Finnair faces wipeout of Asia business on Russia flight bans

Finnair Oyj faces a wipeout of its Asian traffic as a tit-for-tat of airspace closures in Europe and Russia jeopardizes its main long-haul strategy. 

Finland’s national carrier has carved out a niche providing transit passengers from smaller European cities the shortest flight times to Asia. But the flights through its Helsinki hub to destinations like Hong Kong, Seoul and Shanghai rely on access to Siberian airspace. 

It won’t make financial sense to operate those flights if Russia’s airspace is closed, Finnair said on Sunday.

“For many of our North-East Asia flights, rerouting would mean considerably longer flight time, and operations would not be economically feasible,” spokeswoman Paivyt Tallqvist said in an emailed response to questions after the Finnish government said it was preparing to end Russian flights. A reciprocal ban by Russia would bring significant consequences, “as our Asian traffic in practice stops,” she said.

More than a dozen European countries closed their airspace to airlines from Russia, which reciprocated with its own bans in an echo of the Cold War restrictions that caused airlines to fly circuitous intercontinental routes.

Asian traffic accounted for just under 40% of Finnair’s revenue last year, down from about 43% in the last full year before the Covid-19 pandemic that began in early 2020. Travel restrictions and spreading infections had grounded much of its fleet, and the carrier had worked to mitigate the impact by shifting increasingly to transporting cargo. 

Finnair had also unveiled a 200 million-euro ($225 million) revamp of the long-haul fleet earlier this month, anticipating the operating environment would be returning closer to a pre-pandemic era in the latter part of the year, driven by “robust pent-up demand.” China and Hong Kong were excluded from that ramp-up, as they remain essentially closed to foreign flights.

“A lot depends on how long the situation” with Russia lasts, Tallqvist said. “At this point we do not have enough information to be able to comment in detail, and we are implementing our contingency plans.”