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mercure1
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How Finnair Got It Wrong in China

Thu Apr 25, 2019 6:46 pm

After announcing the company slipped into a loss in Q1 (€48.5 million), interesting insight in how Finnair miscalculated in China a key market for the carrier by targeting individual travelers instead of the historic travel agent and group travel.


Finnair’s plans to take a greater slice out of the growing Chinese travel market have suffered a setback after the airline group’s plan to focus on individual travelers failed to pay off.
CEO Topi Manner, who joined the company at the start of the year, said the company got it wrong in 2018 when it moved to target higher-yielding single passengers.
“[In] China, about a year ago, we also sort of made the decision to focus more on individual travel out of China, especially in some cities. And that…has only partially been successful for us,” Manner said Wednesday on an earnings call after the release of the company’s first-quarter results.
“And then therefore, we are…re-analyzing our sales and channel focus and also taking into consideration the travel agencies and group travel and focusing more on that one going forward.”


https://skift.com/2019/04/24/how-finnai ... -in-china/
mercure f-wtcc
 
Kilopond
Posts: 417
Joined: Wed Jun 15, 2016 10:08 am

Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 7:17 pm

Seems they listened to a stupid advice of the notoriously arrogant London Airways which perpetually preaches the mantra of caring for premium passengers only. The TUI ticket shop lists the following "low-yielding“ airlines "for the unwashed“ as their partners:

Lufthansa
Air France-KLM & Delta
Air Canada
Emirates
Qatar Airways
United Airlines
Korean Air
Aeroflot
 
c933103
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Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 7:21 pm

Well at least they're quick to react
This is a placeholder.
 
Waterbomber2
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Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 8:13 pm

AY is getting it wrong everywhere, including in Japan. Their reviews in Japan are tanking and getting worse and worse by the day.

Japanese find the occasional bad review acceptable but when 1 in 3 reviews is bad, they are clearly repulsed.
No wonder that JAL is able to fill own metal flights at a huge premium.

AY are being saved by their joint venture with JAL, but JL also needs to ask themselves if they want to stay partners with an airline that has such a poor service.
After all, many Japanese pax are buying JAL tickets and are expecting JAL levels of service, only to find out that their flight is operated by AY and the service is poor.

The reviews are not too bad on the A350, but the feeding sectors are being badged as "no IFE, no service, boring, nothing else to do but sleep, 5 hours of pure boredom"

High yield pax don't pay more to fly a low service airline.
AY needs to stop kidding themselves and present themselves as the clear low fares option. They already do this within the joint-venture, but not within the wider market.

Nobody cares about Marimekko paper napkins. People want amenities, toothbrushes, good food, a nice service both in the air and on the ground, a comfy seat with good cushioning, legroom and personal space. Japanese people are not as naive as they appear, they are paying good money and expect a good service.
You can't keep selling rubbish at the price of gold. My advice to AY: up your game or lower your prices.

They'll make plenty of money over Q2 and Q3, but that could be the decisive moment for them. Do they go for short-term profits or securing their long term business? It wouldn't kill them to offer a 50cl bottle of water on the long feeding sectors.
Last edited by Waterbomber2 on Thu Apr 25, 2019 8:22 pm, edited 3 times in total.
 
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alancostello
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Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 8:18 pm

Isn't this exactly what happened with BA and Chengdu? 77W down to 787 and then scrapped altogether. If you can't make a direct flight to London from a city of 14 million work it's not the route that's the problem.
 
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LAXintl
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Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 8:51 pm

Atleast the new CEO is honest.

Though its true, Chinese overseas travel to markets like Europe is still very much group driven, or at least organized trips, with solo travel being the more rarity.
Also as the article mentions obtaining visas can be an issue for solo travelers, while easier being part of an organized trip.
From the desert to the sea, to all of Southern California
 
zakuivcustom
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Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 8:59 pm

LAXintl wrote:
Though its true, Chinese overseas travel to markets like Europe is still very much group driven, or at least organized trips, with solo travel being the more rarity.
Also as the article mentions obtaining visas can be an issue for solo travelers, while easier being part of an organized trip.


There's definitely some age gap here also. But yes, you think those "Dama" (It's a somewhat ageist/sexist term in Chinese for "older women", especially those that come from more "backward" places in China) will go solo travel instead of following a group? I doubt it myself.

Doesn't help that Chinese economy slow down somewhat (although still growing...at a faster rate than US one also).

P.S. Here goes Waterbomber and him (or her) hijacking every single AY-related thread as to how bad AY is and how JL should have ignore AY, ad nauseum.
 
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MillwallSean
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Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 9:10 pm

I'm struggling to follow some here. AY has made a name for itself as one of the main carriers between Europe and Asia, in particular North Asia. They have done so by catering to not just their home market but also to the markets which they serve. And they have been pretty successful at it. More successful than most European airlines.
They then tried to move away from tour-groups and agencies towards more direct sales and that has not been as easy an envisioned. I cant say I am surprised. Selling through direct channels in Asia isn't easy and especially not in markets such as China.

What we can learn from this is that listening to advise of a fancy consultancy company, that should remain nameless, isn't always a great idea...
Consultants with confident vocabulary, statistical analysis with limited validity, showing untapped market segments, high potentials, depressed yields and with a simple fix that only they could see. Amazing people. I remember the days when I was like them, believed in it. Then I matured...
The dear consultants didn't understand the company or the market. AY is smart to realise this so fast. I remember Austrian who saw the same management consultancy company change their business model (and graphical profile ) twice in a decade all while Austrians results got worse and worse. The McConsultancy kept invoicing OS and OS kept bleeding, no one seemed to pull the plug despite failure after failure.
Then came LH and out went McConsultancy and in came LH consultants.

For Japan, hmm they are increasing their flights? Have I missed something? I struggle to see how their product is worse than any other European shorthaul?
No One Likes Us - We Dont Care.
 
zakuivcustom
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Re: How Finnair Got It Wrong in China

Thu Apr 25, 2019 10:16 pm

MillwallSean wrote:
For Japan, hmm they are increasing their flights? Have I missed something? I struggle to see how their product is worse than any other European shorthaul?


You didn't miss anything. The poster (Waterbomber...now Waterbomber2) has a long history of bashing AY in every single AY-related thread. Basically in his opinion AY is "High price carrier with LCC service".
 
Waterbomber2
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Re: How Finnair Got It Wrong in China

Fri Apr 26, 2019 12:08 am

First of all, I don't think that AY should be considered successful.
They are barely profitable on their yearly results.
If fuel prices rise 20%, they'll turn brightly red.

They have market share in China, but at too low yields.
They have market share in Japan, but their market share consists of 1. mislead JAL customers, 2. low-yielding tour groups, 3. low yielding individuals who are sold by AY's marketing and preference over other low fare options, 4. Higher yielding premium pax who will try out AY once never to be seen again

IB is in the same boat, doing the exact same thing out of MAD, BA is slightly better than AY but trying hard to reach the same level.

JL is making tons off of this joint venture, but I wonder if they wouldn't make more letting AY go bust and walking this walk with AF/KL and BA.
I prefer to fly JAL for as much as possible, don't mind a short connecting sector with AF/KL or BA.
The 3-5 hour AY sectors are on narrowbodies, boring, pay for drinks and food, etc... Why endure that when you could be enjoying those 3-5 hours on a JAL widebody with JAL service?

Some people are paying 3000 USD return over the golden week only to be served like a LCC passenger on AY. That's not ok in my opinion.
You just paid 3000 USD, but please do not hesitate to pay another 50 EUR to reserve your seat or listen to our noisy duty free announcements.
Ow and by the way, you still only get the half glass of blueberry juice on this 5 hour flight to Barcelona. Sit back, relax, don't hit us.
 
x1234
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Re: How Finnair Got It Wrong in China

Fri Apr 26, 2019 12:24 am

Ah the service part of EU legacices! Intra EU narrow-body and no business class service!? Damn its a shame. But I read somewhere that the reason AY has low ticket prices is because its the closest Western European country to East Asia so they can turn a wide-body in 24 hours going to and from Tokyo for example versus longer time for the other EU legacies. And damn, even Aeroflot has better business class service and its FAR CHEAPER and they service literally every city in Eurasia too.
 
bhxalex
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Re: How Finnair Got It Wrong in China

Fri Apr 26, 2019 6:47 am

alancostello wrote:
Isn't this exactly what happened with BA and Chengdu? 77W down to 787 and then scrapped altogether. If you can't make a direct flight to London from a city of 14 million work it's not the route that's the problem.


Nothing about the multiple Chinese carriers flooding the market with bargain basement fares both non stop and one stop? The point of sale was and still is overwhelmingly from China, so the local carriers have an advantage in the market with brand awareness/familiarity, and that's before subsidies are factored in.

Europe to secondary Chinese cities does not work on non-chinese/non-heavily subsidised airlines yet (With the exception of a few routes e.g AF CDG-WUH, driven by corporate contracts). China is getting richer but the yields are still trash from almost everywhere except PVG to Europe.

If it was just a BA problem then where are LH, AF, SK, SU, TK etc in CTU? A city of 14 million surely should boast a plethora European carriers? They have KLM sub daily, that's all.
 
a350lover
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Re: How Finnair Got It Wrong in China

Fri Apr 26, 2019 9:04 am

I have the impression that we (Westerners?) will always understand better the product of Western carriers, and in the same way, Eastern travelers will always prefer the product of their Eastern airlines. Said that, there is evidence that international well-known airlines which have made themselves global are really appealing and are always among first options to consider for customers in both sides of the globe; here I'd put Cathay, Singapore, Emirates or Qatar only.

In other words, I probably feel the same "cold" on board say.... Xiamen Airlines as one Chinese citizen would feel on board Alitalia/BA/Iberia?

As a matter of fact, and figures support this, Finnair is probably the most Asian-focused EU carrier, well above some Eastern carriers from Asia. The fact that they will always struggle more than the local carriers to market huge economies such as China isn't just a problem affecting Finnair. If Finnair struggles, imagine how bad other EU carriers in North Asia must be doing.
 
lutfi
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Joined: Wed Sep 27, 2000 6:33 pm

Re: How Finnair Got It Wrong in China

Fri Apr 26, 2019 9:47 am

Actually - I really like flying AY Asia-Europe. They don't pretend to be SQ/CX, but they deliver honest service for honest price, and HEL is a good airport for transit

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