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Short-haul carriers struggle with weak profitability

Finnair and Flybe announced on Wednesday that they have reached an agreement on the sale of their joint venture, Flybe Nordic.

The providers of short-haul domestic flights have struggled with weak profitability for several years.

The most recent indication of the financial woes came on Wednesday when Flybe, a British carrier, announced that it will pull out from its joint venture with Finnair, Flybe Nordic. Flybe Finland, a subsidiary of Flybe Nordic, has been responsible for operating the majority of short-haul routes in Finland – some independently and some as a service provider for Finnair.

Flybe owns 60 per cent and Finnair 40 per cent of the shares in Flybe Nordic.

Pekka Vauramo, the CEO at Finnair, said on Wednesday that a new majority shareholder will be sought for the joint venture due to its weaker-than-anticipated performance. If one is not found, Finnair will buy out the stake of Flybe for a nominal fee of one euro.

The weak profitability of short-haul flights has been a concern for years.

Mikko Saariaho, the director of corporate communications at Finavia, points out that passenger numbers on domestic flights have dwindled steadily already for ten years, at an annual average rate of 1.7 per cent. On international flights, passenger numbers have contrastively increased by 5.2 per cent per annum since 2004.

Heikki Arola – HS
Aleksi Teivainen – HT
Photo: Antti Aimo-Koivisto / Lehtikuva