HELSINKI-VANTAA AIRPORT: Finnair and LCCs drive growth

Summary

• Helsinki-Vantaa's passenger growth was 11.9% in 1H2018 with forecasts of over 21 million passengers in 2018;
• Finnair has more than two thirds of seats and Norwegian is number two. LCC seat share is 15.5% and growing again;
• Helsinki is Europe's number 29 ranked airport, but is a large hub compared with Finland's population. It is Europe's number seven by seats to Asia Pacific.

Passenger numbers are expected to exceed 21 million in 2018
Helsinki-Vantaa, one of 21 airports managed by state owned Finavia, is by far the largest airport in Finland, with 83.4% of the country's seat capacity in the seasonal peak week of 03-Sep-2018, according to OAG.
The strong growth in Helsinki-Vantaa's 1H2018 traffic was driven by transfer passengers, up by 23.9%, in addition to strong tourist traffic. Leisure demand is buoyant both outbound (Spain is the largest market, while Greece is becoming more popular) and inbound.
Helsinki-Vantaa expects to handle more than 21 million passengers in 2018, implying a growth rate of more than 11%.

EUR1 billion investment programme will increase capacity to 30 million pax
An investment programme of almost EUR1 billion is under way to accommodate 30 million passengers. An expanded baggage handling system is scheduled for completion at the end of summer 2018.
Seven new gates are planned for Terminal 1 in summer 2019, increasing the airport's capacity for domestic and European routes. Extension of Terminal 2, with new widebody gates and additional passenger space, is also in the pipeline.
A new cargo facility was inaugurated at the end of 2017 and a new multimodal travel centre is planned, combining rail, bus and ferry transport between the airport and Helsinki.

Finnair has more than 67% of seat capacity; Norwegian is number two at Helsinki-Vantaa
Finnair is the leading airline by seats at Helsinki-Vantaa, with 67.1% of seats in the seasonal peak week of 03-Sep-2018. This is up from 66.1% a year earlier and 60.9% five years earlier.
Number two is Norwegian, with a seat share of 13.3% (12.4% for Norwegian Air International and 0.9% for Norwegian Air Shuttle). Norwegian's share is also growing - it was 12.7% a year earlier.

LCC capacity is up again in 2017 and 2018, after flatlining in 2014 to 2016
LCCs account for 15.5% of seats at Helsinki-Vantaa with airBaltic, easyJet, Transavia, Blue Air and Vueling each having a small presence in addition to Norwegian. airBaltic has 0.9% of seats and easyJet has 0.8%, while the other three have only 0.1% to 0.2% each.
Today's six low cost brands compare with three five years ago (Norwegian, airBaltic and Vueling). easyJet entered most recently, in Feb-2018, while Transavia entered in Apr-2017 and Blue Air in Jun-2017.
Although the number of LCC brands has doubled over the past five years, their seat share has grown by only 1ppt since Sep-2013, when it was 14.5%.
LCC capacity at Helsinki-Vantaa was fairly stable from 2014 to 2016, but growth has been strong in 2017 and 2018. LCC seat numbers for the week of 03-Sep-2018 will be 25% higher than in the same week a year earlier, when they were up by 21% on the same week of 2016.
Norwegian grew rapidly between 2012 and 2013, but then maintained broadly flat capacity before resuming strong growth in 2017 and 2018. easyJet is also growing in 2018, while the other LCCs are broadly flat.

Helsinki-Vantaa International Airport Annual Passenger Numbers*

Source: CAPA - Centre for Aviation and Finavia
Note: *From 2008 to Jun-2018

In Oct-2018, a seventh LCC brand will operate at Helsinki-Vantaa, with the entry of flydubai. Norwegian will also launch Helsinki-Dubai service, alongside Helsinki-Tel Aviv service, in Oct-2018.
In the first week of the next winter season (the week of 29-Oct-2018), LCC capacity at Helsinki-Vantaa will be up by 41% year-on-year, according to OAG.

HELSINKI-VANTAA INTERNATIONAL AIRPORT: AIRLINES BY SEAT SHARE*

Source: CAPA - Centre for Aviation and OAG

Europe's number 29 ranked airport
By passenger numbers, Helsinki-Vantaa ranked at number 29 among European airports in 2017, ahead of Malaga Airport in Spain (18.6 million) and behind Berlin Tegel Airport (20.5 million) in Germany.
As a hub airport for a national airline, with intercontinental links, Helsinki-Vantaa is one of the smallest in Europe. Only Warsaw Chopin (15.7 million passengers) and Reykjavik Keflavik (8.8 million) are smaller in this category of airport.

Helsinki-Vantaa is a large airport by comparison with Finland's population
Helsinki-Vantaa may be one of Europe's smallest intercontinental hub airports, but it is large by comparison with the population of Finland. The airport's throughput of 18.9 million passengers in 2017 is almost 3.5 times the national population of close to 5.5 million.
Helsinki-Vantaa has achieved its scale thanks to two factors.
One is the relative emptiness, in population terms, of Finland's northern regions. As with other Nordic countries, this has made aviation a vital means of transport to and from destinations where surface transport is impractical or unappealing.
Based on OAG schedules data for the week of 03-Sep-2018, 14.8% of Vantaa's seat capacity is on domestic routes and it has 16 domestic destinations. By way of comparison, this is one more than the number of domestic destinations at Frankfurt Airport - a much larger airport in a country with a much bigger population and with several large cities. London Heathrow has only eight domestic destinations.
The second factor is Finnair's strategy of using Helsinki's geographic location to target connecting traffic between Europe and Asia, in particular North East Asia.
According to OAG data for the week of 03-Sep-2018, Helsinki is the seventh largest European airport by seats to Asia Pacific, after London Heathrow, Frankfurt, Paris CDG, Istanbul Ataturk, Moscow Sheremetyevo and Amsterdam. It is number six to North East Asia, after Paris CDG, London Heathrow, Frankfurt, Moscow Sheremetyevo and Amsterdam.

Asia is Helsinki's leading long haul region
Helsinki-Vantaa has 15 destinations in Asia in the week of 03-Sep-2018, including seven in China (including Hong Kong) and four in Japan.
This is an increase of one compared with last year, following Finnair's launch of a service to Nanjing in May-2018. Before that, the last Asian route launch by Finnair was Fukuoka in May-2016.
In capacity (ASK) terms, Asia accounts for 38.7% of Helsinki-Vantaa's international capacity (North East Asia 30.3%, South East Asia 7.4%, South Asia 1.0%). Europe is the largest region, accounting for 53.0% of international ASKs (Western Europe 39.4% and Eastern/Central Europe 13.6%).
Apart from Asia, intercontinental capacity is fairly small. North America (three destinations: Chicago, New York JFK and San Francisco) accounts for 5.8% of international ASKs, and Middle East (two destinations: Doha and Tel Aviv) for 2.5%.

Top 10 routes include Scandinavia, major European hubs, Germany and Tokyo
Helsinki-Vantaa's largest international route by seats in the week of 03-Sep-2018 is to Stockholm Arlanda. The other two Scandinavian capital cities, Copenhagen (number two) and Oslo (number six) are also in the top 10.
The biggest destination outside the Nordic region is London Heathrow, hub to Finnair's oneworld partner British Airways. The UK is Helsinki-Vantaa's number four destination country by seats after Sweden, Germany and Spain.
Finnair's membership of the North Atlantic JV with British Aiwrays, Iberia and American Airlines provides indirect links to 28 gateways in North America and 163 onward destinations. Its membership of a Europe-Japan JV with BA, Iberia and JAL helps to funnel traffic from Heathrow into its Japan network.
Although not oneworld bases, other major Western European hub airports Paris CDG, Amsterdam, Frankfurt and Munich are also in Helsinki-Vantaa's top 10 international routes by seats.
The top 10 also includes Berlin Tegel, giving a total of three German airports in this list, and Tokyo Narita, again highlighting the importance of North East Asia to Helsinki-Vantaa. Germany is the number two destination country by seats from Helsinki-Vantaa (after Sweden) and Japan is number six (Denmark is fifth).

HELSINKI-VANTAA AIRPORT: WEEKLY SEAT CAPACITY OF LCCs*

Source: CAPA - Centre for Aviation and OAG
Note: *From Sep-2011 to Jan-2018

HELSINKI-VANTAA INTERNATIONAL AIRPORT: DEPARTING INTERNATIONAL ASKS BY REGION*

Source: CAPA - Centre for Aviation and OAG

HELSINKI-VANTAA AIRPORT: DESTINATIONS IN ASIA*

Country	Number of routes
China	Beijing, Chongqing, Guangzhou, Hong Kong, Nanjing, Shanghai, Xian Xianyang
India	Delhi
Japan	Fukuoka, Nagoya, Osaka, Tokyo Narita
Singapore	Singapore Changi
South Korea	Seoul
Thailand	Bangkok

Source: CAPA - Centre for Aviation and OAG
Note: *Week of 03-Sep-2018

The relationship between Helsinki-Vantaa and Finnair is mutually beneficial
Helsinki-Vantaa's traffic growth picked up in 2016 and, in particular, in 2017 and 2018, driven mainly by Finnair.
This followed some years of fairly anaemic growth while Finnair worked on margin improvement (it made operating losses in four out of six years from 2009 to 2014). The stronger growth of 2017 coincided with Finnair's achieving its best ever operating margin of 6.6%, making it the most profitable airline in the Nordic region by margin.
The revitalised Finnair has further growth ambitions, building on Helsinki's geographic location on the way to North East Asia from Europe. This has prompted Helsinki-Vantaa to ensure that it has sufficient capacity to accommodate increased traffic levels, particularly with LCC growth also picking up strongly in the past two years.
LCCs are providing competition to Finnair, but so far, not on long haul routes (and Finnair's stronger financial performance now makes it more resilient to such competition).
The mutually beneficial relationship between Helsinki-Vantaa and Finnair is serving both sides.