For the Finnish air traffic market, 2003
was a year of huge fluctuation and new situations. Air transport
shrank dramatically at the beginning of the year, especially
in the second quarter, even as new airlines entered the market
in an unprecedented way. Stiffening competition among airlines
in this declining market finally halted the long-term trend
of rising air fares by the end of the year, and slashed them
sharply; by as much as 30 % for domestic fares and 12 % for
foreign travel.
The price changes plus the extra capacity increased air
travel in the final quarter by up to 10 %, although the
general economic trend – the driving force behind
air travel – wavered either side of zero in Finland.
For the airports, this favourable year-end spurt raised
annual passenger volumes by about 2 %, which, with the belt-tightening
prompted by the New Year jolt and a number of other measures,
allowed the CAA to show a favourable 16.5 million euro financial
result, without having to skimp on quality or standards.
This was a highly surprising turn of events, since during
the somewhat desperate “disease period,” we
at the CAA estimated that air transport would end up as
much as 5 % down for the year, with zero profit or even
a slight loss.
Over the year, domestic air travel remained 2 % down, despite
the price trends and new airlines on the market. However,
during the final quarter when price competition was fiercest,
domestic traffic rose by 7 %. International traffic growth
over the year finally ended almost exactly as we had predicted
at the beginning of the year, at 3.7 %. In the final quarter,
growth, spurred by Christmas Lapland travel, reached a full
11 %. With international travel accounting for 74 % of Finnish
flights, the changes in the various demand segments gave
a growth of 2 % in Finnish air travel as a whole.
The sluggish state of domestic traffic is worrying, especially
for the development of provincial airports, as well as for
the future of some of the smaller ones. For apart from Tampere
and Turku, the proportion of domestic traffic at provincial
airports is absolutely decisive, that is, 85 %, of which
onward international travel accounts for about 15 %. At
the beginning of 2004 the bankruptcy of a Finnish budget
airline raised a number of issues and was instructive for
the industry.
