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Finnair Hub Management – expectations and experiences

Agenda

•  Finnair in a nutshell •  Finnair operations & ground handling •  Ground handling in Helsinki hub •  Vision and targets for our hub •  Where we are today •  Experiences and expectations

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On blue and white wings since 1923 •  Over seven million passengers per year •  Turnover two billion euros •  7,600 employees •  Over 60 aircraft •  Listed in 1989 •  Market value 646 million euros •  12,500 shareholders

–  Government ownership 55.8 per cent –  Foreign ownership 15 per cent

Finnair Group organisation Travel Services

Oy Aurinkomatkat – Suntours Ltd Ab

Horizon Travel

Calypso

Takeoff/Matkayhtymä Oy

Finnair Travel Bureau Ltd (SMT)

A/S Estravel Ltd

Area Travel Agency Ltd

Amadeus Finland Oy

Airline Business

Airline

Finnair Cargo Oy

Finnair Cargo Terminal Operations Oy

Finnair Aircraft Finance Oy

Aviation Services

Finnair Technical Services

Northport Oy (ground handling)

Finnair Catering Oy

Finncatering Oy

Finnair Facilities Management Oy

Division of external turnover 1 January -31 December 2010

Finnair´s growth story

•  Focus on Europe-Asia traffic •  Asian traffic growth was 30 per cent in 2007 and 16.5 per

cent in 2008 •  Modern fleet •  Financially sound, strong balance sheet

Over a third of scheduled traffic revenue from Asia – over half from Europe-Asia traffic

Finnairin kaukoliikenne 2001

New York 7

Tokio 2

Peking 3

Bangkok 4

Finnair’s long-haul traffic in 2001

Singapore 4

Kaukoliikenneverkosto keväällä 2011

Osaka 7 New York 7

Tokyo 7 Nagoya 7

Seoul 7 Beijing 7

Shanghai 7

Hong Kong 12

Bangkok 7

Delhi 7

Long-haul network in 2011

Toronto 4

Singapore 7

The shortest great circle route between Europe and Asia goes via Helsinki (i.e. Mercator is our enemy).

The shortest direct route looks longer on a map projection.

The globe is not flat

Asian capacity has grown rapidly •  to China:

2001: 3 weekly flights 2009: 21 weekly flights 2011: 23 weekly flights

•  to Japan: 2001: 2 weekly flights 2009: 15 weekly flights 2011: 20 weekly flights

•  to India: 2001: 0 weekly flights 2009: 6 weekly flights 2011: 6 weekly flights

2001 2003 2005 2007 2009 2011

Helsinki is always on the way

•  Approximately 30 million passengers travel between Europe and Asia.

•  The market is growing 6-10% per year. Passenger numbers will double by 2015.

•  Via Helsinki is a natural choice if you have to change aircraft, for example from Stockholm, Gothenburg, Oslo, Hamburg, Düsseldorf, Berlin, Stuttgart, Manchester, Tallinn or Krakow.

Ljubljana Pisa

Venetsia

Zürich

Pietari Oslo

Praha

Pariisi

Lontoo

München

Milano

Ateena

Madrid Barcelona

Mallorca

Malaga

Faro

Rovaniemi

Kokkola/Pietarsaari Vaasa

Tampere Turku Helsinki

Seasonal service

Scheduled destinations

Leisure destinations

Tallinna Moskova

Riika

Vilna

Tukholma

Göteborg

Kööpenhamina

Hampuri

Amsterdam

Düsseldorf

Rooma

Hania Heraklion Rodos

Bryssel Varsova

Berliini

Frankfurt

Geneve

Nizza

Wien Budapest

Manchester

Kiova Krakova

Verona

Funchal

Malta

Jerez

Kos

Larnaca Pafos

Las Palmas, Fuerteventura, Lanzarote

Ponta Delgada

European route network

Lissabon

Stuttgart

Insbruck

Teneriffa Enfidha

Rimini

Varna Burgas

Zakinthos

Catania Preveza Korfu Skiathos

Santorini

Antalya Dalaman

In addition, we fly numerous flights in Europe with cooperation partners

Gdansk

Bergen

Jekaterinburg

Ivalo Enontekiö

Kittilä

Rovaniemi Kuusamo

Kemi/Tornio Oulu

Kajaani Kokkola/ Pietarsaari Kuopio

Joensuu

Jyväskylä

Vaasa

Seinäjoki

Pori Tampere

Turku

Savonlinna

Varkaus

Finnair

Finnair & flybe flybe

Domestic route network

Finnair´s Vision 2020

•  Finnair's vision is to be –  Number one in the Nordic countries –  The most desired choice in Asian traffic –  Among the top three operators in Asian ’via’ traffic

•  Fleet investments and route network development support the growth strategy

•  Service offering is based on Finnair’s own high-quality production and also on a network of carefully selected partners

•  Doubling our revenue from Asia-Europe

Finnair´s new identity

•  A boldly distinctive customer experience –  what we are:

Designed for you –  how the customer is

encountered: Peace of Mind service identity

–  how we act: quality, freshness and creativity

•  World class service –  Spa & Saunas airport spa –  Skytrax ranked Finnair as

Northern Europe's best airline

oneworld – the quality alliance •  oneworld has only quality members •  Finnair, British Airways, American

Airlines, Iberia, Cathay Pacific, Qantas, LAN, Japan Airlines, Royal Jordanian, Malev, Mexicana, S7 Airlines

•  Customers benefit from a global route network, common frequent flyer programmes, lounge services and travel services

•  Airlines cut costs through different types of cooperation

A look into the future

•  A long-term vision is needed, because the past is history, but we can influence the future

•  Flying is an unbeatable form of transport on long journeys

•  With a three kilometre runway, you can travel anywhere in the world, but how far with the same length of road or rail?

•  www.departure2093.com

Agenda

•  Finnair in a nutshell •  Finnair operations & ground handling •  Ground handling in Helsinki hub •  Vision and targets for our hub •  Where we are today •  Experiences and expectations

HEL GH short history

•  Outsourcing of ex Helsinki ground handling and supervision throughout the 2000

•  Struggling in finding the right shape and form for Helsinki ground handling

–  Helsinki ground handling incorporated early 2000 with target to grow the business to Nordic region

–  Dec 2009 Barona took over ramp services from Northport, major quality problems for several months

•  Barona proved to be a wrong approach –  Labor, quality and contract issues –  No real internal process improvement

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Agenda

•  Finnair in a nutshell •  Finnair operations & ground handling •  Ground handling in Helsinki hub •  Vision and targets for our hub •  Where we are today •  Experiences and expectations

New approach from 2010

•  Target: total ovarhaul of our hub operations

–  SmartHub hub management –  Search for high quality outsourcing partner in

ramp handling –  Customer experience process insourced –  Total unit cost approach instead of subsidiary

EBIT approach

New approach from 2010

•  Overall target to be the best Asia – Europe hub

–  Punctuality –  Connection success rate –  Baggage reliability –  Baggage delivery times –  Customer experience –  Unit cost of our handling

Finnair hub means peaks

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Quality dashboard

HEL costs HEL

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2010 2011 2012 2013 2014

Total costs in HEL

1050

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1200

1250

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1350

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1450

2010 2011 2012 2013 2014

GH costs HEL DEP

Agenda

•  Finnair in a nutshell •  Finnair operations & ground handling •  Ground handling in Helsinki hub •  Vision and targets for our hub •  Where we are today •  Experiences and expectations

SmartHub

•  Five pillars

– Process design – Hub Control Centre – New system support – Common KPI:s & reporting – Set and agreed cross organisational

governance •  Airline top priority – steering and involvement from the top

•  Target to be operational 1.12. •  Encouraging and steady progress

Agenda

•  Finnair in a nutshell •  Finnair operations & ground handling •  Ground handling in Helsinki hub •  Vision and targets for our hub •  Where we are today •  Experiences and expectations

Experiences & expectations

•  Hub is the core of your operations - you have to have a very clear vision where to take it

•  Hub ground handling is a good candidate for outsourcing •  Unlearning is more difficult than learning •  Outsourcing problems vs. partnering in solving those •  Win – lose is not sustainable •  Sprint or marathon

Experiences & expectations

•  Good fit in corporate culture •  Commitment in creating value for customer •  Flexibility in turbulence •  Continuous improvement and deployment of best practices •  Risk and reward sharing •  Integral part of Finnair operations

1. POINT OF DEPARTURE/DESTINATION 2. SEARCHING FOR INFO & BUYING THE TICKET & PLANNING Web / phone / advertising / travel agency / rumours 3. CHECK-IN SMS message 4. ON THE WAY TO THE AIRPORT Taxi / train / bus / car / metro 5. ARRIVAL AT THE AIRPORT Airport 6. CHECK-IN Ground services 7. CHECK-IN Automat 8. BAGGAGE DROP

Ground services 9. SECURITY CHECK Ground services 10. SHOPPING/LOUNGE/SPA Airport Shops, Lounge, Spa 11. PASSPORT CONTROL Border Guard 12. BOARDING THE PLANE Ground services 13. BOARDING IN THE PLANE Cabin Crew 14. BUILDING ONE'S OWN NEST & TAKE-OFF Cabin Crew 15. MEAL Cabin Crew

16. FINISHING THE MEAL Cabin Crew 17. WORK / ENTERTAINMENT / SLEEP / LEARNING Cabin Crew 18. SHOPPING Cabin Crew 19. LANDING AND ABANDONING THE NEST Cabin Crew 20. EXITING THE PLANE Ground services 21A. BAGGAGE CLAIM Arrival service 21B. TRANSFER 22. ON THE WAY TO THE DESTINATION Taxi / train / bus / car / metro 23. FEEDBACK Web / phone / fax / letter

In the end – there is only the end customer we work for

Peace of mind - Make it happen