Interview

'When we settle down in the market, we will sell at a slightly higher fare'

Finnair's pricing strategy has helped it generate higher load factors on routes from India and the launch of its sixth flight from Mumbai this summer, will take the total number of flights operated by the airline to 13. It won't be long before it opens up other destinations in the country, says Sakari Romu, its VP (revenue management & pricing), commercial division. By Chetan Kapoor

Sakari Romu VP (revenue management & pricing), commercial division Finnair

What is the reason for Finnair's low fares?

Our low fare pricing strategy is not only to earn revenues but also as a marketing tool. It was a bad move to begin operations in Mumbai in 2006 because of the seasonality of travel. It helped us in gathering data for passenger behaviour, understand them and create demand. Every airline lowers fares with increasing competition, but ours is widely available unlike the others resulting in us selling about 50 per cent of tickets. However, when we settle down in the market we will sell at a slightly higher fare.

Won't that jeopardise loyalty?

At present, the seasonality is so strong that there are no seats available from India to Helsinki but are available the other way around, and our load factor is around 75 per cent which is not bad for newcomers. If one were to think that we are creating loyalty by low fares, it only happens when other airlines are handing out cheaper fares too.

Moreover, it is actually the corporate travel segment which is our primary target and we have over 100 corporate deals and their loyalty is derived from the good service provided by us in the form of good and shortest connection to Helsinki. The Indian market generates about 30 per cent of our revenues and we are in fact looking at appointing area sales officials and strengthen our presence in Mumbai. We are also exploring the option of placing a Finnish representative there.

How important is the leisure traveller segment to the airline?

Our strategy is not to sell Finland as a single destination but also have tourism co-operation with other Scandinavian countries. In fact, India is one of the top destinations on the tourism board's list as many Indian companies, especially the IT industry, do business in Finland. But we need time as the sales force in the country is putting close to 70 per cent of their time on the Indian corporate segment. We are a business traveller airline and more than 50 per cent of our revenue comes from them.