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Finavia’s Business Review H1/23: The long-term financing of the Finnish airport network must be secured

Press release
Article published
31.8.2023 at 09:15
Kuvassa Finavian siniset liput.
Finavia's turnover increased in January–June thanks to increased passenger volumes. The company's profitability grew in all business areas, but the company's operating result remained negative due to low passenger volumes. The slow recovery of passenger volumes has a significant impact on Finavia's finances and, consequently, on the operation of regional airports. The data is available in Finavia's January–June 2023 business review.

Air traffic continued to grow in January–June 2023. The growth in passenger volumes increased Finavia's revenue from air traffic, which improved the company's profitability. The operating margin of the company before extraordinary items improved by 131% and came to EUR 43.2 million. During the review period, the company also accomplished the goals of the cost-cutting programme ahead of schedule. The cost-cutting programme launched due to the COVID-19 pandemic included, for example, a reduction of EUR 300 million in operational costs and investments.

The company's operating result remained negative at EUR -14.5 million. Most of Finavia’s revenues are derived from air traffic revenue, such as passenger charges and landing charges paid by airlines. The reported loss was particularly due to the low number of passengers at Helsinki Airport as a result of the closure of Russian airspace. The number of passengers at Helsinki Airport is still only approximately 70% of the number of passengers prior to the COVID-19 pandemic in January–June 2019. The passenger volumes of Helsinki Airport have an impact on the whole of Finland: In accordance with the network principle, the operating costs of regional airports have been covered mainly by the air traffic revenues of Helsinki Airport.

“We estimate that passenger volumes and, consequently, Finavia's air traffic revenues will remain low for a long time due to the closure of Russian airspace. Due to moderate passenger volumes, Helsinki Airport's revenues are not adequate to cover the operation of all regional network airports or future investment needs. Despite the fact that we are actively continuing our work to launch new flight connections, as well as implementing cost-cutting measures and taking other actions to ensure financially sustainable operations, the financing of the airport network is facing a dire situation,” comments Finavia's CEO Kimmo Mäki.

The January–June 2023 business review shows that the recovery of passenger volumes to the level prior to the COVID-19 pandemic has been slow, especially at Finavia's smaller network airports. The passenger volumes of small airports have been declining for years and there are no changes in sight that would materially affect the negative trend.

Temporary public financing has been granted for flight connections to Joensuu, Jyväskylä, Kajaani, Kemi-Tornio, Kokkola-Pietarsaari, Pori and Savonlinna. The public financing of Joensuu, Jyväskylä, Kajaani, Kemi-Tornio and Kokkola-Pietarsaari flights will end in April 2024. Finavia estimates that continuing purchased traffic services to low-traffic airports would cause Finavia annual losses of approximately EUR 20 million.

“When talking about subsidies for regional air traffic, it would be good to also take into account the impact of the decision on Finavia's finances. No aircraft can safely land or take off without a well-operated airport,” says Mäki.

The trends of passenger volumes at regional airports have been very varied: The development of passenger volumes during the review period was particularly positive at Tampere-Pirkkala, Rovaniemi and Turku Airports due to the opening of new direct international flight connections. Rovaniemi has even exceeded its passenger volume in 2019, which can be considered a strong indication of Lapland's international appeal as a tourist destination. The Lapland airports of Kittilä, Ivalo and Kuusamo came close to the level of 2019.

Business Review January–June 2023.
Up-to-date air traffic statistics are available on Finavia’s Traffic statistics page.