Icelandair to Descend on Denver

Icelandair is to increase its capacity to North America from its Keflavik International Airport hub from May 2012 with the introduction of a four times weekly link to Denver, while boosting its existing six times weekly service to Seattle with an additional rotation, increasing to a daily schedule. The new Keflavik – Denver route will be introduced from May 10, and will provide new opportunities for travellers between Europe and the Colorado city. There are currently only two direct links from Europe to Denver: a daily Boeing 747-400 service by Lufthansa from Frankfurt and a daily 777-200ER link by British Airways from London Heathrow.

Icelandair already serves eight markets in North America with flights to Halifax and Toronto in Canada and Boston, Minneapolis/St Paul, New York, Orlando Sanford, Seattle and Washington. Although there is a limited O&D demand between Iceland and these cities, a large amount of traffic also connects at Keflavik International Airport to the airline’s wider European network, either directly or as a longer stopover (the airline offers 72 hour stopover opportunities in Iceland on its transatlantic connecting flights).

Icelandair bases its route network on the central location of Iceland between northern Europe and North America. The route network enables Icelandair to serve three markets: the domestic market in Iceland, the tourist market with Iceland as a destination, and the international market between Europe and North America. According to the airline, the tourist market to Iceland is currently the fastest expanding of the three markets with a 20 per cent year-on-year growth.

The table below shows the importance of Icelandair’s European network to its transatlantic business model. It may only account for just a 0.9 per cent share of the total O&D traffic between Europe and North America, but this is enough to offset its limited home market. In the table below we analyse the airline’s eight routes to North America in more detail, highlighting the main traffic flows.

The airline’s two seasonal routes to Canada have the largest O&D flows from outside Iceland, with strong demand from Scandinavia, France and the UK in particular. The figures for Keflavik are actually artificially high as the success of the airline’s up to 72 hour stopover option in Iceland means that many passengers are actually recorded with an origin or destination of Keflavik, despite starting or ending their journeys elsewhere.

Icelandair has strong aspirations for the new link to Denver International Airport and as the fifth busiest airport in the US serving more than 160 non-stop destinations, the facility is likely to not only act as a gateway to the state of Colorado, but is also easy access to many points beyond the city.

"We were thrilled to choose Denver from a short-list of potential new gateway cities, as we feel it is a natural fit for Icelandair. Denverites will love the nature, lifestyle and culture of Iceland, while Icelanders will feel at home with the landscape, active lifestyle, and independent philosophy in Denver," said Birkir Holm Gudnasson, Chief Executive Officer, Icelandair.

Alongside the new route, Icelandair is to also add an additional weekly rotation between Keflavik and Seattle next summer. The airline launched the link in July 2009, initially four times weekly. It now offers six flights per week, but will now offer a daily schedule from May 22. This is planned to revert back to six flights per week from late October at the start of the Northern Winter 2012/2013 schedules.

The carrier’s schedule for 2012 will be approximately 13 per cent larger than its offering this year, according to the airline as frequencies are increased. As well as the Denver and Seattle developments it will increase flights to Washington, to all the Nordic capitals and Trondheim, Stavanger and Bergen in Norway, to Billund in Denmark, to Munich, Amsterdam, Brussels and Paris across Continental Europe and to Manchester and Glasgow in the UK. It expects to carry over two million passengers during the year using 16 Boeing 757-200s, two more than it operated this year.

During the Sixties and Seventies, Icelandair was known as the ‘backpackers airline’ and was the choice for many college students for travel between Europe and the US because of its low fares and convenient Schedule. This background is still part of the airline’s model today as it provides a value option for travel across the Atlantic.