Ed Size

WOW I m impressed by your deep concerns about global politics. AYs success in the past was founded on a strong relationship with those c*nts, maybe that's why we are where we are? And that's why you lost all your burgers? But I can calm you down here, losing money wasn t very hard in the last 36 month.

But I agree, in hard times like these we all need to tighten our belts, pull together and give up superfluous things like champagne and pillows, because something much bigger is at stake. Wait until we're done with the c*nts.
WOW, I am impressed by your deep concern about world politics. AY's success in the past was based on a strong relationship with these c*nts, maybe that's why we are where we are? And that is why you have lost all your burgers? But I can reassure you here, losing money hasn't been very hard in the last 36 months.

And then it's climate change's turn, as AY is already very concerned about that. We'll give up Business Class completely and concentrate on the AY version of Zoom, but of course only in black and white and on small screens.

joorinainen

This is short sighted view. Revenge travel will wear off and the next downturn of economy is right around the corner. High prices will fade out eventually but the downgrades in service and product are here to stay.

mpkz

Well, aside from the fact that we do not know if current prices are revenge-travel driven (seems to be a US story that was ported over to Europe without much thought about the magnitude of excess savings), AY can always adjust its service if it notices that its competitors start serving champagne again or upgrade their products somehow. But this is the current market reality..

intuition

The rush to defend any and all product deteriorations is interesting. Usually, consumers have very little appreciation for the corporate motives behind a change. Which makes me think not everyone posting here is a consumer.

Anyway, two things comes to mind.
The concept of maximizing and minimizing something (like a profit, a loss, a cost) always has a time frame. Maximizing the profit with the fiscal quarter as the time frame is in no way a guarantee you will maximize the profit over a year, two years or any other time frame.

An airline could easily cancel every flight that has less RASK than a certain threshold and optimise the process to do it 15 days before departure and rebook passengers in order to fill other flights and/or just cancel and return funds (and possibly pay some damages). Overall, this will cut costs and boost profit, in short term. In a longer term they will lose a lot more in revenue though, as customer confidence gets eroded.

Secondly, profit is not a function of costs. It is a function of revenue and cost.
When someone advocates cost reductions their business case often assumes revenue will be unaffected or little affected. This "all else equal" reasoning fails to recognize the revenue part of the profit calculations and sometimes fails spectacularly. Especially when the cost reduction mainly is targeting the customer experience.

Will the champers itself reduce revenue in a significant way? Probably not. Will wave after wave of product deteriorations reduce revenue significantly? Most certainly.

The game Finnair is playing is to see if they can reduce costs faster than the inevitable customer revenue losses manifests themselves. Ie can they get profitable by becoming a small costs, small revenue airline. I don't think they can, but that is for the future to determine.

However, when aiming for a small cost, small revenue business, many ignore the fact that this is a volume business. With smaller volumes, economy of scales is against you. You cut costs, resulting in lost sales, resulting in increased unit costs, leading to the profit/loss pretty much stays the same albeit at a lower operating volume. So you need to cut more costs, resulting in... ...

Ed Size

What I don t get in the AY game is that they are going after the customers spending the most money. If the Champagne cut combined with the previous costs drive away just three customers a day the lost revenue and the saved money are very very unequal. If assuming a ticket is on average 2500�, and AY saves about 6�/bottle and any of the pax will drink 4 bottles it is less then 1% savings of the lost turnover. But its also close to 3 million less cashflow.

Isn t it more effective to make the tickets another 30� more expensive? I would say a business class passenger is more likely to book another airline because of poor flight times and service than because of 30�, especially if he is a status member of an airline. But it seems that AY and the airline industry no longer trust their own loyalty programs. But who am I, there are real experts here who can certainly judge this better. But with the money I won't be spending on Finnair this year, you can buy a lot of small bottles.

avermat

Future of Finnair J is here... On some longer intra EU flights. This is what was served as breakfast on 2h 40min hop. 2 bottles of wine was certainly enough. But this is Y for comparable Y price.


Okay airline breakfast

NoWindowSeat

Been travelling all week so �missed� this news totally, I saw some �iltapulu� article and reading that it would hint that champagne goes from LH to..? That�s crazy and with that I imagine it goes from the lounges too? Or from The Lounge(s) they still have it (non-schengen/pw).

DirektornSE

This was on THY not sure how that is AY?

Cambo

Not sure, whether just using "overfly rights" can be called a strong relationship. Buying the Russian natural resources as well, wanting to buy all the China crap is a significant more influential aspect.

And, yes, the "West" has been sleeping against the developing threats from the authoritarian regimes. These aren't stupid. The sooner Russia gets split up in 2 dozens smaller countries (the real thing Russia seems to be afraid of), the better it would be. Smaller countries are much easier to reform into a democracy. And then, later on, come to a union form like the EU. The positive aspect of that is, that none of these smaller countries does have the money to keep running the Nuclear weapons, so, one less state with that stuff.

Hmmm, I didn't lose my burgers, it got more, though less than without the Covid/Russian-c*nt.

Unfortunately, the only alternative would be to being taken over by the c*nts and then J class is only available for those being part of the authoritarian organization. All others get locked up for reeducation.

Yeah, poor man's J, though as soon as Russia has been defeated (In the past 100+ years, all aggressors have been, WW-I + WW-II), as a compensation payment, the (very expensive) Russian overly rights will be free, so AY does have double advantage.

avermat

Surely for SH not a competitor for AY but for equivalent Y pricing you get almost the same in flight service as AY J would be for triple the price. After COVID flying AY J has been mostly getting boozed as their salad concept means illaksi kotiin via McD drive thru. Therefore cutting champagne makes sense to drive away that kind of crowd.

Cambo

Aha, that's the Nimby approach.

Usually, when money is needed, one goes after the ones with the deepest pockets.

Not to say, the pricing AY can "offer" are related to the demand vs. availability. Just fly less in J class and J class pricing will go down.

Regarding your price calculations; A bottle of 1 kg on board of a LH, does cost something like 3 times that weight in extra fuel. So, your EUR 6 bottle can easily cost on board some EUR 12-18.

I once did, in the good times, make a calculation of the net profit for Easyjet, per flight (based on the numbers in their yearly reporting). This was less than EUR 25 / flight. Shocking. So, all those little savings can make a difference between positive or negative result per flight.

Ticket pricing is a difficult thing. Especially in economy, people decide on the lowest price, so EUR 30 can make a huge difference in the amount of tickets an airline sells.

In J class: Whether your decision to move elsewhere does have negative effect, all depends, whether AY is able to sell that ticket to somebody else. For now, it seems to be, this happens.

And, yep, loyalty programs are being trashed at the moment, all over the world, by nearly all airlines. Somehow, there is the perception, that only the high-priced close-in ticket purchases are relevant. Completely wrong. Those who purchase a cheaper ticket far out, are just as valuable customers, since these take care the close-in ticket purchasers have to pay the highest price. Lose these early buyers, because loyalty is lost, and they go for the lowest pricing, and it'll cost the airline a fortune in discounts to fill up the airplane, later on, before the close-in buyers do come.

The early bookers bring (at least) 3 advantages: Some want to change and pay a fortune to change the ticket, some cancel and the airline can double-dip, as well, the lower booking classes are full and all those buying later will have to cough up more money.

Added: For a J class price difference of just a couple of 100 Euro's, I am not moving away from a more convenient flight (or flight times). Not to say, I prefer to fly a couple of hours longer, to have a suitable "long" LH segment, to get a long sleep. ME carriers just drop out for me, to fly from EU to Asia. I don't want to be kicked out of the airplane, half-way my night sleeping.

mpkz

No, it's just that there are many who come here and predict AY's downfall as a result of cutbacks yet keep flying them on very expensive tickets.

I am entirely with anyone who wants to fight AY cutbacks by shifting their flying to another airline because that will force AY to improve their product.

But when it comes to people like you, whose level of understanding of business (from another thread) is that share-based compensation is taking from the shareholders "instead of the company" (https://www.flyertalk.com/forum/35131833-post7449.html), explaining how this is certain to hurt AY when it hasn't even caused you to cut back on your own flying it just gets too outrageous to not comment on. Same goes for Ed Size, who was sure that the lack of upgrade space would cause him to shift from being Y tickets on AY to buying J on whomever was cheapest, until he realized that sub-2k to BKK was not actually possible anymore and he bought a more expensive ticket on AY than he would have 3 years ago.

intuition

I can see how the pubslihed text would cover removing champers from both short- and longhaul. It doesn't say so explicitly, but knowing how sloppy some AY communications are, and considering it will be a much greater save if all champers gets replaced by sparkling wine my money is on that interpretation.

Soon enough we'll know.

intuition

It will only make a difference if you are 29� above the lowest price offered on the market. Especially in economy, people decide on the lowest price, and if you are offering tickets 30� less than yesterday and the priceleader is 100� less, you won't sell a single ticket.

DirektornSE

Airlines don't have relationships with governments, governments have relationships with governments. AY is a Finish company and Finland and, for example Russia are the parties here that makes borders closed or fly-over impossible.
For AY that's not going to change soon as they will be new members in NATO very soon (with Sweden most likely joining as well) - Both AY and SK have had a strong business in Asia due to both airlines have a large enough European network to be able to use a hub-spoke setup with Arlanda and Helsingfors-Vanda.