Jukka Heinonen, President and CEO of Finnair has a ready answer for just about anything as this recently appointed airline chief forges forward in 2006 in command of the northern Europe airline that has once again delivered solid financial results while placing record orders for new aircraft and expanding to new destinations, especially in Asia.
     But his favorite answer is to the almost age old question of whether and when AY might ever merge or be taken over by another carrier or even nearby rival SAS.
     “Finnair is 57% owned by the Finnish government and indication amongst most people in Finland is that our carrier should remain independent rather than in one scenario becoming a small part of a bigger airline that would in fact just gobble us up.
     "But still some wonder if Finnair will be able to continue as an independent airline in the new world competition for airlines besieged by high fuel costs and over-capacity.
     "They have suggested that economies of scale will dominate the field.
     "I am not a big believer in this.
     "If scale were the only truth, Delta or United would dominate the market.
     "There are niches available for quick decision makers, customer-friendly service companies and for those, who simply fill the gap, that was not interesting enough for the bigger players.
     ”In the case of a possible Finnair/SAS merger, my colleague Jorgen Lindegaard, CEO of SAS has proposed a merger in the newspapers.
     "But when it comes to Finnair/SAS I am also reminded of the story of the chicken and the pig who decide that maybe they could combine some of their activities.
     “The chicken invites the pig for breakfast saying;
     “I’ll bring the eggs, you bring the bacon.”
     “Globalization has meant considerable transfers of production and capital worldwide as well as changes in people’s living environment.
     ‘For air transport, globalization is a positive and work-generating challenge.
     ‘The Asian countries have occupied a significant role in the globalizing economy due to their low production costs, liberal investment conditions and large reserves of labor. Finnair understood at an early stage the business opportunities in this and also that our geographical position would be an excellent asset.
     "So the direction of Finnair’s long haul traffic has been steadily and purposefully turned toward the East.
     ‘This has been the most important decision in the company’s recent history and its successful implementation is the key to our future.
     “While there is no doubt that consolidation will accelerate everywhere in the airline business including Europe we will continue to apply our plan to remain a vibrant growing profitable independent airline.”

Three for Northern Europe.
Pictured (l to r) as newly named AY CEO Jukka Heinonen (right) outlined future plans, is Antero Lahtinen president cargo (far left) and Tony LaRusso (center) area director cargo The Americas.
     

     Mr. Heinonen, who describes himself as one of the “pin stripe suit ”generation who is part of the new airline reality “flying ten hours to meetings, right off the airplane and then back into the air,” spoke April 5 to The Finnish American Chamber of Commerce at the Yale Club in New York City.
     Apropos of that self-description, an early Spring 2006 snow squall momentarily filled the windows and streets outside just as the Finnair chief spoke.
     It was if his self-described whirlwind schedule had also swept up some typical Northern European weather that had come along for the ride.
     “We Finns see ourselves living at the right spot on the map as we plan to open, for example, Delhi.
     “Helsinki is right on the shortest route between NY & Delhi.
     “What that means is that it is better to change in HEL than Heathrow, where you lose 3 hours and still lose your luggage
     “Asian traffic already directly brings in 27 percent of our sales revenue, but as a large proportion of passengers on Asian flights continue via the Helsinki gateway to the rest of Europe, the importance of this traffic overall amounts to around 40 percent of Finnair’s sales revenue.
     “Finnair is also proportionally much bigger than its size in Asia.
     In China, for example, we are the third largest of the airlines flying from the country to Europe - even larger than our one-world partner BA, which is a 10 times bigger company than Finnair.
     “We do not believe that even possible crises or economic disruptions will change this overall picture over the long term.
     “Even after three Japanese destinations, four Chinese destinations, Singapore and Thailand, Asia has many interesting cities with 5.04 million inhabitants to which we still do not fly. Malaysia, Korea, the Philippines or many population-rich areas of China which are experiencing strong development offer a long and, in terms of risk, a very diverse list of destinations, where Finnair might find business opportunities.
     “Our product, namely the shortest travel time between Europe and Asia, is excellent and our competitive advantage is in many respects permanent.
     “For all those passengers who need in any case one intermediate stop between their departure location and final destination, the combination of Finnair’s route network and the efficient, compact Helsinki-Vantaa Airport is in many cases unbeatable.
     “We are aware of the heavy investments in Europe-Asia traffic of airlines operating in the Middle and Far East.
     “We do not underestimate the challenge they present, but looking at the globe we believe that there is great potential for Finnair to succeed in this business, even in conditions of tightening competition.
     “Today Finnair has strong cash reserves of more than 400 million Euros and aircraft investments in the near future will be acquired for the company’s own balance sheet (some also to be leased).
     “It may be surprising, but in many cases owning the aircraft oneself is a more flexible way of operating than leasing. Investments into new aircraft and owning them are not available to every other airline.

     “Every new generation of jets has meant a 10-15 percent saving per passenger in reduced fuel consumption.
     “In summer 2006, the long-serving MD80 workhorse, that has served the company really well, will be decommissioned from Finnair’s fleet.
     “The aircraft has many undeniable advantages, such as reliability and passenger comfort, but in terms of fuel economy it cannot compete with the most modern of today’s aircraft.
     “By this summer, Finnair’s European scheduled traffic will already be operating with the youngest fleet on the continent (average age of aircraft around 4 years).
     “The fuel and eco-efficiency of this fleet will be among the best in the business.
     “One example of technological development is the need for engine maintenance: whereas in the mid-90’s the maintenance interval of a DC-10 engine was 2,000 flying hours, the maintenance interval of the new engines acquired for the Airbus 350s will be 20,000 hours, i.e. ten times longer.
     “With these assets we will be competitive as far as our equipment is concerned, and as long as in all other respects we can meet the challenge that our customers, competition and environmental conditions will throw at us.
     “I do not want to suggest that everything possible has already been done in Finnair -because it hasn’t.
     “It would make out life easier, of course, if in the market there were signs of cheaper fuel, lazier competitors or less hungry customers.
     “Our future outlook, however, is based on the assumption that life as an airline will remain challenging - and interesting.
     “The airline business can heal itself only through cutting overcapacity.
     “Unfortunately some operators will have to depart the scene.
     “I don’t envy the position of the financially weakest companies.
     “Many airline colleagues have said to me, ‘are you aware of how fine a company you have ended up managing’.
     “This reflects the esteem enjoyed by Finnair as a small country’s quality, financially sound and viable airline, which within the industry has a much bigger voice than its size would suggest.
     “We need customers who love Finnair and who are even passionate about our airline.
     “We also need excellent people who are in the right way proud that they work for Finnair - while showing appropriate humility towards the customer.
(Geoffrey Arend)