Blue and white wings leaving the home market

Finnair now flies to more destinations in Asia than in Finland - many Finnish provincial airports coming under threat of closure

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By Jyri Raivio
     
      Lappeenranta, the city in south-eastern Finland at the centre of the South Karelia business region, is looking at a very unpleasant prospect on the transport front.
      Regular scheduled flights to and from Lappeenranta, which were introduced more than half a century ago, came to an abrupt end at the beginning of September when Finncomm terminated their connections.
      If no other carrier can be found before the middle of the winter, then the airport will be closed down, says Samuli Haapasalo, the director-General of Finavia, the former Finnish Civil Aviation Administration.
      If that happens, then two kilometres from the centre of this bustling border town, Finland’s finest forest landstrip will be left nestling under a blanket of snow.
     
Regular scheduled traffic is the only sensible reason for Finavia to maintain airport services in a location, says Haapasalo. Only seven Finavia airports, with annual passenger throughput of more than 300,000 each (Helsinki-Vantaa, Oulu, Tampere, Turku, Kuopio, Rovaniemi, and Vaasa), actually make any money. The other 18 Finavia-run airports are subsidised to the tune of around EUR 10 million a year all told.
      If and when scheduled services are terminated, then the airports will close their doors.
     
Raimo Särkelä, the plant manager at the UPM Kaukas paper mill, owned by Lappenranta’s largest private employer, is worried about the impending closure.
      "The stopping of air traffic would bring a lot of problems and additional costs. It would make for an extra day of travelling for anyone heading abroad from here - and another day on their return. The air connection is a very important consideration when new companies are thinking about locating down here", says Särkelä.
      Local businesses have in fact rented for themselves the use of a seven-seater light plane on weekday mornings, but it is not going to replace scheduled flights.
     
Lappeenranta is not alone in fearing for a future without flights in and out. Flights from Helsinki to Mikkeli ended some years ago.
      Varkaus has dropped off the domestic air-routes map, and Savonlinna is only clinging on by the skin of its teeth.
      The Ministry of Transport and the cities are right now arranging a tender competition whereby air traffic to these two places could be guaranteed via joint subsidies from the state purse and the municipal budget.
      The number of passengers passing through Jyväskylä is falling, and at least the local chamber of commerce is afraid there will be fewer scheduled flights in and out each day. And yet there are seven airports around Finland that are even quieter than Jyväskylä.
     
This means that there are quite a few places where City Hall is feeling the chills about the possible axeing of flight connections and the likely knock-on effect of closure of the local airport.
      A particular cause for alarm is the quite obvious running down of the domestic network of the traditional carrier Finnair.
      On the Finnair front, the situation has changed dramatically. The Finnish flag carrier, in which the state is the majority shareholder (with a 57.04% holding), now flies to fewer domestic desitnations than it did 50 years ago.
      In 1957 there were flights to 14 Finnish airports. Now there are regular services to just nine airports, if “regular” means at least two flights each way every weekday around the year.
      Finnair now flies to more destinations in Asia and the Far East than it does in Finland.
     
Finnair’s domestic passenger numbers have fallen during the current decade by more than a quarter, and the decline is set to continue, because the Finnair Group is reducing its domestic offerings at a rate of around 15% a year.
      The next cut on the horizon will come during the winter, when the Estonian subsidiary Aero will cease flight operations.
      Some of the lost services will be made up by using smaller jets, the Embraer 170, while some seats will simply go unreplaced.
      The Finnair CEO Jukka Hienonen regards this development as precisely in line with the company's strategic planning. He is not about to maintain unprofitable domestic services as some kind of loss-leader product.
     
The soft demand coupled with spiralling costs has made a good many routes unprofitable for Finnair.
      “Everybody has to look at this thing through the filter of their own results. There are several operators these days, and even in the domestic market there is real competition for passengers”, says Hienonen.
      The Finnair CEO says that he does not underestimate the regional policy aspects of domestic air schedules. In this respect, Hienonen comments that he is delighted and not a little surprised, too, that the company’s principal owner has in no way exerted pressure on him or Finnair to continue with unprofitable but "regionally valuable" domestic services.
      “Things would really be out of whack if Finnair was expected to serve every village on the map just because the state owns a majority share in the airline.”
     
There is not going to be any pressure exerted from above, in any case, at least according to the owner’s representative Harri Cavén, who heads the Transport Policy Department at the Ministry of Transport and Communications. Cavén plays down the alleged threat posed by the running down of domestic air connections.
      “Flight connections are to a large extent an image thing. And the degrading of the airport network is not so very dangerous, provided that there are train connections to replace those in the air”, says Cavén.
     
The government has no plans to support flights to and from Lappeenranta.
      Harri Cavén also takes a less than enthusiastic view of the current plans for competition on services to Varkaus, which actually is not so much a tender competition, since there is only one company offering a service - Finncomm. Varkaus is so close to the relatively busy airport of Kuopio that Cavén does not believe it requires its own air links. Savonlinna, on the other hand, is a different matter as it is far enough from anywhere else that might step in to provide an alternative point of departure.
      In Hienonen’s view there is no sense whatsoever in running subsidised services. He even goes so far as to criticise Finavia’s actions in supporting the quieter airports out of the profits from Helsinki-Vantaa, much of which are extracted from Finnair’s own pocket.
     
Helsingin Sanomat / First published in print 14.10.2007

More on this subject:
 Threats to the future on short-haul routes

JYRI RAIVIO / Helsingin Sanomat
jyri.raivio@hs.fi