Finnair, prior to the COVID-19 breakout, found success in a niche: transporting passengers between Europe and Asia, mainly China. Due to the location of its main hub, Helsinki Airport (HEL) in Finland, flight times between the two continents are much shorter than to other big European airports. Furthermore, HEL is not yet clustered with airlines the same way as Frankfurt Airport (FRA) or Heathrow (LHR), putting Finnair in a prime position to also offer connections to the aforementioned airports to Asian airlines’ customers.
But seemingly, the airline, not to any fault of its own, became the victim of its success. Out of the total $2.6 billion (€2.4 billion) earned revenue in 2019, $1.1 billion (€1.08 billion) was earned from travel related to Asia, stated Finnair’s 2019 financial report. In the light of recent developments, the Helsinki-based airline was forced to cut 90% of its capacity since April 1, with the cancelations lasting until the end of June 2020. It would only operate crucial air links to Finland and the only intercontinental flight would be to Tokyo, Japan. With 43% of revenues coming from Asia, the financial impact to the carrier is significant.
So much so, that the company pulled its profit guidance and instead issued a warning that the current situation would result in a “substantial comparable operating loss in the 2020 financial year.” Nevertheless, the Finnish airline “remains committed” to the Chinese aviation market, remarked Finnair’s Chief Commercial Officer Ole Orver.
The airline signed a Letter of Intent (LoI) with Juneyao Air to deepen the cooperation between the two airlines. Currently, the two carriers already have a codeshare agreement on the Helsinki Airport (HEL) – Shanghai Pudong International Airport (PVG) route since July 2019. Now, they plan to establish a joint venture, which would offer passengers a “seamless travel experience through a wider choice of destination, schedule and fare options” via HEL and PVG, stated the press release.
The deeper cooperation on the two hubs, namely Helsinki (HEL) and Shanghai-Pudong (PVG), will allow the two companies to serve its customers better, but is also the foundation going forward past the coronacrisis, indicated Orver, once “aviation market starts to normalize.”