Towards More Responsible Air Travel, MBA, BSc Jaakko Schildt

Okay, I'll start with a hard poll of the industry. I should probably talk in English. For hobbies, I have snowboarding and enduro riding. This time of year is exciting for enduro riders because the race around Lake Pioneers is in two weeks and I'm participating again. It's going to be twelve hours plus twelve hours of pain in the Finnish forest. First of all, thank you to the city of Helsinki for the invitation. It's a pleasure to be here. I was very excited to see some real stuff: we do have new kinds of propulsion flying already, electrical and hybrid. Thanks for the presentations. Everybody knows Finnair, so no presentation about the airline as such. Our business is not yet flying electrical, but there is huge technological development. A couple of years ago, the first aircraft flew with composite fuselage, the 787 or 350. Composites first appeared in the 1960s, so it took 40-50 years to come into production use. That's the point: technological development is key to reducing emissions, but R&D times are huge. I believe electrical flying and propulsion will come to commercial use. The vital point is how to create the right environment for it, ensuring certification authorities have resources. We all complain about taxes and administration, but we need to ensure the right environment for certifying safe aircraft. Every change starts from myself. How many of you have been flying this year? How many have been compensating your CO2 voluntarily? Less than 1% of this group. Ladies and gentlemen, the change starts from yourself. Every kilo onboard is less CO2 emissions, so let's do it together. Now, looking at opportunities in the industry, I'll quickly go through a couple. I feel lucky because I have the highlights. I looked at my colleague Kimmo Mäki's presentation from La Vina, it's the same stuff, but I don't see Kimmo here so I can empty the Piazza before he comes. First, technology: Finnair got the A350, proven to reduce emissions by 25%. The direct shaft is overperforming its guarantees. We have a robust representative here. I've said it publicly: it's hard to say in commercial negotiations, but here I am. It's not only new aircraft; for example, our narrow-body fleet of Airbus A320 with CFM56 engines has had at least two major modifications: a performance improvement package and a technical insertion, giving 0.5% and 1% fuel efficiency. Technology comes into current aircraft and brings us forward, saving cost and reducing emissions. Second, flight methods and process development: on long-haul flights, we often make a flight plan for 12 hours, then go en route. In old systems, we rarely changed the flight plan significantly. Now there are software that communicate with pilots and allow en route changes, saving fuel. We use it on the A350, not all wide-body yet. Different approach methods, direct routing, off-track. Every catering item, carpet, blanket increases weight and fuel consumption, so no CO2. Every kilo you bring as a passenger creates more CO2. I tell my daughter: we need less clothing, Sarah, no more kilos. Third, continuous improvement of the environment: let me be frank, what's going on in ATC in Europe is not acceptable. If we sorted out ATC, it would save billions of euros to airlines, reduce delays, and save significant CO2. There are initiatives, but last summer in Maastricht, ATC was completely unacceptable, with strikes every week causing thousands of flight delays. Also, EU261 compensation mechanisms are unfair. So I started to talk bad about ATC, but it's not about ATC, it's about the political environment. We see more nationalism pushing ATC to behave as they do. Technologies on ATC are still voice communication via VHF radio, first used in the 1920s. It's slow and requires attention. We can improve efficiency by removing those. In addition, market-based methods: the emissions trading system for aviation, where airlines pay for CO2. That's already ongoing in other industries, more to come. Biofuels: probably three to five times more expensive than normal fuel, and supply, logistics, and infrastructure are not there. I'm excited to see concrete stuff, like a refinery in Gothenburg. But to make biofuels work, all stakeholders need to contribute. The big threat is legislation mandating biofuels. That may sound nice, but with restricted supply, what would happen to price and competition? If Finland mandates Finnair to use biofuels but other countries don't, it could price us out of business. We have to be cautious of populistic political themes. Number six: minimizing impacts. We introduced 'Push for Change' voluntarily. You can offset your carbon or invest in biofuels. I told you I ride motorbikes; I offset the fuel I burn in a year, and it was not that expensive. I feel much better about the hobby because I offset it. Conclusion: we can only save the earth and reduce CO2 together. It's no point pointing at manufacturers, authorities, oil companies, or airports. We all have responsibility. Even with the cost of a couple of coffees, you can make a difference. Financial: the current business logic: manufacturers like Boeing and Airbus make huge R&D investments, with cash flow out for 7-10 years before product certification. Then the question is whether it sells. How do we ensure the bigger picture? How do we change development for our children? Technology: electrical power to aircraft will be a breakthrough, but legislation like EU261 penalizes airlines for three-hour delays, which drives against technological improvements because new technology has reliability issues initially. Airlines are hesitant to take new technology. Penalties for irrelevant reasons like pilot sickness or lightning strike are not fair. Company development and public awareness: every kilo on board counts, and it starts with small things. We all have to contribute. Thank you.

As a company, where comes the zero point that you can't do anything more? Well, probably I would say from the technological perspective, this is like a running target. We always find something. If I think about extra weight, for example, new technology always comes: lighter seats, better materials. I think this year it's actually 30 years since I have been in aviation, and if I look at fuel saving programs, they have been going down all the time. It's small things, like route planning software gives 0.4% efficiency. That may be a small percentage, but aviation burns many kilograms a day, so 0.4% is a significant impact.

Yeah, that's correct. I mean, at airlines we do a number of optimizations. At the end of the day, it's a question of fuel price at the destination, infrastructure, capability of return, airport slots, etc. There are many parameters we optimize. In an ideal world, it would be nice that every city could optimize to fuel only, but that's unfortunately not really possible. So you might think that from an ecological point of view, for reducing CO2, there must be more awareness among companies, there should be more of an economical incentive to do that, not only for the people flying but also other companies. Yeah, that's correct. Thank you.

Okay, first of all, just a comment on the domestic network. At the end of the day, we are a stock listed company and we have to do the flying on a profitable basis. If we don't find a solution to support domestic flying, it would not be fair to our shareholders to make a lot of loss on domestic flying. I know it's a highly political issue, but that's how it is. Luckily, there are some positive news, like the development in Pori, where legislation has been changed and they are asking for a public service offering for the route. So I can see good development. Airlines can serve the domestic better. Then, what comes to electric flying, every airline wants to choose the best and right aircraft for its operations. We have no reason to exclude any electrically powered aircraft from future selection, definitely not. But we can always speculate when they would be available. We can demonstrate a good track record: we were the first customer for the A350 in Europe, and that decision was made in 2005, so we really took the leap to the future to get the latest technology.