Located near the roof of Europe, Finland has spent decades leveraging its location to become a popular gateway for Asian travelers. Its flagship airline, Finnair, offers flights from Tokyo, Seoul and Shanghai to Helsinki, transiting through Russia, which is several hours shorter than flights to other European capitals. has invested nearly $1 billion in new terminals with streamlined transfers. There were Japanese, Korean, and Chinese displays and a water heater. instant noodle pack liked by Chinese tourist.
Russia then sent troops across the Ukrainian border on February 24, turning the carefully constructed game tables upside down overnight.
Russia has closed its airspace to most European airlines in response to the Russian plane ban. His 9-hour flight to Helsinki now took him 13 hours and 40% more as he had to swoop across the border when he crossed 3,000 miles of vast airspace in Russia. of fuel is required.
The fastest connection from Asia and Finnair’s competitive advantage as a travel hub in Europe vanished in an instant.
The sudden collapse of Finnair’s business model is part of the widespread economic turmoil that the war in Ukraine is wreaking on businesses around the world.
Over 1,000 companies were affected immediately, with companies making significant investments and transactions with Russia. Operations to withdraw from RussiaAccording to a database compiled by the Yale School of Business,
Soaring energy prices are wreaking havoc on a wider scale.hungarian opera house Erkel Theater We will be temporarily closed because we cannot pay the utility bills. Huckle, One of Germany’s largest toilet paper producers has declared bankruptcy due to soaring energy costs, forcing factories across Europe to scale back or close factories producing ceramics, glass, chemicals and fertilizers.
of snack food industry.GMO”
caused by closed airspace Japan Airlines and ANA Cancel your flight to Europe. And this month, Virgin Atlantic will cancel all Traffic to and from Hong Kong due to Russian ban. For Finnair, however, the impact was significant.
“Our Asia strategy has been in the works for 20 years,” Finnair Chief Executive Officer Topi Manner said from the company’s headquarters next to the Helsinki terminal in Vantaa. Service was tailored to the tastes of Asian customers. Half of the in-flight movies are dubbed or subtitled in Japanese, Korean and Chinese. Meals include stir-fried crispy chicken with Chinese garlic and oyster sauce, stir-fried Korean-style pork with spicy sauce, bok choy and rice. Helsinki’s airline ground staff are fluent in the native language of the region.
Before the coronavirus pandemic hit, half of the airline’s revenue was generated by travelers from Asia. Passengers who used Helsinki as a hub to transfer to other destinations accounted for 60% of his revenue.
But with the war “no end in sight”, airline management soon “needed to adapt to the reality that Russian airspace had remained closed to European airlines for so long,” Manners said. said.
Finnair operated 76 flights between Helsinki and Asia this summer, compared to 198 flights in summer 2019.operating loss In the first half of the year, it reached 217 million euros.
“We really have to reorganize,” said Manners.
In some respects, Finnair has continued to reorganize since the pandemic hit in early 2020, effectively halting global travel. China’s “zero-coronavirus” policy, which has continued to lock down Shanghai and other major cities this year, has led to a significant drop in passenger numbers in the east and west, causing airlines with large domestic markets and airlines operating in other regions to dwindle. It hinders Finnair’s recovery compared to the company. Finnair, which is half-government-owned, has fought to survive by laying off employees, cutting costs and raising €3 billion in new funding.
“We paved the way through the pandemic,” Manners said, but it was always meant to be a “back to Asia strategy.”
more than this. Last month, the company officially announced a change of direction.
“We started turning our network westward,” said Manners, while expanding partnerships with American Airlines, British Airways and other airlines. In the spring, he added four weekly flights from Dallas-Fort Worth and three from Seattle. New routes from Helsinki to Stockholm, Copenhagen, Mumbai, India and Doha, Qatar have also been announced. Airlines are renting out planes and crews to other airlines, planning to scale down fleets and staff to cut costs as jet fuel prices skyrocket.
Finnair, which has lost 1.3 billion euros in the past three years, said it hopes to return to profitability in 2024.
“It will take some time for the company to see if this is the right decision,” said Jakko Tirvainen, an airline analyst at Nordic financial services group SEB. Stated.
The new Helsinki Terminal, which opened in June, also required a shift in strategy.
An estimated 30 million passengers were expected by 2030, up from the approximately 22 million that the existing terminal handled in 2019. Those forecasts are now irrelevant, and airport officials say the situation is too uncertain to give meaningful updates to the numbers. Next year, 15 million tourists are expected to pass through.
Perhaps more clearly, the project, which started almost a decade ago, was aimed at improving services for transit passengers from Asia.
A multimedia advertising campaign launched by Finavia, the state-owned company that operates the country’s airline terminals, for Helsinki Airport (code letter HEL) in 2017 was aimed primarily at customers from China. In honor of the 2004 movie “Terminal,” campaign, “Life in Hel” Featuring popular Chinese actor and social media influencer Ryan Jhu. Moon at the terminal.
Helsinki now has a sprawling new terminal dedicated to non-European connections, but few travelers.
On a recent weekday afternoon, the long, winding lanes made to handle the congestion at passport control were deserted. The spacious aukio, or meeting plaza, where passengers can sit and watch a wraparound video installation depicting Finnish landscapes, hosted a lone woman with a backpack. Moomin shops selling merchandise were especially popular with Japanese visitors, but they had no customers. Further down the main corridor, the Moomin Café was almost deserted.
“The mornings are usually slow,” said Lisserie Del Carpio, who works at the Moomin Store, adding that business often starts in the late afternoon.
The European terminal was bustling, but most of the shops and cafes that stretched along the long halls of this terminal were empty.
Sami Keeskinen, Finavia’s vice president of airport development, said the hundreds of millions of euros in loans used to build the airport would eventually be repaid, but “the repayment schedule needs to be revisited.” . Negotiations are taking place, he said.
But even as the war in Ukraine drags on and Russian airspace may remain closed to European navigation, Keiskinen remains optimistic.
“We still believe in strategy,” he said. Major infrastructure developments like airports are designed with a 50-year horizon, he said. “Putin isn’t going to be there forever.”