Finnair Forced To Deny IAG Takeover Rumors – Is Europe Going the Way Of The US?

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A few weeks ago Skift reported that Finnair’s CCO, Juha Jävinen, had hinted that Finnair was in advanced preparations for a buy out by IAG – the parent company of British Airways, Iberia and Aer Lingus. He even used a panel discussion of global industry partnerships, consolidation, and joint ventures to highlight the success of Finnair’s joint ventures with British Airways and JAL on their routes to Japan:

[The benefits of the JVs can be seen] on the revenue on the Japanese routes. It’s 10% sold already by JAL and BA. That’s one of the enablers of why we announced our fourth Japanese point, so we serve four points directly out of Helsinki. That’s, of course, a benefit for BA. For example, they can feed all that beyond Tokyo traffic. That’s were we really get [coordination of routes, processes, and network].

Jävinen explained that it was competition from the Gulf Carriers that was driving the agenda:

The Gulf carriers are there to stay. We need to become focused on building our platform, so that our platform through Helsinki, especially to North Eastern Asia, is competitive. It is a niche where survive by ourselves or we become part of a consolidation

Juha JärvinenJuha Jävinen – Finnair CCO

And that’s where the rumors started. First there was the mention of the benefits to British Airways of a close association with Finnair and then there was the suggestion of a consolidation.

Yesterday  the Finnish business press reported that negotiations with British Airways are “advanced”…. which then forced Finnair to come out with the following statement:

Finnair notes that there has been speculation in the media today regarding a potential bid for Finnair by British Airways or IAG.

Finnair is not active, and is not aware of its shareholders being active, in any such negotiations.

IAG decided to weigh in too: “We haven’t been in any discussions with Finnair” an IAG spokeswoman told Reuters.

It’s hard to know what to believe but I’m a big advocate of the “there’s no smoke without fire” concept when it comes to mergers, acquisitions, buy-outs etc…. IAG has proved itself to be an acquisitive beast and, now that the Aer Lingus deal is in the bag, there’s no reason to believe that they won’t go after another European airline. And Finnair would make perfect sense.

Over recent years Finnair has been building up its easterly routes and, thanks to Helsinki’s geographical location, their home base is perfect bridging point between Europe and Asia.

 

finnair-route-map

A quick look at the Finnair route map shows just how much benefit an airline like British Airways could derive from having access to those routes. Access that a joint venture don’t really give it.

If IAG were to make a successful tilt at Finnair the biggest losers would be the consumers – there’s absolutely no doubt about that. The US has now got itself into a position where there are only 3 big airlines running the show and it looks like IAG has ideas of sending Europe down the same route.

Competition is the consumer’s best friend, and if Finnair were to be subsumed by the IAG behemoth, European travelers would suddenly find themselves with a lot less choice when flying east. IAG is already on the record as being pro consolidation (at least they’re honest about it!) but there is absolutely no upside to consolidation for consumers.

Finnair is part of the OneWorld Alliance so British Airways flyers already have a whole host of benefits when they fly the airline. They can:

  • Earn Executive Club miles
  • Use Avios for award flights on Finnair
  • Earn tier points towards British Airways status
  • Have their British Airways status recognised on Finnair (lounge access, seat allocations, priority boarding etc…)

And the reverse is true too, all the Finnair flyers get a full set of benefits when they fly on British Airways, so what possible gain would there be for either of these groups if IAG were to take over Finnair?

I can’t see how this move would be any good for OneWorld fliers as a whole either.

  • The British Airways loyalty program has been gutted
  • They insist on levying abhorrent surcharges on award tickets
  • They fly business class cabins that resemble dormitories
  • They haven’t improved their onboard product since the late 1990’s
  • Their customer service is, at best, average.

Is that the sort of airline/company you’d like to see running Finnair?

One thing is for sure, if Finnair is taken over by IAG it won’t be the good parts of Finnair that win the day. Avios will become their loyalty currency, surcharges will appear on everything and the once cheerful, happy cabin staff will have their spirit broken as IAG forces through cut after cut after cut.

Europe needs to learn from the mistakes that the US DoJ make when it failed to do its job and allowed America’s commercial airlines to consolidate down to just three major carriers. Standards were already low on the US carriers and now they’re rock bottom. Airlines like Finnair still have some character about them and appear to actually want to provide a good product with decent service – it would be a neglect of duty on the part of the European regulators if they allowed that to be destroyed.

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