WTM 2016: Finnair eyes more UK regional flights as it goes for growth

Finnair is planning to increase its regional flying programme from the UK as it embarks on a new era of accelerated growth.

Speaking at this week’s World Travel Market chief executive Pekka Vauramo said building a new runway at Heathrow would “take time” and in the meantime the Finnish flag carrier has enough capacity and would happily take UK passengers and offer connections.

He said connections through Helsinki were simple and quick and the airline offered a business class product which he said was competitively priced and good quality.

“We are definitely going to increase the number of airports in the UK,” said Vauramo. “We have the capacity.”

Finnair says more corporates, especially in the financial sector, are looking at their costs of travel and are choosing to fly east though Helsinki.

Vauramo said Brexit had seen an immediate spike in demand for travel to London as people looked to take advantage of the weak pound and come to the capital to shop. These high volumes are seeing wide bodies aircraft used on short-haul routes, something Vauramo predicted we will see more of in Europe.

On the wider implications of Brexit, Vauramo said there were some concerns about open skies although it was more of an issue for carrier that fly out of the UK. However, he was confident of a positive result of Britain’s negotiations to leave the EU.

“We would hope we can continue to enjoy open skies and people continue to travel they way they are used to. I’m trusting this will eventually take place.

“No one knows the schedule of Brexit. There are many things that need to be solved and agreed but I think there will be a solution that will not effect to much the aviation business. If it does companies are fairly good at adapting.”

Vauramo said that Finnair needed to “get in growth mode” and that it could no longer base its strategy on what manufacturer Airbus is able to deliver in terms of new aircraft. “We need to take growth in our own hands. We believe there is room in this business for really good service. We want to be perceived as having the best European business class on our flights and we are well on our way according to some surveys.”

Due to teething problems delivering new A350s Finnair has had to agree take on a wet lease in order to fulfil the services it had planned. Vauramo said this was a disappointment but having moved from a situation of no growth to growth the company has experienced bottlenecks some of which it has dealt with, others it has not.

Future plans to consolidate the Finnair fleet will depend on growing its banking partners in Finland from two to four and the carrier is currently running studies to explore to options before marking any decisions.

“Some time mid next year we will know the bank structure, we will know the timing and flight structure and we’re also likely to know the path, how we move on.”

Vauramo said Finnair will look to grow 50:50 in established markets and new emerging markets.

A key part of Finnair’s growth plan is digital transformation and this will see growth in ancillary revenues. Finnair has seen ancillary sales grow dramatically but yields have gone down although recently that trend has been reversed.

Vauramo said Finnair was behind some airlines in embracing digital but was catching up.

Iata’s New Distribution Capability standard will be key to this and Vauramo criticised how slow the GDSs have been in adopting to the modern age, particularly given the margins they make – more than airlines themselves.

However, he said Finnair had not been tempted to follow Lufthansa in bringing in a GDS booking fee.

“It’s a big decision every airline needs to consider in today’s world,” Vauramo said. “We are networking with other airlines so heavily and GDS is the glue that makes the operation tick. But then if you look at the speed the GDSs have been able to act in response to a changing market and consumer preferences it’s been way too slow. At the end of the day it’s about survival for them to as well.”

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