Invasion of low-cost carriers to Finnish airspace gathers momentum

New budget airlines do not threaten Finnair's Asia strategy

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The British budget airline EasyJet announced on Tuesday that it woulde be opening up two new routes from Helsinki-Vantaa Airport.
      From February 8th 2010, the company will run flights to Paris CDG and to Manchester.
      The Paris service will be daily and there will be four flights a week to Manchester.
      Prices are at least at present down in the basement, with seats offered for less than EUR 30.00.
     
EasyJet has already been flying in and out of Helsinki-Vantaa for about a year, on daily services to and from London Gatwick.
      The company says that the route has been a success: the target for the year was 90,000 passengers carried, and this was surpassed in the early autumn.
     
According to Finavia, the former Finnish Civil Aviation Administration, which manages Finland's airports, four budget airlines have appeared in the skies over Finland, with growth in passengers carried in the region of 25% since the start of the year, and with a market share between them of nearly ten per cent.
      The cheap airlines, or to give them their correct title "Low Cost Carriers" or LCCs, currently fly to ten foreign destinations from four Finnish airports.
      In addition to Helsinki-Vantaa there are cheap flights in and out of Tampere, Turku, and Lappeenranta.
     
Alongside EasyJet in Helsinki are Air Berlin, who fly to Berlin, Hamburg, and Düsseldorf.
      Tampere-Pirkkala is the home airport in Finland for the other (besides EasyJet) European low-cost giant, Ryanair.
      Ryanair now fly to London Stansted, Milan, Frankfurt Hahn, Bremen, and Riga.
      From next April the company promises to open up a route to Edinburgh with three weekly departures.
      The fast-growing Wizz Air flies from Turku to Gdansk in Poland.
     
Another carrier that is making inroads into the Finnish market, or in fact has already arrived, is the Latvian AirBaltic.
      AirBaltic's schedules take in no fewer than six Finnish airports (Helsinki-Vantaa, Turku, Tampere, Lappeenranta, Oulu, and Kuopio.
      However, Finavia does not classify AirBaltic in the "cheap airline" category, just as it does not include the SAS Finnish subsidiary Blue1 or the Finnish carrier Finncomm, even though both of these also have some very inexpensive offers on seats.
     
It is easy to overestimate the threat to the national carrier Finnair of the surge in interest in these latitudes among cheap airlines.
      The backbone of Finnair's long-term strategy is the company's Asian routes, which already bring in more than half of ticket revenues. The LCCs do not endanger this side of the business.
      On long-haul flights the pricing principle is such that for example it costs the same to fly from Tokyo to any of the airports in Northern Europe.
      Hence Finnair transports its passengers from Tokyo to Manchester for free on the Helsinki-Manchester leg of the journey, and no budget carrier is going to be able to compete in that particular market.
     
Where the cheap airlines will eat into Finnair's load factors is in the local traffic, or passengers who travel only between Helsinki and Manchester or Helsinki and Paris.
      In this department, Finnair really cannot compete, at least not on price.
      A one-way Finnair flight to Manchester in February next year, when EasyJet starts its scheduled service, will set you back EUR 748, while EasyJet is offering its cheapest seats at just EUR 26.99.


Links:
  Finavia

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