A new price war for buses awaits Finland – this is what it means for the consumer

Finland bus traffic may face a new price war. For the consumer, it would appear as cheaper tickets on the most popular routes. On the other hand, the risk is that it would be even more difficult to find an operator for quieter routes.

The background is the introduction of the German company Flixbus to the Finnish market. It is coming to Finland in an interesting situation. Long-distance bus traffic has recovered slowly from the corona virus. Onnibus also has significantly fewer routes and schedules than five years ago, even though it is the market leader.

“Our position brings us social responsibility, but we cannot expect loss-making traffic from a market-based operator”, explains Onnibus’ CEO Joona Hurmerinta.

The long-distance transport market between cities is practically an oligopoly between VR and Onnibus, and ticket prices have risen significantly since the price war of the last decade.

Despite its position, Onnibus has made more loss-making than profitable accounts during its history. Cost rules have been sought, for example, by letting equipment investments. The company still has a lot of original 2014 double-decker buses in traffic, which have already accumulated millions of kilometers on the odometer.

“This is not gold rush. Margins and margins are moderate. Inflation is running and costs are increasing,” Hurmerinta describes.

Flixbus is a fairly unknown company in Finland, but it is a major player in Europe. Last year, the low-cost bus company did turnover of two billion euros and transported 81 million passengers worldwide.

The company could have been seen in Finland much earlier, as it tried to buy Onnibus.com in 2016. The deal did not materialize, so the information never became public before this. If the offer had been accepted, Finnish bus traffic might look quite different today.

The roots of both companies are in deregulation of market-based public transport in the EU. Onnibus started with one bus on the Tampere–Pori route in 2012. Flixbus also initially had only one route in Germany between Munich and Nuremberg in 2013.

In the summer, ten years passed since Onnibus expanded into a national contender. In 2014, a Scottish investor became a partner in the company Sir Brian Souter. In two years, Onnibus brought 80 new double-decker buses into traffic, for which tickets were sold at unprecedentedly low prices.

VR had to react to an unexpected competitive situation. In 2016, train ticket prices were reduced. Eventually the number of passengers increased so much that price competition increased VR’s operating profit.

The old domestic bus operators did not fare as well. They began to cut back on their offerings or stopped their long-distance traffic altogether. The corona pandemic completed the development. Onnibus was almost the only market operator that continued to operate throughout the crisis. After Corona, the shifts of many other operators did not return.

The old giant of the bus industry, Väinö Paunu from Tampere, founded in 1926, ceased operations on the eve of its centenary last winter. On the Helsinki-Turku route, Onnibus’ last competitor, Vainion Liikenne, merged with Onnibus last summer.

A decade during the Onnibus has achieved complete air dominance on several highways. It already has a 70 percent share of the market-based long-distance bus traffic of the entire country.

At the same time that Onnibus has conquered Finland, Flixbus has conquered first Europe and then the world. The company operates in 44 countries on four continents. Flixbus is currently conquering markets in India and South America, for example.

The global market leader does not own any buses himself. Flixbus plans the timetables and pricing, but the operations are managed by local contract partners, who also bear a considerable part of the financial risk.

In the EU, Finland is the only country where Flixbus does not have a significant market share. After its failed landing attempt in 2016, the company long considered invading the Onnibus fort. Only last year did Flixbus open its first route here. When the newest Rovaniemi–Krakow route starts on Thursday, October 10, the company will have four bus lines in Finland.

Flixbus’ current routes connect Finland to Eastern and Central Europe via Tallinn. For example, there is a direct connection from Joensuu to Hamburg. The new connections offered by Flixbus are also interesting on the other side of the Baltic Sea.

“Tickets to Rovaniemi have already been bought from Poland,” said the manager responsible for Flixbus’ Eastern European operations Michal Leman tells. Estonians have also found new direct connections to Helsinki-Vantaa Airport.

Flixbus currently operates in Finland with Baltic drivers and fuel, which lowers the cost level. Yle met On the Joensuun line, there were drivers who knew neither Finnish nor English.

In the long run, however, the conquest of Finland will not succeed with timetables tied to shipping connections.

“There is a big expansion coming next year, for which we are already in talks with new Finnish partners,” Leman reveals.

“Our schedule for the whole world is planned in Berlin, but we also need local market experience from our partners.”

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“Would any operator have enough resources for quieter routes?”

New price war is a question that makes the interviewees spin.

“We don’t focus on the competitors, but on the passengers. We have, for example, a large legroom and the possibility to transport bicycles,” states Leman.

Onnibus’ answer is similar. The company returned to domestic ownership in 2018, when Koiviston Auto bought the majority of its shares. Since 2022, the owner has been the investment fund Capman. Now being domestic is seen as an asset.

“We employ hundreds of people in Finland. Our customers get service in Finnish both on buses and from the customer service center. Our development program focuses on improving the customer experience both on buses and on digital channels,” Hurmerinta formulates.

VR’s long-distance sales and marketing director Antti Karjalainen says that the company closely monitors the market situation.

“Our own pricing is already dynamic, and tickets are on sale at very competitive prices. We are now selling tickets for day trains until next summer, so if you buy the ticket in time, there are cheaper options available.”

According to Hurmerinna, if a price war starts, it will not necessarily be good for the customer either.

“On popular routes, passengers would benefit. But would any operator have enough resources for quieter routes?”

At least the final part of Michal Leman’s interview heralds new turmoil in Finnish long-distance bus transport:

“Everywhere we operate, we want to be the market leader.”