The effect of competitive environment on the passanger's choice of airport in northern Finland

The effect of competitive environment on the passanger's choice of airport in northern Finland Research Tool for the needs of Athens University of Economics and Business

Background:

The city of Kajaani, Finland wanted to research the facts why passenger rates from the local airport have decreased sharply, and what to do with the results.

A customer experience study was carried out using Intres Tool information solution, which helps, firms access crucial information they need easily, quickly with possibilities for real-time results analysis.

Results:

The City of Kajaani and the local enterprenous association published the following major findings:

The research revealed that thousands of business travelers in Kainuu region choose to travel from airports of neighboring regions because of the lact effective competitive environment at the Kajaani airport. The reduction in passenger numbers that has occurred during the recent year at the airport of Kajaani (a drop of 128.000 passangers annually to to 92.700 passangers annually) is largely because of the high pricing and poor route timetables of the single flight operator flying from Kajaani airport. More and more business travelers choose to fly from more distant Oulu and Kuopio airport, where competition has improved the service levels of passangers and, at the same time, decreased pricing. Passengers clearly desire alternative flight operators and competition at Kajaani Airport, and based on the facts, proper action can be taken to improve the service level at the local airport.

Research Facts:

■ Participation invitation was sent to 633 companies and organizations, out of which 161 completed the questionnaire

■ 39 % of the respondents makes 1-5, 14 % 6-10, 17 % 11-20, 10 % 21-50 and 10 % 51-200 return flights per year.

■ 42 % of the respondents uses the Kajaani airport services only. 58 % use the services of more distant airports, too.

■ The business organizations in the area make 31500 return flights between Kajaani and Helsinki

■ The city of Kajaani and Kajaani share the common anxiety that the decrease in passenger rates at Kajaani airport will lead to reducing the flight services and connections from Kajaani.

Open feedback:

“Flights from Kajaani are very expensive, in practice, double the regular price.”

“The main reason for flying via Oulu is the more favorable pricing and timetable. Gladly we would travel from our local airport.”

“If you are able to fly from Oulu with 80 euros, it is worth taking a taxi drive from Kajaani to Oulu (distance 180 km), and still you save money compared with Finnair pricing.”

“Just would like to see a rival flight operator.”

“I just got to know from our most important tour operator that there is no connection from flight from Frankfurt to Helsinki to Kajaani. We have to fly our customers first to Kuopio or Kuusamo, and transport from there to Kainuu (distances 169, 246 km)

Recommendations:

“The growth in passengers at Kajaani airport can occur, but only if the competitive environment improves”.

“Business travelers’ increase in price awareness may further encourage passengers to prefer more distant airports. At the moment, already 14 percent of the passengers have switched to using Oulu and Kuopio airports, where there is good and fair competition between multiple flight operators. Blue1 has been able to reach a greater market share among these passengers."

Media sources:

Kainuun Sanomat (Newspaper), 18.12.2007, article available upon registration only

Koti-Kajaani (Newspaper), 19.11.2007, page 8

Website of Finnish assosiation for private entrerpreneours, 17.12.2007

Website of Finnish News Agency (STT), 17.12.2007