Finnair Lost $54.3 Million In First Quarter Due To Wrong Marke​t Strategy For China

According to Skift, Finnair’s plan to gain a larger share of the growing Chinese tourism market has suffered setbacks due to its focus on individual passengers has failed to meet expectations.

Finnair CEO Topi Manner, who took office earlier this year, said that Finnair was wrong to target higher-output individual passengers in 2018.

On April 24, Manner said in the company’s first quarter earnings conference call: “In China, about a year ago, we decided to experiment and focus more on China’s personal outbound travel, especially in some cities. This strategy has only partially succeeded.”

“As a result, we are re-groupping our sales and channel focus, taking into account travel agencies and group tours, and will pay more attention to this in the future.”

Finnair failed to fully consider the restrictions on individuals obtaining EU visas and passports. Before the EU fully liberalized its visa policy, the use of travel agents may not be very cost-effective, from the distribution strategy point, perhaps it’s much safer.

Thanks to Finnair’s advantageous position in Northern Europe, Finnair is able to provide good flights to China and other parts of Asia, and these routes contribute to most of Finnair’s passenger revenue.

In the seasonally weak first quater, Japan’s inbound and outbound tourism performance was strong, helping to offset the poor performance of Finnair in China.

Manner pointed out that the uncertainty of Sino-US relations and the market growth rate after the Chinese Lunar New Year is lower than usual, which is also the reason for the company’s poor performance in the first quarter, but he said that the situation is improving.

In Europe, competition is still fierce. The capacity in the market is very sufficient. As for the Boeing 737 MAX 8, which has greatly affected the competitor Norwegian Airlines, Finnair has not been affected so far.

In the first quarter of 2019, Finnair’s pre-tax loss was $54.3 million, while Finnair’s profit for the same period in 2018 was $18.8 million; revenue increased by 5% to $752.8 million, but was offset by increased operating costs and fuel costs.

Albert Aviation

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