Finnair Warns Of Russian Airspace Closure Impact

Finnair Warns Of Russian Airspace Closure Impact

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Finnair’s shares are collapsing today (down 24% as of the time of this post), as the airline has warned that its Asia route network is no longer sustainable.

Finnair has always been strong in Asia

Historically Finnair’s biggest strength when it comes to long haul flights has been Finland’s geography. Thanks to how far north Finland is, the airline has had a massive route network to Asia. Helsinki Airport is an easy-to-use airport with short minimum connection times, and when you combine that with Helsinki’s favorable geography, the airline has promised passengers the fastest travel time from Europe to Asia.

As you might expect, Finnair struggled a lot during the pandemic. The markets in which Finnair was the strongest — in particular China, Japan, and South Korea — have largely been closed for nearly two years now.

Fortunately Asia is slowly starting to reopen (not so much China, but other parts). On top of that, Finnair has gotten creative, and has built up its US route network. Not only has the airline added US destinations (including Dallas and Seattle), but it has also launched long haul flights out of Stockholm.

Just as things were starting to look better, Finnair has warned of a major new obstacle today.

Finnair has historically been strong in Asia

Finnair warns Asia flights “not economically sustainable”

The European Union has banned Russian aircraft from operating in its airspace, and it’s expected that this will be made reciprocal. Finnair has today issued a statement warning about the implications. The airline says that the financial impact of this will be “significant,” and as a result the airline has withdrawn its guidance related to Q1 2022.

As Finnair CEO Topi Manner describes this:

“The crisis in Ukraine touches all Europeans, and we understand the EU’s decision to close its airspace. We are implementing our contingency plan as the situation has a considerable impact on Finnair. Bypassing the Russian airspace lengthens flight times to Asia considerably and, thus, the operation of most our passenger and cargo flights to Asia is not economically sustainable or competitive.”

The airline is now planning new traffic and cost savings plans in the event that this situation prolongs. It is stated that the airline has a good cash position, with 1.7 billion EUR on hand as of the end of 2021.

Indeed, all long haul airlines in Europe will be negatively impacted if these airspace closures remain. However, Finnair will be hit hardest among European airlines, given that the carrier’s huge geography advantage has just turned into a major disadvantage.

If this continues, I imagine Finnair will shift more flights to North America, as there’s simply no way the airline could operate most Asia flights profitably while avoiding Russia.

Finnair’s geography is now working against it

Bottom line

Russia’s invasion of Ukraine is having all kinds of far-reaching impacts. Of course the loss of life is the most severe, but when it comes to aviation, the implications are endless as well. Finnair is one of the first airlines to come out and warn about the financial impact Russia closing its airspace could have on airlines.

While many airlines would be negatively impacted by this, efficient connections to Asia has been Finnair’s biggest selling points for long haul flights. Suffice it to say that’s no longer the case.

It’s anyone’s guess how long this will last. If Russia remains off limits for an extended period of time, the global aviation industry will have to make some major changes.

Do you think the current airspace bans will stick around in the long run?

Conversations (15)
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  1. Leslie Raynor Guest

    Having flown Finnair from Chongqing China to Düsseldorf via a short stop in Helsinki and then Frankfurt to Nanjing China also via a short stop in Helsinki, the news regarding Russian airspace closure is a huge blow to the airline, other passengers and myself who have discovered that on the Asia-Europe long haul, Finnair was up there with the best. Excellent inflight service and speedy transits through Helsinki all added up to create a go...

    Having flown Finnair from Chongqing China to Düsseldorf via a short stop in Helsinki and then Frankfurt to Nanjing China also via a short stop in Helsinki, the news regarding Russian airspace closure is a huge blow to the airline, other passengers and myself who have discovered that on the Asia-Europe long haul, Finnair was up there with the best. Excellent inflight service and speedy transits through Helsinki all added up to create a go to choice. Let’s hope Finnair can find a way around the Russian problem and get back to being a really worthwhile airline choice for Asia-Europe-Asia routes

  2. Joe Guest

    why are you only writing about non US airlines. Why not write about UA which is still flying over Russian airspace and other US carriers. So USA is profiting over the ban of its allies like the EU, CAN etc. but the USA will not put a ban over Russian carriers flying over US airspace!
    Simply DISGUSTING! Now when we are in the verge of the WW3 suddenly the US Americans are tired and...

    why are you only writing about non US airlines. Why not write about UA which is still flying over Russian airspace and other US carriers. So USA is profiting over the ban of its allies like the EU, CAN etc. but the USA will not put a ban over Russian carriers flying over US airspace!
    Simply DISGUSTING! Now when we are in the verge of the WW3 suddenly the US Americans are tired and reluctant to lead as its has been doing for decades. It seems not only the Russians are becoming the disappointment. Trumptard attitudes of the last 4 years have made the Americans indifferent and egoistic.
    The Russians will make them remember the Cold War sooner than they have wished for.

    1. Jumper Guest

      Jumped the gun. I bet you wish you waited 1 day for that analysis.

      https://www.cnbc.com/2022/03/01/us-bans-russian-aircraft-from-american-airspace.html

  3. glenn t Diamond

    Japanese carriers JAL and ANA will be massively affected as all their Europe-bound flights overfly Russia. JAL is a partner with Finnair on those routes too.

    1. Samo Guest

      Japanese carriers can continue to fly via Russian airspace so if anything, they will be affected positively. JAL will probably get a lot of that Finnair demand shifted to them, with Finnair still providing connecting flights to elsewhere in Europe.

  4. Gabriel Guest

    Finnair can wet leased from CX for their Asian routes. The only question is does their union contract allowed that?

    1. Eskimo Guest

      Can Aeroflot wet lease from CX for all their routes?

  5. Ed Guest

    I don’t how Finnair shifting flights to North America helps them right now, yes they can fly there but surely the war is going to depress (already soft) demand to Europe, especially east and Central Europe where Finnair makes sense for North American connections.

    Sure Ukraine is a big place but it’s only a little over 1000km from Vienna to Kiev; that’s going to weigh on summer tourist demand from the US to Europe.

    1. Sir Digby Chicken Caesar Guest

      Funnily enough, as a European airline with good links to Asia, demand for Finnair tickets isn’t primarily driven by USA residents (as difficult as that may be to comprehend for many Americans who seemingly forget that 96% of the world population isn’t actually American)… adding US routes was primarily for Europeans visiting the US. Europeans also travel y’know :-) Demand TO Europe, from America, may be low-ish, but demand FROM Europe is high to pretty...

      Funnily enough, as a European airline with good links to Asia, demand for Finnair tickets isn’t primarily driven by USA residents (as difficult as that may be to comprehend for many Americans who seemingly forget that 96% of the world population isn’t actually American)… adding US routes was primarily for Europeans visiting the US. Europeans also travel y’know :-) Demand TO Europe, from America, may be low-ish, but demand FROM Europe is high to pretty much everywhere, primarily because people haven’t been able to travel for so long.

      On an unrelated note, avoiding Vienna because Putin is terrorising Kiev is a bit like avoiding Toronto because the police in Minneapolis murder some of the citizens they are supposed to be protecting… It’s a long way away and in a different country.

    2. Eskimo Guest

      On your unrelated note, it depends on your view point. But Ferguson, MO is long way away and in a different state. But that didn't stop Minneapolis police did it?

    3. Mary S Guest

      You sir are a tool.

      Your racist stereotypes have no business here. Please go back under the rock you call home.

    4. Samo Guest

      How much do you think Ukraine contributed to overal European tourism? Finnair will of course lose Russian tourists (who won't be allowed in and likely won't be able to afford the trip either, since ruble is collapsing) but the rest of the demand should remain relatively stable.

  6. Daniel Desjardins Guest

    Yes it has an impact, but not an impossibility:

    HEL - BUD - BKK : 6029 miles
    HEL - BKK : 4890

    it adds 23% to the distance

    1. Sir Digby Chicken Caesar Guest

      If adding 23% to the distance adds 23% to the operating costs (which it probably does, roughly), it’s not sustainable or viable, given that many Finnair customers are already starting their journey elsewhere in Europe when they fly to Asia

    2. eponymous coward Guest

      Go look at a map again, that HEL-BUD-BKK path takes you into Russian and Ukrainian airspace.

      Not to mention that BKK is already garbage for yields compared to someplace that’s even more impacted by losing Russian airspace like HEL-NRT.

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Sir Digby Chicken Caesar Guest

Funnily enough, as a European airline with good links to Asia, demand for Finnair tickets isn’t primarily driven by USA residents (as difficult as that may be to comprehend for many Americans who seemingly forget that 96% of the world population isn’t actually American)… adding US routes was primarily for Europeans visiting the US. Europeans also travel y’know :-) Demand TO Europe, from America, may be low-ish, but demand FROM Europe is high to pretty much everywhere, primarily because people haven’t been able to travel for so long. On an unrelated note, avoiding Vienna because Putin is terrorising Kiev is a bit like avoiding Toronto because the police in Minneapolis murder some of the citizens they are supposed to be protecting… It’s a long way away and in a different country.

2
Leslie Raynor Guest

Having flown Finnair from Chongqing China to Düsseldorf via a short stop in Helsinki and then Frankfurt to Nanjing China also via a short stop in Helsinki, the news regarding Russian airspace closure is a huge blow to the airline, other passengers and myself who have discovered that on the Asia-Europe long haul, Finnair was up there with the best. Excellent inflight service and speedy transits through Helsinki all added up to create a go to choice. Let’s hope Finnair can find a way around the Russian problem and get back to being a really worthwhile airline choice for Asia-Europe-Asia routes

1
Jumper Guest

Jumped the gun. I bet you wish you waited 1 day for that analysis. https://www.cnbc.com/2022/03/01/us-bans-russian-aircraft-from-american-airspace.html

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