It’s hard to see your business model being shaken by events beyond your control. This is what has happened to Finnair over the past two years.
First there was the COVID-19 pandemic and the long-term shutdown of the airline’s main markets in Asia. Even now, while much of the rest of the world is on track to reach pre-pandemic traffic levels, China, Hong Kong and other destinations in the region have yet to fully open up. .
Then, in February, the Russian invasion of Ukraine led the European Union and Russia to close their airspaces to each other. This deprived Finnair, almost overnight, of an important neighboring market. Perhaps more importantly, Finnair has also lost its key market differentiator.
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Finnair’s traditional advantage was the convenient location of its Helsinki Airport (HEL) hub and the shortest route between Europe and Asia. But as soon as it became impossible to fly over Russia, this geographical location turned into a handicap.
Adding salt to the wound, Finnair’s bet on opening a secondary long-haul hub at Stockholm Arlanda Airport (ARN) fell short of expectations. In August, the Finnish carrier announced that it was cutting five long-haul routes it operated from the Swedish capital to John F. Kennedy International Airport (JFK), Los Angeles International Airport (LAX), l Miami International Airport (MIA), Suvarnabhumi Airport (BKK) and Phuket International Airport (HKT).
It’s no wonder, then, that the Finnish flag carrier has been busy finding new uses for its long-haul fleet. The fleet currently consists of 8 A330-300s and 17 A350-900s.
In addition to wet leasing some aircraft to Eurowings on a short-term basis, Finnair has also launched new routes to Dallas Fort Worth International Airport (DFW) and Seattle-Tacoma International Airport (SEA).
The geographic shift is evident when comparing the evolution of available capacity by region. In the first half of 2019, 49% of ASKs (Available Seat Kilometers) were allocated to Asia; at the same time this year, that figure fell to 24%. Conversely, America, which represented 10% of capacity, now represents 24%.
New flights to Qatar
The only major novelty, however, was unveiled last month.
Finnair surprised just about everyone by announcing a close partnership with fellow Oneworld member, Qatar Airways. The move will allow Finnair to fly daily to Hamad International Airport (DOH) in Doha, Qatar from three different Nordic capitals: Helsinki, Copenhagen and Stockholm. It seems likely that the airline could also soon announce flights from at least a fourth, as yet undisclosed, European city.
The two airlines will share capacity and codeshare on these flights – which will be operated by the Finnish carrier, using its own metal.
This will come on top of the fact that Qatar Airways already offers its own direct flights between Doha and the three northern European cities. This winter season, timetables show that Qatar Airways flies at least twice a day to Copenhagen, daily to Stockholm and three times a week to Helsinki. Passengers will be able to take advantage of Finnair’s new cabins on the Doha route.
A330s intended for deployment on Doha routes have been fitted with the new Collins AirLounge; this is a rather innovative business class seat. Finnair is the launch customer and the carrier plans to roll it out gradually across the entire long-haul fleet.
These A330s also feature Finnair’s recently introduced premium economy cabin and a revamped economy class product; it’s all part of a $200 million+ product renewal program announced last February.
Since both airlines are already members of the Oneworld alliance, not much changes when it comes to loyalty programs. Finnair Plus members already have access to earning Tier Points and access to lounges when flying on Qatar Airways.
This is the first major tangible manifestation of the 2002 Open Skies Treaty, which was signed between the European Union and Qatar in October 2021.
In particular, Finland, Denmark and Sweden are not among the exceptions to the treaty; Until 2024, this agreement will limit the number of flights allowed between the emirate and airports in Germany, France, Italy, Belgium and the Netherlands.
Finnair’s fleet thus provides a convenient and fast way to route European traffic to Qatar Airways’ extensive network via its DOH hub. (Connectivity options are more limited the other way, however.)
At the same time, it gives Finnair a new growth vector at a time when the Nordic airline is still reeling from simultaneous shocks.
Finnair, which secured backing from its home government in the form of a loan of more than $400 million last year, posted an operating loss of more than $92 million in the first semester of this year.
So the overall picture is still far from pretty. However, at a recent press conference, Finnair’s senior management shared some reasons for optimism. With revenue and load factors posting triple-digit increases (albeit from last year’s still anomalous levels) and significant cost reductions continuing rapidly, they expect the accounts of the airline return to black by 2024.