Finnair brought in its new CEO Topi Manner, whose background is in banking, at the start of 2019. Founded in 1923, the Finnish flag carrier is one of the world’s oldest airlines. Today its network spans the Nordics and Eastern Europe, North America and Asia Pacific (in the UK it flies from Heathrow, Gatwick, Manchester and Edinburgh) and it has a fleet of 83 aircraft.
Some of the airline’s priorities have remained the same for decades; primarily, promoting its connectivity between Europe and Asia and its eco-credentials. But when Manner took the helm, he described Finnair as ‘renewing’.
Business Traveller sat down with him to discuss what that means in terms of growth, passenger experience and – the topic now on every airline’s mind – sustainability.
What’s changing at Finnair?
If you look at Finnair over the last couple of years, we have been growing fast. This year we are growing our capacity by 12 per cent in terms of available seat kilometres, which makes us one of the fastest-growing airlines in Europe, if not the world.
We are moving into a new phase that’s about sustainable, profitable growth. As an airline we are all about connecting Europe and Asia with the shortest travelling time, being the most environmentally sound route producing less carbon emissions.
We are focusing on Asian megacities. Instead of adding destinations in Asia – we have more than 20 in Asia – we will be adding frequency. Today we have double daily to Tokyo, 12 times per week soon to Osaka, 12 times per week to Beijing, double daily to Hong Kong.
Back in the 80s you were the first airline to fly nonstop from western Europe to China and Japan, but today passengers have various nonstop options. How do you remain an attractive proposition?
Firstly, we play to our unique strength as a short, northern route. It means we’re the most environmentally sound in connecting Europe and Asia – because you have to remember we have one of the most modern long-haul fleets with our Airbus 350s.
With A350s, the optimal distance in terms of fuel consumption and therefore reduced carbon emissions is approximately nine hours. When you fly from Helsinki to the likes of Tokyo, Hong Kong and so forth, that is the flying time. The unique combination of our geographical position and our long-haul fleet is what gives us natural competitive advantages.
On top of that, we are committing to long-term carbon neutrality within the next 30 years – we will be publishing a detailed sustainability plan in Q1 2020 and it will include elements such as reducing single-use plastics by 50 per cent by 2022. There will also be visible changes to customers with the cabin product in terms of catering and so forth. So sustainability will be a differentiator.
There’s the focus on Asian megacities, that differentiates us from competition from some of the smaller Chinese carriers. And then there’s the focus on being a modern, premium airline. That means brand elements such as authenticity, offering Nordic flavours, and being sustainable.
Being a responsible employer is also very important for us, and employee engagement is really high. Our employees give an average rating of 4.25 out of 5 to the question of how proud they are to work with Finnair. Our people are committed, proud and competent.
We have an integrated business model, a one company model, and the kind of culture that enables us to be a ‘big small airline’. We are big enough to do things and small enough to get them implemented fast and in agile fashion. This is what differentiates us from many of the giant airlines.
What’s an example of what that allows you to do for passengers?
In our digital services and our use of data it allows us to be more relevant to customers. Going forward it will allow us to provide more choice.
For example, if you are a business traveller who starts from London and goes via Helsinki to Hong Kong, we can offer you a product between London and Helsinki on a widebody, every morning you can get an A350, so you can have a full-flat bed product. Let’s say if you don’t want to eat the breakfast, you can have that in the lounge, and you will be able to opt-out and only pay for the relevant parts of the service.
That is the choice we will be providing across travel classes in the future. Service development and data will be needed and logistics will need to be put in place but this is the direction we are going in.
Speaking of Hong Kong, demand was lower in Q3 and turbulence seems to be ongoing – are you optimistic about the future? Are there plans to alter frequencies?
I was in Hong Kong last week for the launch of our new business class menu. We are not reacting to short-term volatility, we are staying the course. We think the fundamentals of Hong Kong are strong and Hong Kong is resilient so we will keep our frequencies.
Cities like London are also developing well and in the past year we have increased capacity quite a bit. The UK market is growing close to 20 per cent with us. We sort of dubbed that as a little Brexit bet. It has been serving us well. Hong Kong, Singapore and Shanghai are some of the markets that are growing out of London, and more people in the UK are finding us as a way of connecting to the east.
We are happy and proud to be their partners. They have opened Shanghai to Helsinki and next summer are expanding with fifth freedom flights. It’s mutually beneficial. We are committed to developing it in the future.
When they fly to Helsinki their customers can connect to Finnish Lapland, the rest of the Nordics and Europe via Finnair flights.
You also launched a codeshare with LATAM.
That codeshare has started out really well. Even though LATAM is leaving Oneworld, we will maintain that relationship.
Generally speaking, we are all about partnerships. They are a way for us to seek scale beyond our size and we are open to develop those in Asia.
Several European airlines have received the A350 this year, you’ve had it for four years. Have you been happy with the aircraft?
We have. It is serving our purpose well. We have 14, and we have five more on order coming over the next couple of years. There are multiple benefits. The customer experience is very good in terms of air quality, noise levels.
The fuel efficiency and reduced carbon footprint is significant, compared with our previous Airbus 340s, there are 25 per cent less carbon emissions. And the Rolls Royce XVP engines have been reliable. So it is functioning well.
Beyond the A350, how will your fleet be changing?
We will be investing in new aircraft, in terms of fleet size we will grow over the next five or six year from 83 to 100. We need a few more widebodies and we will be renewing our narrowbodies. That will be an investment of 3.5 to 4 billion euros.
We have been looking at that, and I think for many airlines I can see the logic and the market. In the case of Finnair, we don’t see a use case. With the focus on Asian megacities, capacity and slots are somewhat constrained. So, I think our long-haul fleet is very well suited to serving those cities, with more widebodies.
The big news next year will be the launch of your premium economy class. I read it might debut on the A330…
[Laughs] Let’s leave that as a cliff hanger. We will be launching it in Q3 next year and then I can elaborate more, but it will be exciting.
Can you say anything about whether the space will come out of economy or business?
It will be a differentiated product, so premium economy is clearly upgraded in terms of dining, added comfort for economy. And we will be making sure business class is differentiated and upgraded.
With a new business seat?
Let’s come back to that…
In business class generally, lie-flat and aisle-access are where all airlines are heading. What else do you think is important to the experience today?
I think the sleeping experience is extremely important so you arrive well rested and is something we’ll be focusing on. We’ve also invested in lounges, at Helsinki our new lounge is beautiful and a great experience. Dining is always important.
Going forward I believe bringing more choice to business class is something customers will value, personalised experience. So if you’re on a midnight flight from Helsinki to Singapore, you have your dinner at the lounge and on the aircraft you want to start sleeping directly, and then you only need breakfast.
So these are things people could choose in advance…
Yes, as I said before it’s not something that’s there right now. The ease of purchase would need to be improved, and this is where digitisation comes into play. But this is something that is the direction of travel for us when I say we want to be a modern, premium airline. More choice for our customers.
Sustainability is the word of the year. How big a role will carbon offsetting play in your future plans?
They are part of the toolbox. If we look at our roadmap to carbon neutrality – and we’ll be releasing the specifics in Q1 – we will be focused on the measures that reduce the carbon footprint of our own operations. Investments in new aircraft and engine technologies. When we plan the renewal of our narrowbody fleet, when we plan the final choice of aircraft – and we have not done that – we will be reducing the carbon footprint of our European flying by 10 to 15 per cent.
Looking at how passengers can offset right now, there are huge disparities between airlines in terms of how much they charge for a flight, and it’s very confusing. How can that be improved – a cross-airline collaboration?
I think the jury is out on that one, let’s see how things will unfold. With carbon offsetting, the key is a credible process, a reliable measurement of the impact and auditing of that. Ultimately it boils down to trust. Customers and all stakeholders, including regulators, will need to trust that if airlines do offsetting, it truly has the impact it’s supposed to have for the environment.
If we extrapolate this to the global level, it’s clear that the planet cannot offset its way out of climate change. There’s simply not enough land on the planet for things like forestation to be the one solution. So the main focus needs to be in the reduction of the carbon footprint in whatever field, in our case flying. Offsetting can complement the picture but can’t be the only way.
With things like weight of baggage, would you ever charge more and say, we’ll invest the extra into sustainable initiatives?
We will be very observant about weight going forward and we have a weight reduction programme going on. Whatever decision we make in terms of using materials on aircraft is very conscious in terms of sustainability and weight, such as the material of cutlery. Replacing newspapers with digital solutions. With the new seats on our regional fleet, the weight is super important. That will translate to all levels, and we will be advising our customers to pack more economically…
Just advising, or charging?
Let’s see. I’m not ruling out any measures, but I also don’t have any news to disclose on that front.
What do you think about governments placing fuel taxes on airlines?
The taxes in themselves don’t do anything for the environment, the key thing is to address making aviation and many other industries more sustainable through a lot of investments into technology. That might be aircraft, new engines, hybrid-electric engines, lighter airframes, different synthetic fuels, biofuels, power-to-liquid, the production facilities for aircraft, all kinds of things.
The danger with taxes is that they just reduce the cashflow that is needed to finance the investments that can really take down carbon emissions. This is something we need to be mindful of.
Finally – air travel today looks broadly the same as it did at the start of the decade. What will be the main changes in another 10 years?
I think it will be much more sustainable. I think carbon neutrality in aviation has taken significant steps forward and will be a big change.