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New Low-cost Airline In Finland Needed!  
User currently offlineMn From Finland, joined Jan 2004, 52 posts, RR: 0
Posted (10 years 9 months 3 weeks 8 hours ago) and read 4810 times:

Flying Finn filed finally to bankruptcy today says Helsingin Sanomat. It is very obvious that someone will establish new low-cost airline here to replace Flying Finn's market share. Flying Finn's problem was too insufficient capital to maintain their functions. I'm sure if someone has enough capital to establish and maintain a new airline, it will be a success. Finnair is absolutely too expensive on domestic routes so competition is needed at least to their best route between Helsinki-Oulu. Would Ryanair be interested in Finnish domestic routes?

19 replies: All unread, jump to last
 
User currently offlineOV735 From Estonia, joined Jan 2004, 914 posts, RR: 3
Reply 1, posted (10 years 9 months 3 weeks 8 hours ago) and read 4735 times:

Hei, Mn

I would ask why FlyFi went bankrupt in the first place. They stopped the HEL-STN service, concentrating only on domestic routes and services to ARN I think. Is the MD80 too uneconomical for operating on a low-cost basis? Would A320 series or 737NG provide better economics?

Some of these questions should be answered first. Anyway, I hope a new Finnish low-cost will start operations soon with a bigger list of international destinations.

OV735



User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 2, posted (10 years 9 months 3 weeks 7 hours ago) and read 4715 times:

Possibly the problems are 2-fold

1. Finnish domestic market is very small and has a very dominant and firmly entrenched national carrier

2. Routes from Finland to traditional low-cost destinations in Europe are very long - HEL-LON is 3.5 hours, HEL-AGP is 4.5 hours, which is pretty long stage length for a low cost operation, meaning that your aircraft fly a lot of hours but can't operate 4 or 5 legs per day, which is how LCC's make their planes work harder.

Possibly another consideration is the high cost (in social taxes, pensions etc) of employing people in Finland - probably quite a lot more expensive than employing people in Ireland or the UK.


User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19245 posts, RR: 52
Reply 3, posted (10 years 9 months 3 weeks 7 hours ago) and read 4713 times:

"I hope a new Finnish low-cost will start operations soon with a bigger list of international destinations."

NO! All the no-frills airlines which expanded slowly to very slowly, like Southwest and easyJet, are undoubtedly here to stay. These airlines still expand slowly, especially Southwest. This is good: it costs a great deal to effectively advertise a new route, and low-cost airlines normally operate them at a loss (loss-leading) for a while. Accordingly, large cash reserves are necessary. Would a new entrant have sufficient funds to effectively do this by promoting each route and offering incentives, like free flights? I think not. I hope that any new no-frills airlines concentrate on one or two routes to begin with, and when these show signs of success, expanding slowly to capture new markets.



"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineRyanairA320 From Ireland, joined Dec 2003, 96 posts, RR: 0
Reply 4, posted (10 years 9 months 3 weeks 7 hours ago) and read 4693 times:



Watch out for Ryanair. I can see them openning up a new base soon enough. That would give them a second scandinavian base and a strong route network to compete with SAS and Finnair.


RyanairA320




Ryanair 'The Low Fares Airline' and now also 'The On-time Airline'
User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 5, posted (10 years 9 months 3 weeks 7 hours ago) and read 4686 times:

I thought FR had pulled a number of routes from NYO, including all the intra-Scandinavian routes.

User currently offlineMn From Finland, joined Jan 2004, 52 posts, RR: 0
Reply 6, posted (10 years 9 months 3 weeks 7 hours ago) and read 4685 times:

That's what I thought. Ryanair had some discussions in early of this decade with Finnish Ministry of Transportation to start routes in Finland, especially between Helsinki and Oulu.

User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19245 posts, RR: 52
Reply 7, posted (10 years 9 months 3 weeks 7 hours ago) and read 4652 times:

Which routes in Finland currently have poor frequencies and high prices, while attracting a mix of business passengers and leisure passengers (those visiting friends and relations and those travelling merely for pleasure)?


"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineMn From Finland, joined Jan 2004, 52 posts, RR: 0
Reply 8, posted (10 years 9 months 3 weeks 7 hours ago) and read 4628 times:

Helsinki-Oulu
Helsinki-Kuopio
Helsinki-Vaasa
Helsinki-Rovaniemi
Helsinki-Joensuu

These are all routes which distances are long and also train ticket is pretty expensive. I think low-cost flights would be profitable on these routes.


User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19245 posts, RR: 52
Reply 9, posted (10 years 9 months 3 weeks 7 hours ago) and read 4629 times:

Are those routes currently underserved and overpriced?

Do those routes generate a number of business people and leisure people (VFR and those going just for pleasure)?



"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 10, posted (10 years 9 months 3 weeks 6 hours ago) and read 4614 times:

Looking at HEL OUL, AY serve the route 9 times per day with M83/320/321's, so I wouldn't say it was necessarily underserved (it depends on the market)

HEL VAA is similiar frequency but with AT7, and a couple of DC flights with Saabs.

HEL KUO is 7 daily (2xM83, the rest AT7)

HEL RVN is 4 daily M83

HEL JOE is 6 daily 1xM80 and the rest AT7

Looking at the fares, looks like cheapish returns work out around EUR150-180.


User currently offlineMn From Finland, joined Jan 2004, 52 posts, RR: 0
Reply 11, posted (10 years 9 months 3 weeks 6 hours ago) and read 4602 times:

I don't know if they are underserved but they are overpriced. New low-cost carrier could get many passengers from train traffic. Finnair's traffic is based on the number of business travellers. Flying Finn made also leisure travelling by air more possible.

User currently offlineRichardw From United Kingdom, joined May 2001, 3759 posts, RR: 0
Reply 12, posted (10 years 9 months 3 weeks 6 hours ago) and read 4569 times:

If your legs are longer at 3.5hours plus then I would have thought that you would have to do a good number of over nights to make it work, although that has extra costs. FR don't do them from STN I notice and EZY does ATH from LTN.

User currently offlineHeisan67 From , joined Dec 1969, posts, RR:
Reply 13, posted (10 years 9 months 3 weeks 6 hours ago) and read 4564 times:

Looking to Norway, an other Nordic country where LCC was launched 1,5 years ago. "Norwegian" (http://www.norwegian.no) operates 8 B737-300, soon 11 B737-300 and has 12 domestic destinations and 14 routes. They also operates to 13 international destianations and has 17 internatioanl routes.

The airline has it's main hub in Oslo, but flies to international destinations also from Bergen and Stavanger.
Load factor is approx 70-75%.


View Large View Medium
Click here for bigger photo!

Photo © Paulo carvalho


If this is possible in Norway I guess you may be able to do so in Finland as well.
The Norwegian market is however dominated by the SAS group (SAS, Braathens, Widerøe, Spanair and Blue1)


User currently offlineFinnWings From Finland, joined Oct 2003, 640 posts, RR: 2
Reply 14, posted (10 years 9 months 3 weeks 4 hours ago) and read 4538 times:

Hi!

It is really sad that we lost competition on many routes as Flying Finn failed, but only strongest will survive in this industry. I think there were these few key factors why Flying Finn failed:

- Insufficient capital when the airline was launched
- Poor management
- Too big aircrafts and poor rotation
- Poor timing for many of their routes

Any new airline should be able survive 2-3 years even they make loss and obviously FFW wasn't. It is really surprise that airline is filed in bankruptcy even they have operated less than a year. It is a total fact in airline business that even a new airline has a good start and entry to market their 1st and probably 2nd year will be loss making periods. Only after that you can expect profits!

What comes to their management I know they had many disagreements with their biggest shareholders of the company future. Four different CEOs during a year is quite a strong evidence of that. All of them were also more and less unfamiliar with airline business. A clear sign of poor strategy was immediately after their start a decision to keep their aircrafts and crews overnight at different destinations rather than fly in the evening back to their hub, Helsinki. This increased costs a lot as LCCs does usually always keep their aircrafts at homebase overnight.

I have also always wondered why they had very long turnaround times for their MD-83s at HEL. 2 hours between flights is absolutely too much as it is very important for LCCs to keep their planes flying all the time. So their operations weren't efficient enough. MD-83s are also too big aircraft for some of their routes and maybe same turboprop should have suited better for some routes with lower operating costs. On the other hand, some flights had very good loads too, but smaller aircraft could offer more frequencies.

Poor timing for some routes was the decision to start domestic flights to different Lapland destinations immediately after their start which was late spring 2003. Summer is off-season for those destinations so all flights had very small load factors during the summer. Also business destinations such as Oulu (OUL) was making heavy losses as many people were on holiday. For Finnair this route has always been important cashcow... During the end of last year load factors improved a lot and in January they recorded highest passengers numbers. When finally it looked that they are going to success as all flights were very full they announced that STN route will end which was a surprise as it was only route which was immediately after start making profit.

It will be interesting to see how other Finnish company Soder Air will succeed as they currently fly with single S2000 from Tampere (TMP) to many domestic destinations and Tallinn. Anyway, Soder isn't low-cost carrier as they offer premium service with higher prices. What I have heard their start has been successful and good loads reported. Helsinki will also see some kind of LCC boom as Germanwings will start fly here as well as FlyMe and V-Bird will 2nd daily flight. We just need a better finnish company with stronger shareholders and professional management because there is strong demand for domestic LCC operations. Currently Finnair just started to fly by MD-11 to many Lapland destinations... a good evidence of strong demand!

Best regards,
FinnWings


User currently offlineOV735 From Estonia, joined Jan 2004, 914 posts, RR: 3
Reply 15, posted (10 years 9 months 3 weeks 3 hours ago) and read 4495 times:

The small number of aircraft (two MD-80's) and the relatively big number of destinations they had implies that the frequencies were pretty bad. Kind of sounds like Helvetic - and I'm one of those who thinks Helvetic won't stay on the surface for a long time either.

FinnWings, I've never seen Soder around TLL. Have they operated here for a long time?

OV735


User currently offlineTraveler_7 From Estonia, joined May 2000, 540 posts, RR: 0
Reply 16, posted (10 years 9 months 3 weeks 3 hours ago) and read 4481 times:

I saw a few articles in Estonian newspapers and news websites about Soder,
even more, once I saw them on arrivals and departures information of Tallinn airport home page (only once  Crying ).
Hope that finally they will fly twice daily to Tallinn as it was announced. One of on-line sources also mention their plans to serve Riga by the end of winter season.


User currently offlineFinnWings From Finland, joined Oct 2003, 640 posts, RR: 2
Reply 17, posted (10 years 9 months 3 weeks 2 hours ago) and read 4436 times:

OV735,

You are correct, FFW frequencies were bad as most domestic destinations were served only twice daily... If I remember right Soder Airlines (SDE) started TMP-TLL route only a few days ago. They fly twice daily on route and not during weekends at all:

TMP-TLL 09.40-10.25 SDE181
TLL-TMP 10.55-11.40 SDE182

TMP-TLL 15.00-15.45 SDE183
TLL-TMP 16.15-17.00 SDE184

At the moment their website is available only in finnish, but maybe you understand the information as our languages are quite similar...  Big grin Their website address is www.soder.fi

Regards,
FinnWings


User currently offlineOV735 From Estonia, joined Jan 2004, 914 posts, RR: 3
Reply 18, posted (10 years 9 months 3 weeks 2 hours ago) and read 4433 times:

Yeah, I took a look at their webpage and apparently they do serve TMP-TLL twice a day. I also saw their departure on the Tallinn Airport website once but never seen it again. I work near the airport and usually when planes take off or land over the city I see them, but I've never noticed Soder's S2000's. I must be blind.

What if there was a low-cost airline serving Finland and the three Baltic States? The passenger loads between the Baltics aren't high, but certain foreign destinations would be quite profitable if low fares and normal frequencies would be offered. Looking at Estonian Air's (OV) current results, their new price structure and several new destinations seem to pay off quite well.

OV735

--
While writing this, FinnWings posted the comment above. The TMP-TLL service sounds interesting. I know there's a regular bus route Tampere-H:ki-Tallinn-Tartu and since that one pays off, so the TMP-TLL might work out too.

[Edited 2004-02-11 19:02:41]

User currently offlineTraveler_7 From Estonia, joined May 2000, 540 posts, RR: 0
Reply 19, posted (10 years 9 months 3 weeks ago) and read 4390 times:


OV 735

I like your idea very much! Perhaps flights to Sweden also could bring some passenger loads.

But you should not forget that fees at the airports of Finland and the Baltic States are quite high. Do you remember all this articles about Ryanair and EasyJet coming to Estonia
(last October or November if I am not mistaken)?


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