State to support struggling airlines through discounting airport operator Finavia’s fees

print this

The Finnish government has lent a helping hand to the struggling Finnish aviation industry. The state-owned Civil Aviation Authority Finavia, which runs Finland’s network of airports and air-traffic control, has agreed - based on a government initiative - to a 10% price reduction for its services for the remainder of the year.
      This is the first direct state subsidy to airlines within living memory.
      According to Finavia Director-General Samuli Haapasalo, for Finavia this translates to a loss of earnings to the tune of EUR 5-7 million.
      A decision with regard to similar reductions for the next two years is to be made later this autumn.
      Of the Finnish airlines, Finavia’s most important customer Finnair will now save EUR 1.5 million during the remaining part of the year.
      Blue1 will benefit from the introduced reduction by about EUR 450,000 and Finncomm, which has particularly audibly criticised the fees, by EUR 700,000.
     
Finavia now hopes that the burden caused by the subsidy would be taken into account when the company pays the state its dividends.
      In recent years Finavia has paid half of its trading profit to the state as dividends, but already last year this principle was waived. Finavia’s surplus was EUR 34 million, but instead of 17 million, only 7 million was paid to the government’s purse.
      During the first half of the year, Finavia saw the number of passenger travelling through its airports fall by about eight per cent.
     
Finavia’s economic situation depends on the passenger figures in particular. Thus, it suffers from the changes taking place in commercial aviation slightly less than the airlines using its services.
      The airlines’ biggest worry is the fall of the average price of the purchased tickets, as more and more passengers opt to travel in economy instead of business class.
      Finavia charges the same price for both economy and business travellers.
      Still, Finavia’s result is also heading downward.
      In the present business climate the country’s only profitable airport is Helsinki-Vantaa, which subsidises Finland’s other 21 airports by more than EUR ten million per year.


See also:
  Threats to the future on short-haul routes (16.10.2007)
  Blue and white wings leaving the home market (16.10.2007)

Links:
  Finavia

Helsingin Sanomat