Russia’s war in Ukraine is a humanitarian and political crisis. It’s also a nightmare for businesses in the region.
“War is hellish in Europe,” says Topi Manner, the chief executive of Finnair. “But in terms of corporate life, we have been to hell and back.”
With Russia lying little more than 100 miles from Helsinki, having the Red Army on the doorstep is something the average Finn has had to tolerate for decades.
All male Finns are required to undertake military service after they turn 18, a legacy of paranoia about the country’s neighbour.
Vladimir Putin’s invasion of Ukraine has not only ramped up that anxiety but made matters intolerable for Manner, the chief executive of the country’s flag carrier.
Finnair is the largest Scandinavian airline and one of the biggest in the world, with bases in London, Manchester and Edinburgh.
However, the closure of Russian airspace after the outbreak of war crippled its business and, at its worst, left Manner staring into the abyss.
“During the darkest moments… it was not self-evident that we would have survived,” he says.
Few would argue that Manner has the hardest job in global aviation. Russia surrounds Finland: to the east as well as cupping the country in the north and south.
The closure of Moscow-controlled airspace as part of economic sanctions against the Kremlin was therefore devastating for Finnair. It forced the carrier to fly around the huge landmass, adding cost and hours onto flight times.
The flag carrier previously used geography to its advantage, carving out a niche running shorter flights between Europe and Asia by skirting the Arctic Circle and passing over Siberia.
Flight times between Asia and London – even with a connecting stop in Helsinki – were comparable to similar direct services put on by British Airways.
“The closure of the Russian airspace smacked right in the middle of that strategy,” Manner says. “So we needed to completely change something that we had built successfully for more than 20 years.”
To understand how disruptive it was, look at flights to China. A service between Helsinki and Beijing took roughly nine hours flying over Russia but now takes up to 14 hours.
Worse still, some destinations are now off limits for Finnair’s aircrafts because of the longer distances required to reach them. Eight of Finnair’s Airbus A330 jets – a tenth of the airline’s fleet – no longer have the range to fly to some Asian destinations.
It is not just Russian airspace that is closed. So too are the skies over Belarus and of course Ukraine.
Costs on some of Finnair's routes have doubled, mostly from the additional fuel required, but also as a result the extra manpower needed on elongated trips.
The crisis came just as another was ending: two years of Covid travel restrictions that brought international travel to a standstill.
Manner, a former banker with no prior aviation background, took charge of Finnair a little over a year after the pandemic struck.
After Putin invaded Ukraine, he was forced to reinvent Finnair's business to stay alive. The carrier began flying to the Middle East in partnership with Qatar Airways. Meanwhile, extra routes westwards have been laid on – to Texas and Seattle, for instance.
“We have completely revamped our network,” Manner says.
Wet leasing has also proved a useful money-spinner. Finnair has been leasing its planes, complete with crew, to other airlines to help them fulfil flights.
This has led to planespotters sighting Finnair jets in unusual locations.
Some of the airline's stricken A330s are being leased to Qantas in a five-year deal – a sign that Finnair does not expect the war in Ukraine to end anytime soon. This means some Finnair crew will be stationed in Singapore to run services to Australia.
British Airways, meanwhile, has borrowed some of Finnair’s A320s to run short-haul flights across Europe. Crew that would typically return to Finland after a flight must now be holed up at Heathrow for weeks on end as a result.
There are signs that Manner’s overhaul is working. In the first three months of 2023, Finnair eked out a small profit.
However, shares remain at half of pre-pandemic levels and are unlikely to rebound until Russian airspace reopens. (Finnair is 55pc owned by the state with the remainder floated on the Helsinki stock exchange.)
The West’s decision to ban flights over Russia was partly about safety. Airline bosses are wary of a repeat of the shooting down of Malaysian Airlines MH17 in 2014 as it flew over rebel-held Ukraine. Russian separatists have been found guilty of the tragedy that killed 298 people.
However, the overflight ban was also about denying Russia a revenue stream to fund Putin’s war effort.
In 2019, the country generated $1.7bn (£1.4bn) through overflight charges – a pittance in comparison with Russia’s oil revenues but money that can be used to make bombs and guns nonetheless.
While Western airlines such as Finnair are observing the boycott, it is not global.
Chinese carriers, for instance, continue to reap the benefits of shorter services to Europe.
Air France has reportedly been pushing for a ban on any arriving airlines that have travelled over Russian airspace. Meanwhile, Virgin Atlantic has been a leading voice in the UK in calling for curbs on Chinese carriers landing in Britain.
Manner believes Europe is unlikely to take a tough stance on the issue despite the lobbying efforts.
“Accept[ing] that there is no level playing field and Chinese carriers go on using Russian airspace – that seems to be the approach that Europe is taking at present time,” he says.
The US is taking a stronger stance: Chinese carriers are being allowed just 12 weekly flights to America by US authorities.
Manner adds: “In theory, there could be the possibility that European authorities would limit Chinese carriers [like the US] – but we don't see that happening at this point.”
It is not just the Chinese airlines that are using Russian airspace. Qatar Airways, Etihad, Emirates, and Turkish Airlines are also flying over and into the country, undermining Western sanctions.
This could be the reason that bosses at legacy European airlines are reluctant to publicly denounce rivals that make use of shorter Russian routes.
Qatar, for instance, is part of the Oneworld alliance that includes Finnair as a member. The Middle Eastern airline is also the biggest shareholder in British Airways owner IAG.
Manner says: “It remains to be seen how this level playing field issue unfolds. And my personal hypothesis is that the US and China will first need to solve their bilateral relationship. Afterward, Europe can follow suit.”
In Asia, Finnair struggles to compete on price with Chinese and Indian carriers that are still flying over Russian.
“We have kept our foothold in Asia, flying to the megacities of Asia [such as] Tokyo, Shanghai, Hong Kong and Singapore,” he says.
However, pent up demand for travel has allowed the airline to survive in the region and pass most of its higher costs onto customers by charging higher fares.
“Eventually we hope that there will be genuine peace in Ukraine with the kind of terms that Ukraine can accept,” Manner says.
“And once that has taken place, we think that the Russian airspace opening should be one of the first sanctions to be lifted. Because it has massive implications for the whole of global air travel, not to mention emissions.”
He adds: “Unfortunately, that is not on the cards anytime soon.”