The network business model is based on a broad network that is built around one or a few airports i.e. around the hub. From the hub, the network carrier offers extensive connections to various parts of the network. Finnair's hub is naturally Helsinki Vantaa Airport in Finland, from where the company is flying to destinations in Asia, North America, Europe and Middle East.
Typical differences between network carrier and low cost carrier
Finnair’s ability to operate its network safely and punctually from one of the world’s northernmost air traffic hubs is integral to value creation. The transfer of passengers, baggage and cargo to connecting flights is ensured through efficient processes and close cooperation with airport authorities.
Finnair's revenue source by product and by area
Passenger revenue
Passenger revenue i.e. airline tickets sold to consumers, are the most important revenue source. In 2023, they accounted for 81 per cent of Finnair's total revenue. Approximately 32 per cent of it was generated by Asian traffic and 43 per cent by European traffic. Finland's share was 7 per cent, Middle East's share was 9 per cent and North America had a share of 9 per cent. Finnair carried 11.0 million passengers (9.1) in 2023 as the COVID-19 impact was already mild although the closure of Russian airspace still had an adverse impact on the Asian traffic.
Ancillary revenue
Ancillary revenue is generated by the additional services that are sold to passengers. In 2023, ancillary revenue accounted for approximately 5 per cent of Finnair’s total revenue. It increased by 20.0 per cent and amounted to 147.8 million euros (123.2), reflecting the increase in passenger volumes. Advance seat reservations, excess baggage and frequent flyer programme related revenue were the largest ancillary categories.
Cargo
Finnair receives cargo revenue from the shipments that are transported in the aircraft’s belly. Finnair Cargo is one of the largest air cargo carriers in the Nordics and Baltic region. It specialises in flying high-value items between Europe, Asia and the United States from its Helsinki COOL hub, one of Europe's newest and most advanced air cargo terminal.
In the global air freight market, capacity already exceeded the pre-pandemic levels, but air cargo yields were still slightly elevated compared to the pre-pandemic levels. However, growing supply, weakened demand and, thus, declining market prices resulted in lower Finnair’s cargo revenue than in the record high year 2022 although the softened demand for cargo already started to level off in Q4, which has a positive impact on market prices. Cargo revenue decreased by 45.5% to 192.0 million euros (352.3). Cargo contributed c. 6 per cent of the total revenue in 2023. Finnair Cargo specialises in air cargo traffic between Europe and Asia but Cargo revenue accumulates also from other geographical areas.
Finnair Cargo
Travel services
Travel services include revenue streams for Aurinkomatkat products. They include package holidays to consumers. In 2023, travel services accounted for c. 8 per cent of Finnair's total revenue. Due to robust demand, travel services' revenue increased by 39.2% to 237.1 million euros (170.3).
Aurinkomatkat
Partnerships
oneworld
Finnair is part of the oneworld alliance, and it also deploys a deeper cooperation with some of its oneworld partners by participating in a Siberia Joint Business and an Atlantic Joint Business. Further, Finnair and Juneyao Air, an airline not belonging to the oneworld alliance, commenced a Joint Business in 2021 on flights between Helsinki and Shanghai as well as between Chinese and European destinations. This Joint Business demonstrates Finnair’s commitment to China as a strategic market. Joint Businesses are agreements on the distribution of flights on specific routes and in terms of prices and capacity.
Finnair's membership in the oneworld alliance increases the size of our global network to more than one 900 destinations in more than 170 countries. Close cooperation with alliance partners particularly in North American and Japanese traffic is a priority for Finnair. Membership in the oneworld alliance and joint businesses strengthen Finnair’s market position and reduce the risks related to growth. For customers, they provide an even broader choice of destinations as well as more flexible routing and pricing options. For airlines, joint businesses are a way to gain benefits typically associated with consolidation in a highly competitive industry without actual mergers, acquisitions or equity transfers between partners. Alliance partnerships and joint businesses have a significant contribution to Finnair’s revenue.
More information about Finnair’s destinations
More information about oneworld
Norra
Nordic Regional Airlines AB is a regional passenger airline company. Its Finnish subsidiary Nordic Regional Airlines Oy ("Norra") operates ATR turboprop aircraft and Embraer 190 aircraft for Finnair, based on a purchase traffic agreement. The majority shareholder Danish Air Transport (DAT) owns 60 per cent of the shares in Nordic Regional Airlines AB and Finnair owns the remaining 40 per cent.
Norra operates a fleet of 24 aircraft. All aircraft are leased from Finnair Aircraft Finance Oy. Its route network has been coordinated with Finnair's European flights and long-haul flights. Finnair's influence on the company is based on shareholding and contractual arrangements.
Other partnerships
Finnair procures certain important operational services from strategic partners, such as the ground handling services in Helsinki hub from Airpro and Aviator, and cargo terminal handling services from Swissport Finland Ltd, as well as the engine and component services from Airbus, Rolls-Royce, SR Technics, and Lufthansa Technik. In the area of IT services Finnair partners with Amadeus, IBM and Nordcloud, among others. The cost and quality targets of these agreements have been determined so as to correspond at least to a good general market level.
All Finnair’s service providers are expected to comply with Finnair’s Supplier Code of Conduct. Finnair aims to secure in its supply contracts the rights to audit the Supplier’s governance and security measures. Finnair’s Code of Conduct and Supplier Code of Conduct can be found here.