Finnair Airbus A350-900
PARIS—Finnair says demand for travel is holding up against a backdrop of high inflation and rising prices, and passengers are tending to book last-minute travel.
“There’s no sign yet of inflation putting off travelers but bookings are extremely close in,” Finnair market director Europe Javier Roig Sanchez told Aviation Daily at the IFTM Top Résa tourism show in Paris Oct. 3. “Today, the biggest European markets are booking really late.”
The Finnish carrier, which will celebrate its centennial Nov. 1, has had to drastically reshape its business model since the Russian invasion of Ukraine halted its flights over Russian airspace. Previously, Finnair had relied on its geographical advantage to offer shorter flights from Europe to Asian destinations than competitors.
The carrier adapted to the new constraints, reconfiguring aircraft, securing new routes over the North Pole, and wet-leasing out some aircraft to compensate for the difficulties in remaining focused on Asia.
“It’s been kind of an adventure. We have survived, but it’s been really challenging,” Roig Sanchez said. The carrier opted to focus on boosting services to destinations in the U.S. and has also been boosting its short-haul network in Europe as a result of the closure of Russian airspace.
But it hopes in due course to be able to return to its long-haul core business of Asian destinations, Roig Sanchez said, although the economics need to add up. “Flying three hours more makes us less competitive cost wise, and we need to think before deploying aircraft and crews to new destinations,” he said. “We need to make a real business case.”
For now, the higher prices necessitated by longer routings, meaning increased fuel and crew costs, are not putting off customers. “The demand is there, but it’s not the same as before. The flying times that Finnair was popular for are now extended. As an example, we can’t fly daily to Tokyo or Seoul with only one aircraft and crew, today we need two and because of flying 12 hr. or even more we need also double pilots and co-pilots,” Roig Sanchez said. “That makes the whole thing quite challenging, but we are succeeding because the demand is still high enough. There are many months in 2023 when Tokyo is still the most profitable route in our long-haul network.”
While overall capacity on the Asian routes the carrier is operating—to China, India, Japan, Korea, Singapore and Thailand—is still not back to pre-pandemic levels, supporting overall prices, Roig Sanchez said capacity increases by other carriers on those routes could change that. “If the price is not maintained, our operations to Asia would be quite challenging. If more capacity comes, we would need to think what we’re doing.”
However, as soon as it can, the carrier wants to regain its former status on Asian routes, with Japan a particular focus.
“We are always looking at new destinations, but what we want is to go back to what we were in 2019, which is the biggest European carrier in terms of capacity into Japan. Our aim is, as soon as we can, is to reuse the Russia airspace and to deploy all our forces in the main cities in Asia. This is what we know, and we know how to do it well,” Roig Sanchez said. The airline also wants to revive a plan it had before the pandemic to serve Busan, Korea’s second city.
Meanwhile, in the U.S., where Finnair now serves Chicago, Dallas, Los Angeles, Miami, New York and Seattle, demand is “very high.” Closer to home, Finnair is also focusing more on Finnish and other northern European destinations as well as adding a new city in Poland, Wroclaw, and increasing frequencies to Milan and Paris.
“There’s a lot of demand. Winter is always full, but this summer has been a very good one,” Roig Sanchez said. “It was too hot, and people were trying to find fresh air and a new Caribbean in the north.”
Market share is now split around 65/35 between short- and long-haul, compared with a 50/50 split in 2019.
