Helsinki-based flag carrier Finnair has today revealed plans to grow its commercial airline fleet in order to strengthen its position as the ‘Asia-Europe’ carrier and has shared more details on its upcoming Premium Economy cabin.
Topi Manner, Chief Executive of the majority state-owned carrier explained how the airline will focus on adding frequencies to Asian megacities, rather than adding several new destinations. The airline, boasting the most direct route to Asia, forecasts traffic between Europe and Asia traffic to grow 4% on an annual basis.
From 2020 until 2025, Finnair will invest up to €4 billion in brand new aircraft, expanding the fleet from its current level of 83 aircraft to approximately 100 aircraft. The airline will order both new narrowbody aircraft and widebody aircraft that will both expand the fleet and replace/renew older aircraft — resulting in a fleet ratio of 70% narrowbody: 30% widebody by 2025.
“The first batch of investment will go to the narrowbody side in order to renew some of the narrowbody fleet” Ole Orvér, CCO of Finnair explained. “We will then address the widebody order to expand our long-haul fleet” he added.
Finnair’s fleet expansion is necessary in order for the airline to increase frequencies across its network. Finnair currently operates an all-Airbus fleet, including 37 Airbus A320 family jets, and 14 Airbus A350 XWBs.
“We have a more mature network now after years of investment. As we grow, we must grow our long-haul fleet” Ole Orvér, CCO added.
While Finnair stresses the need to replace some of its older jets, it’s worth highlighting that it’s average fleet age continues to be lower than its European competitors (however in terms of scale, Finnair is significantly smaller than the likes of IAG, Air-France/KLM). Between 2015 and 2019, Finnair invested approximately €2 billion euros in A350 XWB aircraft, which has brought significant CO2 emissions reductions in Finnair’s flight operations.
As an airline, Finnair is one of the most visibly committed to sustainability, and Manner reaffirmed the company’s commitment to cleaner flying when discussing the upcoming aircraft order. “Our new aircraft order is focused on reducing the carbon footprint of Finnair” he explained while sharing the sustainability strategies at the airline, including direct, ‘straight-in’ descents for aircraft on approach to Helsinki, and reduced taxi times on the ground.
Furthermore, Finnair will launch Premium Economy in 2020, becoming the latest airline to invest in what many airlines consider the ‘money-making’ cabin. The airline expects the new cabin — featuring new seats, more space, and an upgraded dining concept compared to its Economy cabin — will be tailored for both leisure travellers, and business travellers, “many of whom have company travel policies that restrict staff travel to Premium Economy cabins” Finnair’s Piia Karhu, SVP Customer Experience explained.
Karhu hinted the company has very high expectations in terms of the success of the upcoming Premium Economy cabin, which boasts “better sales margin and yields.”
For the airlines, premium economy is generally incredibly cost-effective. On average, an airline is able to charge two to three times the cost of a lower-fare economy class ticket, yet its increased costs are very minimal. Premium economy seating doesn’t significantly reduce the seating capacity in the cabin, and for most wide-body jets, airlines are able to retain a 2-3-2 configuration. In addition to this, the catering is often more similar to that of economy class (albeit better presented), meaning the airlines aren’t spending too much more on the food.
If anyone had any doubt over whether or not premium economy is a successful product, look no further than the airlines flocking to introduce this cabin class on their aircraft. Emirates, known for its luxury cabins, confirmed that its new A380s will feature a brand new premium economy product from 2020. American Airlines became the first US carrier to introduce the product in 2016, followed by Delta in 2017 and United in 2018.
In response to a question from Aviation Analyst, Finnair’s Piia Karhu, SVP Customer Experience explained that the first aircraft to debut the airlines’ new Premium Economy Cabin will be ready in November 2020, twelve months from now. All of Finnair’s widebody fleet will be equipped with the new cabin by mid-2022.
In order to implement a new cabin, the Finnish carrier will ‘rightsize’ Business Class cabins on some aircraft, suggesting a reduction in size of the number of Business Class seats. The airline also signalled the new Premium Economy cabin will see the removal of a small number of Economy Class seats in order to make room for the new product.
“All the indications we get from customer research and close partner airlines suggest this is going to be a very good move for the company” Karhu said.
Finnair targets sustainable profitable growth, with annual capacity growth between 3-5%, in line with market growth. In its strategy, Finnair say the company will leverage the geographical location of Helsinki and the direct, short and fuel-efficient routes it enables to Asian megacities.