in Asia are a certainty over time, as Finnair grows its long-haul fleet when it begins taking delivery of 11 Airbus A350-900s it has on firm order. (The carrier has also optioned eight more A350-900s.)
Kaldahl said the airline might replace three Airbus A340-300 jets with A350-900s when the new twinjets enter service from 2015: two of the A340-300s are due be returned off lease in 2014 and another, bought second-hand, is much older than the other four A340s which Finnair operates.
However, he said that, “by and large,” the carrier’s fleet of eight recently delivered A330-300s would probably remain in the fleet after the A350-900s are delivered.
Finnair, which saw revenue growth of 12 per cent in 2011 to €2.3 billion ($2.9 billion) and currently carries some 8 million passenger a year, was selected as ‘best airline in Northern Europe’ by the independent Skytrax World Airline Awards in 2011, based on surveys of some 17 million passengers worldwide.
U.S. native Kaldahl – formerly United Airlines’ VP resource planning – said that while Finnair is already “the airline of choice for frequent travelers at Helsinki, we have to extend that to all Nordic countries”, in order for the carrier to achieve its strategic goal of becoming Europe’s favorite airline to Asia.
This is because Finland itself has a tiny home market of just 5.5 million people – but Scandinavia and the Nordic countries represent a home market of 35 million people, more than six times as large.