It’s hard to see your business model shaken by events beyond your control. This is what has happened to Finnair over the past few years.
The first is the COVID-19 pandemic and the long-term closure of the airline’s core markets in Asia. Even now, with much of the rest of the world on track to reach pre-pandemic traffic levels, China, Hong Kong and other destinations in the region have yet to fully open.
Then, in February, Russia’s invasion of Ukraine prompted the European Union and Russia to close each other’s space. This deprived Finnair, almost overnight, of the large next door market. Perhaps more importantly, Finnair also lost sight of the key differentiator in the marketplace.
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Finnair’s Struggle
Finnair’s traditional advantage is the convenient location of the Helsinki Airport (HEL) hub and the shortest route between Europe and Asia. However, the moment it was impossible to fly over Russia, this geographical position became a disadvantage.
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 it was shutting down five long-haul routes from the Swedish capital to John F. Kennedy International Airport (JFK), Los Angeles International Airport (LAX), and International Airports. Miami International Airport (MIA), Suvarnabhumi Airport (BKK) and Phuket International Airport (HKT).
So it’s no wonder that the Finnish-flagged carrier is busy finding new uses for its long-haul fleet. Currently, the fleet consists of 8 A330-300s and 17 A350-900s.
In addition to wet-leasing some aircraft to Eurowings on a short-term basis, Finnair also opened new routes to Dallas Fort Worth International Airport (DFW) and Seattle-Tacoma International Airport (SEA).
The geographic reorientation is evident when comparing the development of existing capacity by region. In the first half of 2019, 49% of ASK (available seat kilometers) was allocated to Asia; During the same period this year, that number dropped to 24%. In contrast, the US, which accounts for 10% of capacity, now accounts for 24%.
New flights to Qatar
However, the only major new feature was announced last month.
Finnair surprised everyone by announcing a close partnership with Oneworld member Qatar Airways. The move will see Finnair fly daily to Hamad International Airport (DOH) in Doha, Qatar, from three different Nordic capitals: Helsinki, Copenhagen and Stockholm. It looks like the airline may also soon announce flights from at least a fourth, still undisclosed, city in Europe.
The two airlines will share capacity and codeshare on those flights, which will be operated by the Finnish carrier, using their own metal.
This will come in addition to the fact that Qatar Airways already offers nonstop flights between Doha and three Nordic cities. This winter, the schedule shows Qatar Airways flying at least twice daily to Copenhagen, daily to Stockholm and thrice weekly to Helsinki. Passengers will be able to enjoy the new Finnair cabins on the Doha track.
The A330s designed for deployment on Doha routes have been fitted with the new Collins AirLounge; This is a pretty innovative business class seat. Finnair is a launch customer and it plans to roll it out gradually across its entire long-haul fleet.
These A330s also feature Finnair’s recently introduced premium economy cabin and a refurbished economy class product; this is all part of a more than $200 million product refresh program announced last February.
Since both airlines are already members of the Oneworld alliance, not much has changed when it comes to loyalty programs. Finnair Plus members already have access to status points and lounge access while flying on Qatar Airways.
This is the first major tangible manifestation of the 2002 Open Skies Treaty, signed between the European Union and Qatar in October 2021.
Notably, Finland, Denmark and Sweden are not among the treaty exceptions; until 2024, the agreement will limit the number of flights allowed between the emirate and airports in Germany, France, Italy, Belgium and the Netherlands.
As a result, Finnair’s fleet provides a convenient and fast way to transfer traffic from Europe to Qatar Airways’ extensive network through its DOH hub. (The connectivity options are more limited the other way around, though.)
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 last year received support from the host country’s government in the form of more than $400 million in loans, reported an operating loss of more than $92 million in the first half of this year.
Thus, the general picture is still far from beautiful. However, in a recent press conference, Finnair’s top management shared some reasons for their optimism. With revenue and volume factors showing triple-digit gains (albeit still unusually high last year) and significant cost-cutting underway, they expect airlines’ accounts to will not return to black in 2024.
