China and mainland tourists mean big business for Finnair

The airline is looking to add more destinations, including mainland cities, to the seven places it already serves in Asia, as more Chinese tourists head to the arctic country

PUBLISHED : Sunday, 24 June, 2018, 10:07am
UPDATED : Friday, 29 June, 2018, 12:18am

More than a decade ago, a small Finnish airline bet its future on luring passengers wanting to travel between Europe and Asia by being their quickest option. Today, its presence in Asia is as big as its largest European rivals.

The next leap for Finnair would be to add more destinations, including Chinese ones, to the seven cities it already serves in the region. Pekka Vauramo, Finnair’s outgoing CEO, said newer long-range small planes could suit the airline’s needs if it wanted to fly to second and third tier mainland cities.

Vauramo, who resigned last month, said China was the centre of the airline’s future and assured that the company would be just as committed to the wider region under the new leadership.

“China is probably the biggest growth market for Finnair for several years to come,” Vauramo said, speaking to the Post on the sidelines of a global aviation industry meeting in Sydney, Australia.

Finnair last month added new flights to Nanjing, complementing the six other cities it flies to including Beijing, Shanghai and Hong Kong. This month, the airline signed a deal to expand its cooperation with Cathay Pacific subsidiary Cathay Dragon on flights around Southeast Asia.

I am very confident that the Asian strategy will continue on that path
Pekka Vauramo, Finnair CEO

Competition is fierce as the Nordic carrier appeals to the masses of Asian travellers. Of the 6.7 million visitors to Finland last year, 360,000 were from China – up 33 per cent than in 2016 according to trade group Visit Finland.

Lapland, in northern Finland, has also attracted more visitors from China, according to an official Finnish tourism report. Finnair thinks direct flights from Beijing to Lapland are possible.

Vauramo, who previously worked in Hong Kong for eight years, will leave in November after five years.

“Five years is a short time,” said the 61-year-old, reflecting on his time at the airline. “I am very confident that the Asian strategy will continue on that path.”

There are concerns in the industry that too much growth could be a negative thing as rising oil prices and labour costs would hit airlines hard and fast, and the Finnair chief acknowledged his company was growing “very rapidly”.

“Maybe we need to reconsider whether we are growing too fast but … [it] is for the new CEO and the board to set the targets.”

For now, Finnair intends to grow 15 per cent this year as it operates more flights than ever.

The outgoing CEO joined Finnair in the middle of restructuring and finished it in less than two years, returning the airline to growth, mainly in Asia, and renewing its ageing fleet of planes.

With 55 aircraft, the airline flew almost 12 million passengers last year to 115 cities – 27 are long-haul destinations, three-quarters of which are in Asia.

Europe’s three dominant airline groups made a combined operating profit 44 times that of Finnair last year and there is the emerging threat from budget airlines right on its doorstep. But the airline still managed to produce an adjusted profit of 171 million.

Finnair is looking at the “possibilities” of using new long-range single aisle aircraft which carry 200 people, to fly to smaller cities in China where bigger wide-body jets with double the passengers would be harder to fill.

The idea of smaller planes “wasn’t very attractive” for the airline as they were not capable of flying longer and reaching new destinations.

“But now the range looks a little bit extended and maybe there is a way to cover the smaller cities in China [from Helsinki],” Vauramo said.

Finnair in the medium-term looks set to open up more destinations in China. The airline is trying to add more flights to Beijing and Shanghai, but the country’s two biggest and busiest airports are almost full.