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Russia Sanctions: Finnair Says its Core Business of Flying to Asia is No Longer “Economically Sustainable”

Russia Sanctions: Finnair Says its Core Business of Flying to Asia is No Longer “Economically Sustainable”

Finnish flag carrier Finnair’s long-haul business model has just been blown out of the skies by EU-wide sanctions that were meant to hurt Russia. The Helsinki-based airline said on Monday that its flights were no longer “economically sustainable” or “competitive” and that it was preparing for a “prolonged” crisis.

Finnair has based its long-haul business model around being the shortest northern route between Europe and Asia and in recent years it has expanded its network across Asia to meet growing demand.

The time and distance advantage of flying with Finnair between Europe and Asia is entirely built on the airline’s ability to fly through large chunks of Russian airspace. If Finnair can’t overfly Russia then it will take longer for passengers to get between Europe and Asia than other carriers.

And Finnair has just found itself barred from entering Russian airspace after Finland and the European Union banned Russian planes from their airspace.

“The crisis in Ukraine touches all Europeans, and we understand the EU’s decision to close its airspace,” commented Finnair’s embattled chief executive Toppi Manner on Monday.

The day before, Finnair had temporarily suspended flights to five Asian destinations in South Korea, Japan and China for just one week. It has since dawned on the airline that the crisis may not be over in just one week.

“We are implementing our contingency plan as the situation has a considerable impact on Finnair,” Manner continued.

“Bypassing the Russian airspace lengthens flight times to Asia considerably and, thus, the operation of most our passenger and cargo flights to Asia is not economically sustainable or competitive.”

The airline has now withdrawn financial guidance for the first half of 2022 and is preparing for a “negative financial impact”.

Flights to Bangkok, Phuket, Singapore and Delhi can continue while avoiding Russian airspace but flight times will be increased by around one hour.

Finnair’s business model has already been battered by the pandemic and the continued pandemic restrictions that have kept most of Asia off-limits for most of the last two years. Manner insists the airline’s cash position is strong but has suggested the Finnish state should be prepared to help its flag carrier because flight connections are important for the “economy, safety and security of supply”.

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