Scheduled Passenger Traffic
This division is responsible for sales, service concepts, flight operations and the procurement and financing of aircraft. Scheduled Passenger Traffic leases to the Leisure Traffic division the crews it requires for its operations. The division also leases cargo capacity for the Group's cargo operations. In 2003 the division's units included Finnair's Scheduled Passenger Traffic and Aero Airlines, which were joined as of December 2003 by Nordic Airlink, which operates in the Scandinavian market.
In financial year 2003, the turnover of the division fell by 9.6 per cent to 1074.5 million euros. The operating loss for the division, excluding capital gains, was 41.7 million euros, compared to a operating profit of 31.7 million euros in the corresponding period last year.
A rise in the relative share of lower price-level, long-haul traffic as well as a more competitive market climate and decline in premium class volumes contributed to a 10.7 per cent fall in unit revenues for scheduled passenger traffic in 2003. The price reform implemented in September had an impact on final quarter unit revenues, which fell 22.6 per cent in scheduled passenger traffic. At the beginning of September, Finnair discontinued the payment of commission fees to travel agencies in Finland, which will reduce distribution costs considerably in future.
Demand for Finnair's scheduled passenger traffic services fell in the first half of the year by 8.7 per cent, but rose in the second half by 13.1 per cent. Finnair's scheduled passenger traffic demand grew by 2.4 per cent over the year as a whole while capacity grew by 6.9 per cent, leading to a fall in passenger load factor by 2.8 percentage points to 62.2 per cent. The Iraq war and the SARS epidemic in particular adversely affected demand at the beginning of the year.
Finnair's market share in traffic between Asia and Europe has grown as a result of increased capacity and new destinations. As competitors strongly increased their capacity, Finnair's market share in domestic and European traffic fell slightly.
The number of business class passengers on Finnair's international scheduled flights fell by 16.7 per cent in January-September. As of September 2003, Finnair no longer reports business class passenger numbers separately. Owing to the price reform and the shift to a one-class service on certain European routes, earlier figures are no longer suitable for comparison purposes.
The punctuality on departure of scheduled passenger traffic improved to 91.0 per cent, compared with 89.3 per cent the previous year.
At the end of the year, Aero Airlines expanded its operations by receiving its second aircraft and starting flights on behalf of Finnair on certain domestic routes suited for turbo propeller aircraft.
As its operations expanded, Finnair founded in December 2003 a new domestic company, Finnair Aircraft Finance Ltd, to which the fleet financing, management and leasing activity practised by Finnair Plc was transferred. The founding of the new company is part of a restructuring in line with the Group's strategy, which aims to improve the productivity of capital committed to flight operations and to make more efficient use of the aircraft fleet. |