Traffic continued to grow in Finnair’s main markets in the first quarter of 2017. Measured in available seat kilometres, scheduled market capacity between Helsinki and Finnair’s European destinations grew by 2.8 per cent year-on-year, while direct market capacity between Finnair’s Asian and European destinations grew by 2.2 per cent year-on-year. Finnair’s market share decreased slightly both in European traffic and in Asian traffic, to 5.9 per cent (6.2).*
During the quarter, there were signs that the negative effect of previous years’ security concerns is dissipating. Asian demand came from several origins as traffic from Asia to Europe grew robustly during the quarter. In terms of destinations the Nordic growth trend continued as all Nordic countries enjoyed strong growth. In Finland, both Helsinki and Lapland destinations grew above average.
The market environment for the Atlantic Joint Business remained challenging as traffic between Europe and North America was affected by overcapacity and resulting price competition. The Siberian Joint Business continued to strengthen its position in traffic between Japan and Europe, and the total market volume also grew versus last year. Revenues increased both in Japan, driven by positive yield developments, and in Europe, driven by the increasing number of passengers.
The supply of packaged travel by tour operators active in Finland exceeded consumer demand during the first quarter, particularly in long-haul destinations, which weighed on prices and profitability. Consumer demand concentrated on the Canary Islands, which reduced the availability of moderately priced accommodation and tour operators' profitability. There was increased demand also for the United Arab Emirates, where the availability of accommodation and profitability were at a solid level. The air cargo market has bottomed out since the comparison period. On a global scale, growth has even exceeded the growth of world trade, indicating an increased market share. On the other hand, the air cargo market continues to suffer from overcapacity, affecting the yields.
The declining trend in the price of jet fuel ended in the first quarter of 2016. The dollar price of jet fuel was 50.4 per cent higher in the first quarter than in the comparison period. The US Dollar, the most significant expense currency after the euro, appreciated by 3.5 per cent against the euro year-on-year and has remained at historically strong levels. In regards to key income currencies, the Japanese yen was 5.0 per cent stronger against the euro than in the comparison period. The Chinese yuan has showed some signs of stabilization during the first quarter, depreciating by 1.7 per cent against the euro year-on-year. Finnair hedges its fuel purchases and key foreign currency items; hence, market fluctuations are not reflected one-for-one in its result.
* Based on external sources (capacities on SRS Analyzer data and market shares DDS pax estimates for January–February). The basis for calculation is Finnair’s non-seasonal destination cities.