Finnair Doesn't Want Compensation for Volcano Disruptions

Last Updated Apr 28, 2010 1:00 PM EDT

Here's something that might make you scratch your head: Finnair has publicly come out saying that even though it lost 20 million euros due to flight disruptions thanks to the ash cloud over Europe, it doesn't want to see any state aid for anyone, including itself. This actually makes more sense than you might think.

The numbers seem staggering for a relatively small airline the size of Finnair. More than 1,700 flights were canceled and 140,000 passengers were disrupted. The 20 million euro hit represents around one percent of Finnair's annual revenues. Last year, Finnair lost 180 million euros, and its oneworld partner airline British Airways has been one of the most vocal proponents of state aid. So why would the airline not want the assistance?

Mika Vehviläinen, Finnair's CEO, said:

Companies in a weaker economic condition are making strong demands for help. A subsidy stampede would distort competition, because the risk of airlines using the system for wider support would be great. We are already seeing support that contravenes the EU's state-aid rules.
In other words, Finnair has enough cash to survive this and they'd rather see weaker competitors go away than be supported so they keep limping along for awhile. Think about Blue1, the Scandinavian (SAS) competitor in Finland. SAS has been in financial trouble for a very long time. I'm sure Finnair prefers to see them on the ropes than flush with cash from the state. There are plenty of other airlines in Europe that have troubles as well these days, but Finnair apparently is not one of them.

Will they be able to prevent aid from flowing? I doubt it, but they do have a point.

According to EU air services regulation, in order to maintain their operating licences, airlines must at all times be able to meet their actual and potential financial obligations for the next 12-month period . . . . We presume that the authorities will check immediately if the companies demanding support fulfill the conditions of their operating licenses. The cessation of operations for a week should not destabilize the solvency of a company that meets the EU requirements
[Photo via Flickr user Aku :)]