HS Interview | There is no saving in travel and experiences, says Finnair’s Topi Manner: “Expenses are reduced by reducing the electricity bill, but the restaurants are full”

Carrier Finnair issued a positive earnings warning last week. According to it, Finnair’s profitability is at the same level as in 2019 or higher.

In 2019, Finnair’s profitability was at the second best level in the company’s history, the best it had been the year before, in 2018.

Even that may now – in the year of Finnair’s centenary – break down.

In reverse the significance is illustrated by the fact that after Russia launched its attack on Ukraine on February 24, 2022, Finnair’s situation looked very bad.

The core of the strategy was based on the fact that the flight distance from many Asian destinations over Russian airspace to Helsinki–Vantaa airport was shorter than to many other European airports.

Finnair had built its entire air traffic on these routes. At the same time, the idea was that Finnair could also fill its European flights with feeder traffic from Asian passengers.

When Russian airspace was closed, the bottom fell out of Finnair’s strategy. A significant competitive advantage disappeared. The prices of aviation fuel and energy were also at their peak.

The range of the Airbus A330 planes designed for Asian traffic was also no longer sufficient for Asian flights circling the airspace of Russia, Belarus and Ukraine. They had to find another use. Write-downs of 30 million had to be made on the value of the machines.

Finnair’s situation looked threatening.

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Finnair’s drift into liquidation and bankruptcy were also seen as possible alternatives.

“Because we didn’t know how the market would adapt to the closure of Russian airspace, we also prepared for the worst scenarios”, CEO of Finnair Topi Manner tells.

In other words, Finnair’s drift into liquidation and bankruptcy were also seen as possible alternatives.

Last summer SAS, a co-Nordic company, drifted into corporate restructuring. Norwegian, a multinational headquartered in Norway, had already gone through it before.

Finnair’s direction has been different.

“Now one of the most positive options has come true.”

Finnair fall corrections are the sum of many things.

“The fact that we can get to this without a short route to Asia shows that Finnair’s people have stretched themselves well,” Manner praises his own.

He talks about Finnair’s cultural change.

“It might have been lucky that the closure of Russian airspace happened after the pandemic, when we were used to bad news and acting quickly.”

Finnair added flights to the Middle East, India and the United States. Together with Oneworld partners, we looked for profitable routes for the machines and crew, where our own capacity can be rented.

Despite the increased air travel, Finnair decided to maintain its foothold in the big cities of Asia.

The good thing about the blocking of Russian airspace was that it also hindered all the airlines of the competing countries, with the exception of the Chinese airlines.

Even though the air travel was up to 40 percent longer and the costs 60-80 percent, passengers willingly agreed to longer flight times and steep price increases, because supply is limited and demand is recovering after the pandemic.

Therefore, Finnair’s Asian traffic is still profitable, albeit less so.

Finnair more than 80 percent of the passengers are leisure travelers, in contrast to Finnair’s former emphasis on business travelers I flew home in blue and white for the evening – could have been deduced from the advertising.

A large part of the business travelers are also project workers and installers on various work assignments, not so much people in suits, says Manner.

According to him, air travel to internal company meetings has decreased in the Nordic countries, but business travel to the rest of the world has remained more or less unchanged.

But Finnair gets the majority of its revenue from leisure flights.

It is therefore vital for Finnair whether people still buy different types of holiday flights.

The situation is difficult because the purchasing power of many consumers has decreased due to inflation and rapidly rising interest costs.

Continental says that the demand for leisure flights is still strong. Holiday flights abroad have clearly increased.

According to post-pandemic consumer surveys and Finnair’s experiences, it seems that experiences are one of the last things that consumers compromise on, says Manner.

“Now expenses are reduced by reducing the electricity bill, but the restaurants are full. In the same way, people travel and services drive.”

Arje’s frugality has also been seen in his own family, says Manner.

“Electricity consumption almost halved in the winter when my wife forbade me to go to the sauna.”

Last In recent years, many Finnair passengers have been angered by the fact that Finnair has begun to charge additional fees of 9 and 14 euros for hat shelves in the cabin carry on-bags from customers who travel with the most affordable ticket type in intra-European traffic.

Pull-on suitcases that can be taken with the airline became common in the 2000s in the wake of low-cost airlines.

Low-cost airlines sell flights from point A to point B without bearing responsibility for whether the passenger will make it to a possible connecting flight, unlike traditional airlines.

Due to their profitability, it is essential that the planes, with their turnaround times, can make as many flights per day as possible.

Because of this, low-cost airlines actively try to price their flights in such a way that loading and unloading takes place as quickly as possible.

Typically, the most profitable routes for low-cost airlines are flights of less than two hours, from which passengers depart with only hand luggage.

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Smoothing out the details is important in the airline business.

The traditional ones airlines such as Finnair responded to the competition from low-cost airlines by introducing various cheaper ticket categories in their ticket selection, in which luggage could only be brought carry on– as much as a bag.

As the popularity of these tickets and bags grew, the number of bags brought into the cabin grew so large that in recent years, airlines have often asked passengers before boarding the plane that their bags may be moved into the hold free of charge.

When the suitcases have not fit on the hat racks, their arrangement has delayed the departure of the planes. And in aviation, every minute counts.

According to reports, punctuality is also the most important thing for customers on flights.

That’s why Finnair stopped Light-his ticket type, and brought instead Superlight -class, for which you can only bring a small bag.

“The increase in the amount of luggage and the extra minutes of bag placement is a problem for all airlines,” says Manner.

In Finnair’s case, compressing the plane’s turnaround time from 45 minutes to 40 minutes means that more flight hours can be gained by saving time, and at the end of the day, one round-trip flight to Oulu, for example, can be flown.

Smoothing out the details is important in the airline business, Manner emphasizes.

That too it matters how many stretches the cabin crew makes for passengers when there are 300 people to serve on wide-body planes, Manner explains.

“Should the bun be served with tongs or is it on a tray.”

According to Manner, the airlines in Europe are in the process of harmonizing their practices.

“In the United States, this happened before. All airlines are now investing in improving punctuality.”

An example of the unification of practices is also the fact that low-cost airlines have started attracting business travelers as customers with, among other things, various loyalty benefits.

Top Manner’s speech often repeats how strongly air travel is an “emotional business”.

A smoothly flowing customer experience is regulated, for example, by the way the flight attendants and flight attendants make eye contact with the passenger.

The most important thing is the right kind of privacy and ease of travel.

Manner tells about a study conducted at Copenhagen Airport, which found out who are the airport’s most satisfied customers when they get on the plane.

“They are the ones who haven’t talked to anyone.”

Then things have gone well.

Airlines umbrella organization IATA estimated at its annual meeting in June that the increase in air ticket prices will still continue.

According to Manner, the reason is global bottlenecks in addition to stricter emission regulations.

After the pandemic, the American Boeing and the pan-European Airbus do not get the components they want.

The production of these two aircraft manufacturing giants is only about 70 percent of what it used to be.

Due to the pandemic, smaller suppliers have dropped out of the production chain, and people have moved to other sectors.

“Airplanes, spare parts and pilots are running out,” says Manner.

Global the pilot shortage arose when pilots were laid off. Many took early retirement.

At Finnair, pilots and cabin crew were not laid off.

“Finland’s good layoff practice helped in that. When Travel returned, we got people back to work.”

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