Finnair strategy to focus on Asian megacities

A focus on increasing frequencies to megacities in Asia, rather than adding new destinations in the continent, will be core to Finnair’s strategy over the next six years. Chief executive Topi Manner has also revealed plans to spend up to €4bn on new aircraft by 2025.

Finnair plans to further strengthen its position in the Europe – Asia market by increasing frequencies on existing routes from Helsinki to Asian megacities, according to president and chief executive Topi Manner.

Speaking at the carrier’s annual Capital Markets Day, Manner said the airline has found “a good space” between much larger operators and low-cost carriers, and now plans to “double down” on this connecting strategy.

“We will be focusing our network to Asian megacities,” he explained. “Rather than adding new destinations we will be more about adding frequencies. These are high-yielding and attractive markets.” 

Manner said he expects Europe – Asia traffic to grow at a rate of 4 percent annually over the coming years, with Finnair well placed to increase its presence.

The airline began operations to Beijing Daxing in September, with service to Sapporo starting next month. Routes from Helsinki to Busan and Tokyo Haneda will begin in March 2020.

“If you look at our market share, it has been steadily increasing and today is higher than ever on the routes relevant to us. Of course, there is still a lot of room for growth,” Manner said.

Ole Orvér, Finnair’s chief commercial officer, said Japan and China will remain core markets and the carrier hopes to take all routes operated between Helsinki and Asia to daily. “Cities that are already daily, we want to make twice daily,” he added.

Manner explained that he expects Finnair’s existing relationships to count in its favour when it comes to securing traffic rights and slots.

“Our track record in terms of getting market access has been very, very strong in the past,” he said. “We have a long history in countries like Japan and China, for more than 30 years, which really matters.”

Manner also gave an update on Finnair’s fleet development plans saying that the airline plans to invest up to €4bn on new aircraft between 2020 and 2025. About one-third of the investment will be for growth, with the rest replacing aging aircraft.

Finnair currently operates an all-Airbus fleet comprising eight A319-100s, ten A320-200s, 19 A321-200s, eight A330-300s and 14 A350-900XWBs. It has a further five A350s on order. By 2025, it is expected that the split between narrow-bodies and wide-bodies will be about 70/30.

The airline said the investment would be the most significant contributor to its sustainability agenda and will reduce emissions in its European traffic by between 10 and 15 percent. It expects to release a detailed sustainability plan during the first quarter of 2020, addressing economic, social and environmental responsibility. 

“The path towards a long-term target of true net carbon neutrality in aviation is a long and challenging one, but we will proceed towards that goal in a determined manner, step by step,” Manner said.

“On this journey, we need a transparent and credible process of offsets and emissions trading, while our main focus remains on reducing the emissions from our flights. We will also engage all our partners, customers and other stakeholders in this vigorous work.”  

Between 2015 and 2019, Finnair invested approximately €2bn in a more fuel-efficient long-haul fleet. 

Piia Karhu, SVP of customer experience at Finnair, also gave an update on the carrier’s plans to introduce premium economy on its flights. She said it is expected to appeal to leisure travellers, as well as corporate passengers who are restricted from booking business-class tickets. The roll-out of Finnair’s premium economy product will begin next year.

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