Finnair & SAS Strategically Foolish

Sweden, Norway and Finland have not been blessed by the gods – we are small populations isolated from the rest of Europe by water. 

Going North or East means venturing into some unpleasant parts of the world in terms of cold weather, or ugly political systems run by despots. 

To get away from our cold, wet weather for short holidays or for business to the big markets where we can sell our products, we must sit on a plane for at least two hours.

Travelling by boat is fine, but who wants to spend 24 hours minimum one way only to rent a car or take a train to some far-away city from the nearest European harbours.

To solve these problems of geography, the Nordic governments had established their own airlines, SAS and Finnair in order to ensure that our routes to the best and most favourable destinations are available for holidays and business travel. 

Nations can always control airlines slots located in their home markets to guarantee relatively easy access to important flights when needed.

Thirty, forty years ago travelling was fine. The airports were not too crowded and flights were fun with real meals packed in silver foil, or on china if in business class.

Now we have airports packed to the brim, full of stupidly expensive “Duty Free” shops selling stuff you can buy for half the price almost anywhere else, gates without seats, and planes that pack you in like sardines with offers of plastic cups of tepid water for free!

Booking a flight, a seat and a meal is an expensive lottery, a prelude of things to come like the 2 to 3-hour wait in the queues for security inspections by underpaid staff… 

After two years of Covid and Chinese Covid lockdowns, we now have Finnair, SAS and privately owned Norwegian all near to bankruptcy. 

Taxpayers have bailed out Finnair a few times with hundreds of millions, and SAS totters on the edge. The governments in Denmark and Sweden may not back another lifeboat package for this loss-making airline. It has been saved up until now with heavy cutbacks and cash from its largest creditors. Now their pilots are threatening to strike – is this a straw that will break the camel’s back?

Finnair has dug a grave for itself by investing heavily in loading up hundreds of thousands of Chinese tourists into their planes so that they can stare at the night sky in Lapland. However, these Chinese have not been able to travel for over 2 years because of Covid. To make matters worse, Russia has closed its airspace to Finnair, removing a benefit that gave Finnair a competitive advantage. The Chinese airlines flying to Europe still have such a benefit.

The result was predictable – huge unsustainable mass-tourist centres have sprung up in northern Finland with high prices that normal Finnish families cannot afford. Nature is fragile up there and cannot take this punishment, but that is not Finnair’s concern. They do not pay for using such fragile resources nor do the visitors… Quite the opposite, the more tourists, the greater the profits…

… and more tourists mean that the airline pumps out ever-increasing amounts of poisonous gases into the atmosphere and these thousands of Chinese tourists and Finnair do not pay for the resulting pollution…

This business expansion meant that Finnair purchased many new long-range aircraft. It demanded and received huge new facilities at the airport in Helsinki and elsewhere to handle the large numbers  of Chinese travellers. Now, we the taxpayers are left licking our wounds and paying for saving an airline that had gone out and developed a strategy that has nothing to do with our basic needs and has caused great damage to the global environment. 

The question we need to ask is do we need mass tourism from any country that is thousands of miles away?

SAS too has expanded through Asia connections for tourism and business and run into similar problems. Labour disputes and strong unions have held back easier solutions. It is also time for the Swedish an Danish government to make hard decisions.

Finns are now asking for a new strategy for Finnair. Necessary business and tourist activities are valid needs that should be at the forefront in such planning, but these users should be paying the full price of using natural resources, our else we will have taxpayers subsidising Asian mass tourism again while destroying our own natural resources and that of the globe. 

It is time to reflect and decide if Finnair is a profit-maximising stock exchange company, or an airline that serves our most important interest, activities which have far more modest requirements.


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