The Magic Formula
Finnair is pursuing a path of increased passenger comfort and convenience, improved business performance, and enhanced commitment to sustainability
In January this year, Mr. Topi Manner became the CEO of Finnair and in June he visited Singapore to celebrate the airline’s eighth successful year of operation in the country. “We continue to see growth opportunities here in Singapore,” Mr. Manner declares with confidence. Finnair has 100 destinations in Europe and 19 in Asia, including Singapore. The traffic in the region, which is on a rapid growth path, has been fueling corresponding growth for the airline.
“As an airline, we’re all about connecting Europe and Asia. Last year our capacity grew 15 percent; this year we have estimated it will grow 10 percent — clearly faster than the market.” In comparison, the annual average market growth for global aviation is about 5 percent. “Bookings for next winter have gone up by 33 percent — by onethird — which is significant.”
In connecting Europe and Asia, Finnair’s sustainable competitive advantage is the short northern route and the optimal geographical position of Helsinki. “Travel time (from different overseas destinations) is very competitive, and travel experience in Helsinki airport is seamless and convenient. Based on those competitive advantages, we continue to double down on our Asia strategy going forward.” Singapore is Finnair’s center for its Asia Pacific operations, and covers a diverse market that includes India, Thailand and Australia. (The main headquarter, meanwhile, is in Helsinki.)
China is also an important hub for Finnair, Mr. Manner claims. They have signed two important code-share partnerships in China recently, the first with China Southern, which ranks first in China and third in the world for the largest fleet. The second is with Shanghai-based Juneyao, which covers more regional destinations. “These partnerships are important steps for us in the China market because they improve connectivity for our customers further.” The code-shares extends to 13 of Finnair’s destinations in China. “With our own aircraft flying 42 weekly frequencies to greater China, including Hong Kong, this makes Finnair among the biggest European airlines in China.”
The Singapore Connection
Mr. Manner observes that consumers from Singapore are demanding; they have seen the world and are keen to explore more, making Nordic destinations in general, and the Finnish Lapland in particular, highly attractive. “It’s about nature: the cleanest snow, the cleanest air in the world, you name it.” The destination also
offers varied attractions through different seasons, from the nightless nights and the lush green forest in the summer to the northern lights and the husky snow rides in the winter. “The Nordics offer that peace of mind that you can get from nature, and that sort of authentic experience is very appealing these days.”
The holiday/leisure segment is not the only group that Finnair is interested in. “Business travel is increasing in Asia Pacific. In Singapore, as both the origin and destination, we have a very healthy balance of business and leisure travelers.” He adds that correlative demand from business and leisure travelers from Finland and the rest of Europe is also healthy.
“There are many direct flights from Singapore to Germany, the UK, and other European destinations, but when you travel to places like Berlin where there is no direct flight, Finnair is the one that offers the best choice. For one, the Helsinki airport is not congested (despite being the fourth busiest airport in the Nordic countries by total passengers). When you go to London, you are practically flying over Europe and then flying back, but when you go via Helsinki, you are taking the shorter, convenient route.”
Finnair flies daily out of Singapore with the Airbus 350 aircraft. “We have one of the most modern fleets globally; Airbus 350 is a magnificent aircraft. The air quality on board is excellent and the noise level is moderate — they bring great benefits and comfort to passengers especially on long haul flights. We also have a Singapore-based crew who deliver the Nordic experience through, for example, the food options and amenities.”
The Sustainability Factor
Besides customer convenience, Finnair’s short route supports other important objectives, including Finnair’s commitment to sustainability. “The shorter the route, the less fuel is burned,” Mr. Manner points out, “and the amount of fuel burned directly translates into CO2 emissions. I personally believe that aviation as a global industry will need to do more for sustainability, particularly in reducing CO2 emissions. Even Finnair has to do more going forward.”
Mr. Manner expects technology to play an important role towards this initiative. “When we introduced our Airbus 350, we reduced our C02 emission by 25 percent, compared to our previous generation long-haul fleet, namely the Airbus 340s.”
He also expects a highly efficient use of airspace, particularly of direct and optimal routes, to strengthen sustainability. “A Singapore-origin flight to any European destination has to carry and burn a lot of fuel; this is reduced with the short route via Helsinki.”
Meanwhile, there are market-based mechanisms, such as emission trading, to which all airlines must adhere. Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is an industry-wide commitment to a carbon-neutral industry growth from 2020 onwards.
Better infrastructure will minimize aircrafts circulating around the airport in landing patterns and consuming fuel for nothing. “Helsinki Airport has three runways, compared to Heathrow’s two. Basically, it means there’s a lot of circling around going on in London, unlike in Helsinki where we land and take off without circling the airport much. That is environmentally friendly.”
He believes new technology will benefit aircraft design, further improving aerodynamics and new engine types. “We are potentially moving towards hybrid engines, and eventually, taking the long-term perspective, towards electrified engines as well.” Mr. Manner admits that this will require airlines to invest heavily in technology going forward. “In turn it will require higher profitability and cash flow. This is one of the challenges that our industry is facing.”
The foregoing delivers linked benefits to the business, its customers and the environment. Mr. Manner sees this as the vision to pursue. Its main competitive advantage in Asia, which is flying the short route to Europe, translates to heightened popularity among customers. This brings in business and profitability, which can then be reinvested in sustainability efforts. Everybody wins — after all the “Finnair philosophy lies in building a product that people would like to buy again. Once you travel with Finnair, you will want to travel again with Finnair.”
The Finnair philosophy lies in building a product that people would like to buy again.