WHOSE WINGS WILL WIN?
Give or take a year or two, Finnair is as old as commercial aviation itself. Finnair today is an airline which has deep roots in decades of experience and a bright future ahead of it.
The Wright brothers and the other pioneers of aviation changed the world. They offered their contemporaries a new perspective. Airborne, people could view things more clearly and move more easily unhindered by earthly restraints. During the past century the world has shrunk as air travel has expanded.
From technology to business strategy
The first seven decades of air travel was marked above all by the development of faster and more reliable aviation technology. Commercially, air travel was within the reach of comparably few people in the early decades of its history. With the coming of jet aircraft that flew faster and further, greater numbers of ordinary people took to the air. Intercontinental travel on a big scale was given a boost when large, wide-bodied aircraft began to fly.
From the 1920s to the Second World War, Finnair flew mainly in the Baltic region and focused on building a domestic network. After the war, it was time to connect Finland by air to the rest of Europe. Later, in the 1970s, Finnair began long-haul services by opening routes to North America. That decade was also a time of strong growth in leisure travel. Now, this millennium has started with a significant investment in Asian traffic.
Since the 1970s the business strategy dimension of air transport, both in America and in Europe, has posed been a greater challenge to operators than technical development. Through the liberalization of air transport, large national organizations, such as airlines, airports and providers of air traffic control services, have become commercial enterprises.
In Europe, state-owned airlines learned in the final decades of last century to operate according to business principles as they were exposed to competition and their ownership base was extended beyond state ownership into the free market.
Just as aerodynamic lift enabled an aircraft's wings to fly one hundred years ago, air transport in this millennium needs a new business dynamic, which even the established icons of aviation need in order to obtain an upward boost. An organization's capacity to adapt and produce services competitively in terms of price and quality is a vital requirement. Understanding customers' needs and the ability to fulfil them will be the prerequisites for success in the skies of future.
Operations enhanced by new technology
In response to the challenges of the operating environment, Finnair's organization has rationalized its processes in order to improve service, increase productivity and cut costs. Finnair is a leading airline in the utilization of e-business and its commercial applications. The new applications have speeded up and diversified the services needed by passengers and have increased security as passengers are identified more often at different stages.
In the development of e-business the key objectives are improving operational quality, enhancing service fluency and increasing cost-efficiency. The digitalization of operations has had the effect of boosting the organization's internal processes and improving customer service.
A programme to develop procurement activities is under way within Finnair. The programme is one of the Group's strategic priorities. In procurement, economies of scale have been achieved by reducing the number of subcontractors and by centralizing supply agreements.
Future growth opportunities
Air transport has historically focused on the travel market within and between Western Europe and North America. Growth opportunities in these markets are limited and require new operating models. Over-capacity and a relatively new segment, the budget airlines, have lowered price and income levels in most forms of transport.
Growth in worldwide passenger volumes will be concentrated in the coming years increasingly in Eastern Europe and Asia. Nearly four billion people live in the area of Asia and Eastern Europe. Of this proportion of the world's population only a fraction already travel by air.
Although there have been uncertainties associated with Asia in recent times, the long-term growth potential in the Far East is not in doubt. The geographical location of Finnair's home airport on the main flight corridor between Europe and Asia gives Finnair a permanent competitive advantage and an excellent opportunity to service the growing passenger streams between the two continents.
Scope for growth also close to home
In areas close to Finland, there are also growth prospects in the Scandinavian market, where Finnair's budget airline Nordic Airlink is targeting high-volume, low-competition routes. The Baltic states will join the European Union in spring 2004. Another Finnair subsidiary, Aero Airlines, is satisfying growing travel demand in the markets of the eastern side of the Baltic. At the same time, Aero facilitates the provision of cost-effective flights services on routes in Southern and Central Finland.
The Russian market also offers a new significant growth opportunity near to home. Finnair has a long history of flight operations in Russia. New routes in different segments of the air transport market will be opened to the growth centres of the Baltic region over the next few years.
The challenge of today is to produce passenger and cargo flight services efficiently, safely and economically. Finnair's long experience creates a solid foundation amid the changes affecting the industry. Healthy finances provide the staying-power and high quality to deliver competitiveness.
From its early days, Finnair has connected Finland geographically to Europe. With its 21st century strategy, Finnair is bringing Europe closer to Asia. In the current competitive climate, those who succeed will not necessarily be the biggest, but those who most quickly adapt to change. |