Jonathan:
Sorry, how does the number of 60 destinations compare with pre-crisis levels?
Topi:
Pre-crisis we flew 130 destinations. So about 60 destinations means that we will have relatively wide network, but then clearly less frequency and a clearly smaller cage than we would usually have. So therefore the capacity for the summer is likely to be a little bit smaller than the 60 destinations actually would indicate.
Jonathan:
And load factor has been very low, the load factor figure for April that I saw was 26%. So even the capacity you’ve been adding, you’re nowhere near filling. Is there an argument for actually making the capacity even less than you have done?
Topi:
We have been very stringent about the flying being cash positive so that we are better off actually flying than not flying. So therefore we have optimized that, but it is clear that especially with the long-haul traffic, with the exemption of Shanghai, we have been effectively in low teens in terms of load factors, and that is where the cargo demand steps into play, and that has been supporting the cash positive flying that we have been doing.
Jonathan:
So I come back to cargo as well, but you’re talking about the long haul, and you’ve talked about the routes into the Asia region and particularly to China. And obviously Finnair’s core strategy in many ways has been linking Europe with destinations in the Asia region. And I guess before COVID, Europe and Asia where the biggest proportions of your traffic, your revenue, with North America and domestic Finland a smaller contribution. But at the moment, obviously, domestic is the biggest area, followed by short haul Europe, and long haul has been very small. But the prospects of a return to that strategy of linking Europe to Asia, when do you think you might get back to something close to the pre-COVID levels?
Topi:
Yeah, I think that our estimate is that, in terms of capacity, ASKs, we will come back to pre-COVID levels in ’23, so in a couple of years from now. And on the overall, if you look at Finnair as an airline, as you stated, as an airline, we are all about connecting Europe and Asia via the short Northern routes, via our Helsinki hub. And we have a small domestic market, and that is certainly impacting our figures as of now. We also see that there will be probably a bit of delay in terms of Asia really opening up. The vaccination coverage in Asia is proceeding more slowly than it is in Europe. And this is basically causing the delay. So the demand will start from European short haul, and as stated, North America most likely will be rather important as a long-haul destination for us during the next six months.
Jonathan:
Okay, but you can’t fully return to pre-COVID levels until Asia is opened up again.
Topi:
That is correct. That is the case with us. But then again, over the medium term, over the long run, we are steadfast in terms of our commitment to our Asia strategy. If you look at how the world is developing after the pandemic, it seems that the big Asian economies are coming out as winners out of the pandemic, driven by China. And the shift of world economy is more and more moving toward Asia, and the urbanization as a mega[1]trend means that there will be new mega cities in Asia, most notably in China, for aviation, for Finnair to serve. And I think that these mega trends will be greatly supporting us over the long run. So we are committed to our strategy.
Jonathan:
To what extent is premium traffic important to you and therefore currently a big problem to you, because premium traffic isn’t really operating very much.
Topi:
Yeah, as an airline, we are a little bit less exposed to corporate travel than some of the other, for example, European flight carriers. Back in 2019 corporate travel constituted 20% of our passengers, 30% of our revenue. So we are getting ready for some of that to be not coming back that soon, so effectively corporate travel seeking a new baseline and then starting to grow from that. But we do think that premium leisure will be increasingly important for us as a segment going forward, and we are getting ready to introduce a new premium economy gapping class in our long-haul fleet during the next years.
Jonathan:
Okay. Do you see demand for that coming more from an economy passenger’s trading up or business-class people trading down?
Topi:
I think that we will be seeing a little bit of both, but we certainly are focused on the upsells, so people from economy moving to premium economy, and when we look at now the early indications, after the demand coming back after the pandemic, we can clearly see that there seems to be a willingness among customers to pay a little bit more extra. So customers will be more focused on service and quality and personal space in the aircraft as part of the in-flight experience. And as stated, these trends are supportive of our hypothesis of premium leisure being very important going forward.
