The Aviation Services division consist of four business units. Northport Oy provides ground handling services, Finnair Catering Oy produces meals for flights and engages in sales activities at airports and on aircraft, and Finnair Technical delivers aircraft maintenance services. Finnair Facilities Management Oy is responsible for managing the Finnair Group's real estate and for providing office services. The units' largest customers are airlines belonging to the Finnair Group. Business done outside the Finnair Group accounts for 25-40 per cent of turnover, however, depending on the unit.
Network airlines have traditionally produced air traffic auxiliary services themselves. The industry has seen the outsourcing of support services during the last 15 years. In Finnair Group, too, the handling of support functions have been transferred to partner companies in recent years.
Finnair believes that its makes more sense to produce within the Group those functions closely connected with air traffic, such as ground handling, catering and technical services. This naturally requires that the services are produced competitively both in terms of price and quality.
Ground handling
The functions of the Finnair Ground Handling business unit were incorporated into an independent company, Northport Oy, on May 1, 2004. Northport Oy handles the passenger services of Finnair and many other airlines as well as the loading of baggage, cargo and mail in connection with aircraft departures and arrivals.
Northport operates either itself or with partners at all of the Finnish airports to which Finnair group airlines fly. In addition, Northport's FinnHandling provides ground handling services at Arlanda Airport in Stockholm.
The challenge in ground handling is to adapt to increasing competition and falling prices in the Nordic market and also to changing processes in the wake of technological development. Digitalisation increases self-service options and enables the reassessment of resource needs as well as the redeployment of resources.
In 2004 Northport Oy revamped its Helsinki-Vantaa operations. Certain activities were transferred to partner companies and the company's own procedures were enhanced through the use of information systems and the extension of multi-tasking.
In 2003 Finnair began a structural reform programme involving the transfer of ground handling at domestic airports to the responsibility of local entrepreneurs. Functions have now been transferred to external entrepreneurs at all of Northport's domestic airports, except at Tampere and Turku, where operating models have been overhauled.
A further challenge in ground handling activity is to allocate personnel resources efficiently. Traffic volume fluctuates strongly at different times of the day, week and year. Northport's more independent status will improve opportunities for expanding the company's customer base and for providing services more flexibly to different customer segments.
Northport Oy and FinnHandling Ab employ more than 800 people. In addition, the companies have a network of 14 partners providing ground handling services.
Catering
This business area comprises Finnair Catering Oy and its subsidiary Finncatering Oy. Finnair Catering is responsible for the logistics of catering services, for part of meal preparation and for sales that take place at airports and on flights ie trading activities. Finncatering produces meals for leisure flights and for European economy class, and supplies catering products to retail food outlets.
In 2003 structural changes in production were initiated in Finnair Catering and in 2004 their impact became evident as a significant improvement in efficiency. The objective is to enhance production processes and improve operational quality in both catering units by introducing the LEAN production method. Moreover, customers' quality targets have been maintained, which is apparent in the success of customer airlines, particularly the main customer Finnair Scheduled Passenger Traffic, in gaining top ratings in a service survey conducted by the airlines.
In-flight and airport product sales have grown as air travel has increased. Sales activities will be extended to new European routes. An e-commerce site will open on the Internet in summer 2005 to enable passengers to place advance orders for products.
Finnair Catering, like other catering companies, has adapted its production to the airlines' altered market situation. A clear overcapacity is evident in many market areas. Withdrawals from markets and company restructurings within the sector are expected.
Finnair flights have increasingly adopted the practice of loading catering products on to aircraft at Helsinki for both the outward and return legs of the flight. This new practice has made more efficient use of Finnair Catering's production capacity and improved profitability.
Work to reinforce structural changes and competitiveness will continue, and towards this end Finnair Catering Oy concluded a three-year cooperation agreement with the catering sector's market leader LSG Sky Chefs on October 20, 2004. Cost-efficiency has also been sought by concluding procurement cooperation agreements.
Technical services
Finnair Technical's services range from full-scale servicing and overhauls to small, individual repair jobs. The unit provides high quality technical services, primarily for Finnair but also for other airlines, of which the largest customers are Lufthansa Cargo and Aeroflot.
Sales outside the Finnair Group grew in 2004. A new opening is the sale of basic maintenance services for turbo-prop aircraft to a Chinese airline. Finnair Technical aims to expand sales of its special expertise in a growing market.
As part of the restructuring of the Finnair Group, Finnair Technical has been developed as a business unit into a distinct profit centre. Structural arrangements advanced further when in spring 2004 a Technical Services unit was established in Finnair Scheduled Passenger Traffic with responsibility for purchasing and optimising the cost of aircraft maintenance operations.
Finnair Technical, in line with the Finnair Group's operational efficiency programme, has managed to reduce its unit costs. Further efficiencies will be generated when a comprehensive enterprise resource planning system is introduced between 2004 and 2006. As one element of the efficiency programme, it will also be possible to match labour more effectively to maintenance processes and schedules.
Finnair Facilities Management
Finnair Facilities Management Oy's area of business is real-estate management, development and leasing as well as servicing and maintenance. In addition, the unit provides office services to those occupying the properties. As a new subarea, the unit now incorporates the Procurement Services department, which centralises the joint purchases of the entire Finnair Group.
Facilities under management total around 300,000 square metres. Demand for real-estate and office services is growing strongly in the Helsinki-Vantaa Airport area and in the Aviapolis district near by. |