Finnair SWOT & PESTLE Analysis

Strength

1. Cooperation with Oneworld partners in joint businesses: Finnair adopts several initiatives in order to increase the resilience against external market-related factors. One of them being joint businesses, strengthens Finnair’s position in the market by reducing the growth-related risks, thereby contributing significantly to its revenues. This position is leveraged by the company’s engagement and closer cooperation with certain Oneworld partners. By participating in joint businesses, namely the Europe-Japan flight, Siberian Joint Business (SJB), and the Europe-North America flight, Atlantic Joint Businesses (AJB), the company strives to make more route and pricing options available for the customers. For the airlines, entering into joint businesses is considered as one of the ways to gain the advantages typically associated with consolidation. In 2019, Finnair’s revenue growth was close to capacity growth in both the joint businesses, thereby leading to better development within the joint business traffic.

2. Implementation of artificial intelligence to come up with a pioneering forecasting solution: Finnair has leveraged the use of advanced technologies like artificial intelligence to deal with the risks associated with unpredictable situations and thereby has developed more agile competencies. Even though the physical risks arising from climate change effects cannot be controlled by the company, Finnair has the core capabilities for accurate and reliable forecasting and crisis response as well as for improvement of events and trends monitoring. This can be seen from the flagship weather forecast solution development by Finnair along with its partner, based on artificial intelligence. The company has been pilot testing this solution since 2018. In addition to this, the geographic location of the home base of Finnair, Helsinki Hub, is less exposed to weather risks and natural incidents.

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Weakness

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Opportunity

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Threats

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Political

1. Flight cancellation due to labour disputes:The labour unions of a particular geography, in spite of belonging to different industries and sectors, are affected by any disruptions caused to any single one. Moreover, the business operations are also affected upon the occurrence of any labour disputes. Being part of the aviation industry, Finnair was also a victim of flight cancellations which was a consequence of the support strike extended by the Finnish aviation labour union, IAU, to the Finnish postal service. The context of the strike was an ongoing labour dispute at Posti. As a result, even if Finnair was not a party in the dispute, it faced major impacts on its flight operations due to the same. The critical services at Helsinki Airport were most prominently affected, including ground services like aircraft loading and unloading, fuelling and push-back and the customer services at the airport such as flight catering and maintenance operations.

2. Impact of Brexit on the cargo business: In the last few years, the world has seen a rising number of global uncertainties caused by global feuds. One of them is Brexit, the uncertainties associated with a no-deal or hard Brexit, which greatly affects the market pace. In 2019, Finnair also felt the heat of the same on its business operations, particularly the cargo business. Even though the main markets of Finnair projected solid growth in demand, the traffic between Asia and Europe grew at a much slower pace than in the comparison period. But the company gained some benefits in the European traffic from the comparatively lower resilience of its competitors which led to significant capacity reductions on Finland to the Mediterranean and some Nordic routes. This resulted in a 3.1% increase in Finnair’s market share, from 56.9% to 60.0%, particularly in the European traffic.

Economic

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Social

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Technological

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Legal

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Environmental

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