Changes in Northern Europe: Finnair outsources European routes to Flybe; Skyways & City Airline fold

The North European market underwent another shock wave this week with the grounding of Skyways Express and its subsidiary City Airline and the announcement that Finnair is moving ahead with its plans to outsource its short-haul operations to a much lower-cost airline through forging an agreement with Flybe Nordic that covers one third of its European network and 12 Embraer aircraft. The two events are unrelated though are indicative of a market undergoing a fundamental structural change spelling the evaporation of small, independent regional airlines and the disbanding of the traditional operating model of the legacy carriers in Europe, although Finnair still has to demonstrate how its JV with Flybe will bring its short-haul operation back to profitability.

Stockholm-Arlanda Airport, Sweden-based Skyways Express and Gothenburg, Sweden-based City Airline have cancelled all flights and stopped all payments with immediate effect (22-May-2012) after the owners of the company decided not to provide any further funds.