NEW SILK ROAD LED TO RECORD YEAR
Planning of flight routes, flight scheduling and aircraft acquisition require long-term work. Finnair has succeeded in the overall management of these elements; the company's scheduled traffic grew by ten per cent in 2005. Of the Finnair Group's 8.5 million passengers, Scheduled Passenger Traffic's share was a record seven million.
The biggest success factor was Finnair's effective Asian strategy. The growing Eastern market, moreover, will continue to increase Finnair's Asian traffic significantly in the future. The subsidiaries Aero and FlyNordic are also delivering growth in the Baltic region and the Nordic countries.
Finnair Scheduled Passenger Traffic:
- Finnair Scheduled Passenger Traffic
- Aero Airlines AS
- Nordic Airlink Holding AB/FlyNordic
- Finnair Cargo Oy
- Finnair Aircraft Finance Oy
Finnair's Scheduled Passenger Traffic is responsible for regular passenger and cargo traffic as well as passenger service on aircraft. The business area's tasks also include route network planning, fleet management and cooperation with other airlines. As the Group's largest business area, Scheduled Passenger Traffic accounts for 80 per cent of Finnair's turnover.
Scheduled Passenger Traffic has more than 60 destinations in Finland and throughout the world. Half of revenue comes from European traffic, while domestic traffic represents one fifth. Asian traffic accounted for one quarter of Scheduled Passenger Traffic's passenger and cargo revenue in 2005. Travel between Asia and Europe is continually increasing; the huge continent offers Finnair enormous growth potential.
In Scheduled Passenger Traffic, 2005 was marked by strong growth in traffic and turnover. Asian traffic expanded to Guangzhou, to which only two other European airlines fly in addition to Finnair. At the end of 2005, a decision was made to acquire 12 new Airbus wide-bodied aircraft. A significant change in Finnair's fleet took place with the introduction of Embraer aircraft in autumn 2005.
European excellence
The popularity of air travel continued to rise in 2005, which encourages confidence in the future of the sector. Intense price competition resulting from overcapacity in air traffic has continued. The biggest challenge to profitability in 2005, however, came from a steep increase in the price of fuel.
Finnair's competitiveness was top class by international standards. Scheduled Passenger Traffic's profitability has been improved by lowering unit costs. In addition, the average price of Finnair's flight tickets rose slightly after falling for several years.
During 2005 Finnair achieved new records in passenger traffic. Passenger traffic demand in revenue passenger kilometres grew in 2005 by ten per cent and passenger load factor rose 2.6 percentage points. The trend was better than the average for European airlines.
Route strategy pays off
Finnair's chosen passenger traffic strategy continued to show its effectiveness in 2005. The Asian and Scandinavian growth strategies have proved to be successful. Finnish and international companies are continually increasing their investments in Asia and this has boosted demand.
Finnair has a unique position compared with its European competitors, because it offers the shortest and fastest connections between Asia and Europe. Flying via Helsinki is the most direct route to Southeast Asia - for example, to China and Japan. A wide range of destinations and optimised timetables mean that Helsinki-Vantaa Airport is a natural stopping point for passengers flying between Asia and Europe.
Nearly 30 million journeys are already made each year between Asia and Europe, and this figure is growing at an annual rate of seven per cent. Passenger kilometre capacity in Finnair's Asian scheduled traffic grew by 15.5 per cent in 2005 and demand by 16.8 per cent. Finnair has achieved a significant market share on the routes that it flies. In the Asian travel market there is still great scope for growth. Finnair will continue in future years to purposefully strengthen the Asian route network by increasing the number of flights to present destinations and by opening one to two new routes per year.
Currently, Finnair's Asian scheduled traffic routes are Beijing, Guangzhou, Shanghai and Hong Kong in China, and Tokyo and Osaka in Japan. Finnair also flies to Bangkok and Singapore. In summer 2006 a third Japanese route, to Nagoya, will open and in November Finnair will begin direct scheduled flights to Delhi, the capital of India. In addition to China, India is one of the fastest growing business and leisure travel designations.
New Airbus aircraft for Asian routes
Due to the strong growth in Asian traffic, Finnair will acquire 12 new Airbus wide-bodied aircraft for its long-haul fleet. Of the aircraft, nine are A350s and three are A340s. The A350 is a completely new type of aircraft, which will be introduced to Finnair's scheduled traffic in 2011. The current Boeing MD-11 aircraft will be withdrawn from the Finnair fleet by spring 2012. The A340 aircraft will arrive in 2007-2008 to serve the busy Asian routes.
The acquisition of the Airbus aircraft represents the biggest fleet modernisation in Finnair's history and reflects Finnair's confidence and commitment to its Asian growth strategy.
During the last six years Finnair has renewed over half of its fleet. The fleet used by Finnair Scheduled Passenger Traffic is also one of the most modern in Europe, which considerably enhances passenger comfort as well as the economy and environmentally positive attributes of the aircraft. For example, the A350-900 will consume a third less fuel per passenger than its predecessor, the Boeing MD-11.
The streamlining of the fleet will lower maintenance and operating costs. For example, the same crew will be able to fly both long-haul and European flights. Maintenance preparedness can at the same time be restricted to fewer types of aircraft.
In 2012 Finnair Scheduled Passenger Traffic will be operating only three types of aircraft. Long-haul traffic will be served by wide-bodies Airbus aircraft. The European and domestic fleet will consist of narrow-bodied Airbus A320 series aircraft and Embraer 170/190 aircraft.
Embraer era began
The Brazilian Embraer aircraft joined the Finnair flight for the first time in autumn 2005. Finnair decided to acquire 12 Embraer aircraft in spring 2004 and ordered four more in autumn 2005. The first four of the aircraft were taken into service by the end of 2005. By autumn 2007, Finnair will have a total of 16 Embraers in its fleet. Finnair also has options for ordering four additional aircraft. Of the ordered aircraft, ten are 76-seat Embraer 170s and six are the larger 100-seat 190 model.
The Embraer's first scheduled flight was from Helsinki to Oslo on 1 October 2005. During 2006 the aircraft will fly to a number of domestic destinations as well as, among other places, to Stockholm, Oslo and Hamburg in Europe. The latest Embraer destinations to be announced are Krakow, Kiev and Geneva, which will open during 2006.
The Embraer aircraft represent the latest aviation technology. The aircraft has an advantage in terms of operating costs, because it consumes less fuel than older types of aircraft. Moreover, progress will be made in environmental friendliness, because compared with other types of aircraft the Embraer's carbon dioxide and nitrogen oxide emissions are low. The Embraer aircraft match the larger passenger jets in terms of passenger comfort.
The new aircraft will be assigned to routes on which demand does not require the use of larger aircraft. The aircraft, which have less than 100 seats, also allow new routes to be opened profitably. Asian flight passengers can now be offered connecting flights to new European destinations. By summer 2006, the Embraer aircraft will replace the Boeing MD-80 fleet in Finnair's services.
Passenger comfort at a high level
In comparisons of airlines, Finnair's service is rated top class. Finnair systematically gathers feedback from its customers in order to improve its service.
High-quality cabin service is also a key element of Finnair's brand and product superiority. For this reason, Finnair's flights serve quality meals and drinks, tailored according to the length of the flight. In-flight service is an important competitive factor for Finnair.
For many years now, Finnair has been Europe's most punctual airline as well as the airline that cancels fewest flights. This is one of the quality factors most valued by customers.
In winter 2006, the business class seats of all of Finnair's wide-bodied aircraft will be renewed. Finnair will be first airline in the Nordic countries to bring lie-flat seats to its intercontinental fleet, which will boost competitiveness.
The development of electronic services has enabled consumers to make their travel plans more flexibly and has also brought cost savings to airlines at the same time. Significantly more than half of flight tickets sold by Finnair in Finland were sold via the internet. Most of Finnair's scheduled traffic passengers use the e-ticket, with the figure in Finland being more than 90 per cent.
FlyNordic and Aero play strong supporting roles
The Finnair Group's budget airline FlyNordic strengthened its position in the Scandinavian market during 2005. One of FlyNordic's most important competitive advantages is its use of the main airports of its destination cities. The easy accessibility of flight reservation and auxiliary services is an essential part of the concept, which has also attracted many business passengers to the flights.
FlyNordic's operations grew to new record levels in 2005; a total of 1.2 million passengers were carried on the company's flights, which is 62 per cent more than the previous year. FlyNordic flies in cooperation with Sterling and Norwegian Airshuttle airlines to a total of 21 destinations.
The Estonian subsidiary Aero, which focuses on Southern Finland and Baltic traffic, also achieved record figures in 2005, when Finnair transferred the handling of its Southern Finland traffic to the airline. In international traffic, as well as the Helsinki-Tallinn route, Aero flies from Helsinki to Riga in Latvia and to Vilnius in Lithuania. It also flies in the summer to Kuresaare on the Estonia island of Saaremaa. The airline carried a total of 760,000 passengers.
Cargo travels on a modern Silk Road
The logistics services offered by Finnair Cargo are based mainly on sales of freight capacity on Finnair's scheduled traffic aircraft. Cargo is carried mainly on wide-bodied Boeing MD-11 aircraft, which can hold 25 tonnes of cargo in addition to the passenger load. The company also leases cargo aircraft capacity according to need and acts as the operator of the Helsinki cargo terminal.
Finnair Cargo has cargo links to more than 30 countries. An essential part of the company's strategy is to focus on developing the Helsinki Gateway; all of the company's long-haul traffic cargo passes through the Helsinki terminal. More than half of the cargo carried on wide-bodied aircraft is transit cargo, which continues via Helsinki to other parts of the world. The introduction of a new information system during 2006 will boost the efficiency of Finnair Cargo's procedures and diversify logistics services.
Growth in cargo traffic between Europe and Asia offers very promising prospects for Finnair Cargo. For example, the volume of goods brought from China in 2005 grew more than 30 per cent compared with the previous year. The opening of the Guangzhou route in September 2005 has allowed fast connections to China's leading industrial area.
Scheduled Passenger Traffic in figures 2005
| Number of flights: |
98,319 |
| Scheduled Passenger Traffic's turnover (mill. euros): |
1,408 |
| Number of destinations: |
64 |
| New destinations in 2005: |
3 |
| FlyNordic new openings in 2005: |
15 |
| Asian traffic growth: |
16.8% |
| 
