Star Alliance member Blue1 recently announced new services to Amsterdam and increased services to Paris Charles de Gaulle. The Hub analyses the Blue1 network strategy.

From January 31^st, 2011, Blue1 will begin a new 12 times weekly service from Helsinki to Amsterdam competing with Finnair and KLM. The same date will see the carrier double its existing six-times weekly service where it competes with Finnair and easyJet.

BLUE1 EXISTING MARKET SHARE

According to IATA BSP data, from June 2009 until June 2010, Blue1 carried 887,717 passengers equating to a 9% share of the total market. The table below illustrates scheduled passenger share by carrier from Finland to all destinations.

Source IATA BSP Data June 2009-2010

Blue1 has its main base located in Helsinki from where it operates five scheduled domestic routes and ten international destinations. For the week of November 14-20th, its international destinations consist of Stockholm, Brussels, Paris CDG, Copenhagen, Gothenburg, London Heathrow, Munich, Oslo, Berlin Tegel and Zurich which are all operated with B717 and RJ-85 aircraft. Its B717 aircraft are leased from parent company SAS, as it seeks to phase out its MD-90 equipment.

Blue1 is 100% owned by SAS and gives the Scandinavian operator a significant presence in Finland, which is dominated by oneworld member Finnair. Not surprisingly its three largest international markets from Helsinki are Stockholm Arlanda which it serves from five markets in Finland (Oulu, Turku, Tampere and Vaasa, as well as Helsinki), Copenhagen and Oslo which are only served from Helsinki. Blue1 allows SAS the ability to feed passengers from Finland into its Scandinavian network, as Finland is the only market in Scandinavia where SAS is not the leading carrier in terms of scheduled seat capacity.

SAS Norway, which was formerly known as SAS Braathens, has a 55% of all scheduled seat capacity in Norway. In Denmark, SAS Denmark has a 45% share, and in Sweden, the Star Alliance member has a 40% share of all scheduled seat capacity.

Blue1 plays an important role for SAS giving it increased presence in Finland and feeding passengers into its hubs in Stockholm, Oslo and Copenhagen.

COMPETITION

Blue1 faces strong competition from its Helsinki base. Of the 15 routes that it serves from Helsinki, it faces competition on every route from the two other major Finland based competitors Finnair and Finncomm.

Source Flightbase 14-20 November 2010

Finncomm offers just one scheduled service internationally, and competes with Blue1 on two domestic routes, whilst Blue1 finds itself competing with Finnair on every scheduled route that it operates from Helsinki.

With a new service commencing to Amsterdam Blue1 will again see itself competing with Finnair. The introduction of the B717 will simplify its fleet structure and help lower its operating cost. This could be even more important as leading low-cost operator Norwegian which has bases in Oslo, Copenhagen and Stockholm has been rumoured to be eyeing a new base in Helsinki.

WHERE NEXT FOR BLUE1?

In terms of expansion for Blue1, the three largest unserved markets according to IATA BSP data from Helsinki are Lyon, where 42% of the existing market flies with Lufthansa via Munich. Sofia where 31% of the existing market travels via Prague with SkyTeam member CSA Czech Airlines, and Marseilles, where Lufthansa currently has the majority of indirect passengers.

A more logical step for Blue1, given its existing network would be to add capacity on existing trunk routes. So markets such as Frankfurt which saw over 135,000 O+D passengers fly between June 2009 and 2010 with Lufthansa and Finnair both on the route, or the Latvian capital of Riga operated by Finnair and Air Baltic, with over 116,000 O+D passengers in the same time period, could be a good opportunity for Blue1.