SUPPORT SERVICES CREATE NEW MARKETS
The Aviation Services business area forms a diverse service chain that has a key influence on Finnair's brand and overall service quality. Aviation Services embraces ground handling, catering functions and technical services.
Business units that support flight operations have assumed an active role in creating new forms of service and customer relationships. The biggest customers of the Aviation Services business area are Finnair Group airlines, but the proportion of turnover accounted for by customers outside the Finnair Group is growing all the time.
The outsourcing of support services has become commonplace throughout the airline industry, and some of Finnair's support functions have also been entrusted to partners.
Finnair Group Aviation Services:
- Northport Oy is responsible for ground handling services
- Finnair Catering Oy handles meal services on aircraft and in airports
- Finnair Technical Services provides aircraft maintenance services
- Finnair Facilities Management Oy is responsible for real-estate management
Smooth connections the mission of ground handling
Northport Oy is responsible for the passenger services of Finnair and many other airlines as well as the loading of baggage and cargo in connection with aircraft departures and arrivals. Each year around 80,000 aircraft "turnarounds" are handled and every one of them has an important role in an airline's overall service efficiency.
Northport and its partners operate at all the domestic airports served by Finnair. A subsidiary, FinnHandling, provides ground handling services at Arlanda Airport in Stockholm.
Ground handling's task is to take care of check-in, lounge services and aircraft embarkation at departure gates. At the same time, baggage sorting and loading are performed, as well as balance calculations for each flight. In addition, meeting arriving aircraft, directing passengers to connecting flights and transferring baggage are also part of ground handling work. The efficiency of these services has a decisive impact on ensuring that customer satisfaction is maintained and flights operate on schedule.
Multi-tasking boosts competitiveness
In Finland Northport Oy operates, in addition to Helsinki-Vantaa Airport, at 15 locations, where services are provided mainly in cooperation with partner companies. Northport's market share in Finland is around 70 per cent, depending on the airport. The biggest customer is Finnair, but services are also provided to numerous other airlines.
The restructuring process of recent years, with its many partnership arrangements, has improved the company cost-effectiveness considerably. The employees' training in multi-tasking skills has resulted in sensible job descriptions and contributed to a more flexible provision of services than before. The new service models have kept customer satisfaction and punctuality at a high level.
Together with the market situation, the huge fluctuation in the need for services according to the season of the year, day of the week and time of the day presents a challenge. At Helsinki-Vantaa Airport, for example, up to a third of passengers departing each day are served in a one and a half hour period during the morning peak.
Refining quality and plans for expansion
In 2005 Northport focused on refining the restructuring programme implemented in previous years and on promoting quality issues. Profitability has been systematically improved. The overall level of costs for the year was around two million euros lower than the previous year. The absolute number of turnarounds declined in 2005 and the general price level of the handling market fell slightly due to the airlines' cost pressures.
In autumn 2005, Northport made organisational changes to support the company's expansion strategy. The Finnish market is limited, so growth opportunities are based on geographical expansion, concluding network agreements and new products. In addition, serving transit passengers offers new development opportunities, particularly in long-haul traffic.
Northport Oy:
| Turnover in 2005 (mill.euros): |
70 |
| Market share in Finland: |
70% |
| Turnarounds in year: |
80,000 |
| No. of employees: |
800 |
Technical Services' good reputation attracts customers
Finnair Technical Services performs both full-service maintenance and repair operations as well as individual repairs for Finnair and other airlines. A reputation earned through professional, quality and reliable services is bringing new customer relationships to the company.
In addition to quality, Finnair Technical Services' strengths are fast delivery times, flexibility and service tailored to customers' needs. The company has the capacity to repair and service the airframes and engines of several types of aircraft.
Most interesting direction for growth is East
Finnair is Technical Services' most important customer, but the unit is increasingly cooperating with other airlines. External customers account for around one third of turnover. The main goal is to build a strong position in the growing Asian and Russian markets. The unit's successful cooperation with Aeroflot will help open doors towards the East.
A number of significant agreements were concluded in 2005 through an active sales effort. Essential issues for the competitiveness of Finnair Technical Services are keeping its level of service high and remaining a pioneer as a technical expert of new types of aircraft.
The airline industry will expand in future, which will also increase demand for maintenance services. On the other hand, modernised fleets will reduce the need for maintenance and repairs. The competitive climate for aircraft maintenance is relatively stable, because the investments required by the sector restrict the start-up of new companies.
In connection with the aircraft of the new Embraer aircraft, Finnair Technical Services has applied a new model for line maintenance based on the LEAN concept. Modelling is being used to try to develop processes taking the whole of line maintenance activity into account. The new operating model will improve productivity.
Finnair Technical Services
| Turnover in 2005 (mill. euros): |
202 |
| No. of employees: |
1,800 |
| No. of types of aircraft serviced: |
8 |
Finnair Catering stands out to its advantage
Finnair Catering produces meal services for flight passengers and is also responsible for sales that take place in airports and on aircraft, namely travel retail operations. A subsidiary, Finncatering Oy, has specialised in preparing meals for economy class and leisure traffic flights. Each year more than seven million passengers are served through Finnair Catering's logistics centre.
The food and drinks service has a strong role in building an airline's brand. The overall service connected with catering produces added value that enables Finnair to stand out from its competitors. For example, Finnair is perceived as a quality airline as a result of the wines it serves. A number of research surveys have shown that Finnair's catering service is one of top three among European airlines. Finnair Catering's goal is to be the best service provider in its field in Europe.
Around 80 per cent of Finnair Catering's revenue comes from Finnair's Scheduled Passenger Traffic business area. Finnair's image as a quality provider of catering services sets high standards for catering operations, which the company has succeeded in maintaining. At the same time services must be produced at a competitive price. This equation requires innovation in catering operations and an ability to constantly create new product concepts.
Sales at airports grow
The competitiveness of catering operations is based on a wide product range and efficient management of many work stages. The LEAN production method, aimed at reorganising and enhancing the efficiency of working practices, was introduced in 2005 within both Finnair Catering and Finncatering.
Although the average price of products fell in 2005, profitability stayed at a satisfactory level. An increasing part of Finnair Catering's operations and earnings is connected with the travel retail side of the business. This activity includes, among other things, sales that take place in airports and on aircraft. Finnair Catering has three tax-free shops at Helsinki-Vantaa Airport.
Catering operations worldwide are faced with a challenging situation, because inflight catering has been reduced. Quality airlines still trust in the added value brought by catering. In future, the trend will be towards personalising catering according to customers' preferences.
Finnair Catering Oy + Finncatering Oy
| Meals prepared / day: |
15 800 |
| Turnover 2005 (mill.euros): |
125 |
| Employees: |
890 |
| Cups of coffee served / year: |
11 500 000 |
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