Interview: How Finnair Circumvents Russia’s Airspace Closure

[In The News]

DALLAS – The Ukraine crisis has taken its toll on the aviation industry, be it the rise in fuel prices or the partial and complete shutdown of airspace.

Several airlines rely heavily on Russia’s vast airspace for flying into the far east. Key trunk routes for passengers and cargo have been disrupted. Longer inefficient routes are now being taken for those airlines desperately wanting to fly.

While this impedes some parts of most airlines’ networks, the situation is different for the Finnish carrier Finnair (AY) – it’s in serious trouble. The airline is seated right by the Russian border and banks on its neighbor’s airspace for much of its international network. The carrier connects a variety of Asian cities to Europe and further through Helsinki (HEL), and most of these routes are now in cold storage. However, AY is making crucial adjustments and fixes to stay afloat.

Airways’ Siddharth Ganesh talks to Finnair’s Chief Commercial Officer, Ole Orvér, about what the situation is like at the airline.

Orvér has served in leadership positions in several airlines, including Qatar Airways (QR), LOT Polish Airlines (LO), Air Berlin (AB), and SAS (SK), working with strategy, network management, and sales. He has been Finnair’s CCO since May 1, 2019.

Ole Orvér. Photo: Finnair

SG: First, the pandemic and now the Ukraine crisis. How serious is the toll on Finnair? What’s the situation like?

OO: The Russian airspace closure notably impacts air traffic between Europe and Asia, which plays an important role in Finnair’s network. As we communicated already at the end of February, the negative financial impacts on Finnair will be significant, especially if the situation is prolonged. We are now preparing for a prolonged Russian airspace closure and have started to adapt our operations with many determined measures. 

As a first response, we have updated our network and are placing more emphasis on connections to the West, South Asia, and the US. We are happy to see travel recovering at a rapid pace after the pandemic, and this summer sees us increasing our offering to over 300 daily flights. This spring, we also unveiled a €200m investment in customer experience with our updated long-haul cabin.  

How much does Finnair rely on Russian airspace?

Most of our Asian flights have used the Russian airspace, as that has been the shortest and most fuel-efficient route between Asia and Europe.

Bypassing the Russian airspace lengthens flight times to Asia, and the effect is most prominent on flights to Japan and South Korea, where the flight time is up to 40% longer when avoiding the Russian airspace. On our South Asian routes, the effect is considerably smaller.  

Finnair. Photo: Brandon Farris/Airways

What routes in particular are affected due to the Russian airspace closure?  

Due to the Russian airspace closure, we have suspended our services to Osaka, Nagoya, Tokyo Haneda, Sapporo, and Fukuoka for the summer season. We have also postponed the launch of our Busan route in South Korea. As we do not operate in Russian airspace, we also canceled our flights to St Petersburg and Moscow.

We continue to fly to Tokyo Narita airport four times a week out of Helsinki, avoiding the Russian airspace. We also continue to have one weekly connection to Shanghai, China, and three weekly connections to Seoul, Korea. Our services to Hongkong will resume in the summer.  

Any ideas on how long this closure may last?

We are preparing for a prolonged Russian airspace closure and have already started to adapt our operations with many determined measures. We expect the opening of the airspace to be a lengthy process – first, the war in Ukraine needs to be resolved.  

Would Finnair explore new destinations now to cover the affected ones?

Our updated network places more emphasis on connections to the West and South Asia. We also have a robust offering in the US from both our Helsinki hub as well as direct flights to the US from Arlanda, Stockholm. 

We opened a new route to Dallas at the end of March and will start new routes to Seattle and Mumbai during the summer.  

Finnair F-WZGY (OH-LWL) Airbus A350-900 (Marimekko Kivet Livery). Photo: Alberto Cucini/Airways

Finnair will be leasing its Airbus A350s if I’m right. How many and for how long?

Eurowings Discover is wet-leasing three Finnair Airbus A350s for their long-haul routes this summer.

Does the Airbus A330 have a future at Finnair?

We currently have eight Airbus A330s in our fleet. In our Q1 2022 results, we recognized an impairment totaling €32.7m relating to four owned A330 aircraft. Based on our current estimate, the shorter-range wide-body fleet is unlikely to be fully deployed as long as the Russian airspace remains closed.

Our A330 fleet is scheduled to be fitted with an updated cabin within the next two years. The aircraft is deployable on our North American routes and flies select destinations within Europe, which are mostly cargo-driven.  

With a disrupted network at the moment, how are you managing the overall fleet? Is it time to make big changes?

Finnair has put a lot of time into making the fleet flexible enough to meet the rapidly changing needs of its network during the pandemic; we have flown types on rotation, stored some aircraft, wet-leased some out, and changed gauge on some routes to accommodate observed demand.  

We plan to continue these efforts and are constantly adjusting our approach to optimize efficiency and the ability to respond quickly to changes in passenger demand.  

Finnair OH-LTS Airbus A330-300. Photo: Kochan Kleps/Airways

What does the bright side look like for Finnair?

In February 2022, we unveiled a €200m investment in customer experience by announcing our brand new, spacious Business Class and Premium Economy cabins, as well as major enhancements in Economy for our long-haul fleet.

The complete cabin renewal covers all Finnair Airbus A350 and A330 long-haul aircraft, with new cabins to be fitted over the next two years. This demonstrates our continued commitment to offering our customers a modern premium experience. We have now updated six of our wide-body aircraft and the elevated long-haul experience is already available on our HEL-SIN, HEL-ORD, HEL-JFK, and ARN-JFK connections. 

Recovery from the pandemic is currently progressing at a pace. Our customers’ booking behavior is normalizing, and flights are being booked well into the summer and autumn. Demand is particularly coming back on routes in Europe, South Asia, and North America, and the number of our daily flights will increase to more than 300 during the summer season. 

For January to March 2022, the Finnish airline had an average load factor of just 47.7% but on reading the above, it surely seems like AY has a grip on the situation. Flying since 1923, AY is the sixth oldest airline in the world.

With solid experience and expertise, the carrier is proactively working on several alternate options to go forward-the game of adaptability.

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