Air Iceland

Operation

Air Iceland is a market-driven service company offering eight scheduled domestic destinations, as well as routes from Iceland to the Faeroe Islands and Greenland.

In total, around 420,000 passengers were carried on Air Iceland flights in 2008. which is the highest number ever in the history of the company.  About 90% of the company‘s passenger traffic on scheduled flights is on the routes between Reykjavík, Akureyri, Ísafjördur and Egilsstadir, with Akureyri being the most popular destination with around 200,000 passengers, followed by Egilsstadir with around 134,000 passengers and Ísafjörður with around 47,000 passengers. Air Iceland carried around 22,000 passengers to Vestmannaeyjar in 2008. .

The purchase of two 37-seat DASH 8 aircraft in 2006 is giving Air Iceland new opportunities to develop the route structure to/from and within Greenland. A new route was opened up between Keflavik and Nuuk, linking Iceland directly with the capital of Greenland. Operating during the summer of 2007 from mid June until the end of August, the route was immediately successful. A big part of this success came through a code-share agreement with Icelandair, which is the first code-share agreement Air Iceland has concluded with its sister company Icelandair. Other destinations offered in Greenland were, as before, Kulusuk, Constable Point and Narasarsuaq. Another new route was opened up by Icelandair offering flights between Akureyri and Keflavik, linking Northern Iceland with the hub in Keflavik; this route was operated by Air Iceland on DASH 8 aircraft.

Markets

Air Iceland holds a very strong position in the Icelandic domestic market and has operated with healthy profits over the past few years. With the strong economy and largescale industrial projects in East Iceland, demand has been high on Air Iceland's main routes. With around 80% of Air Iceland's customers having purchased their trips on the company website, Air Iceland has reaped benefits from its extremely effective distribution system, which is important in a competitive environment where time and money play a significant role in customers' decisions.

Outlook

Air Iceland plans to grow and increase its profitability by offering the Icelandic market, and the tourism market in Iceland and Greenland, the best possible service. Demand is, however, expected to decrease on the routes to East Iceland as industrial projects are coming to an end. Expectations are that other routes will be growing and demand, particularly on the routes offered to Greenland, will be increasing. Based on its previous success, the route between Keflavik and Nuuk will be offered from the end of May until the beginning of September.