Icelandair is the largest subsidiary within the Icelandair Group, accounting for around 53% of its income. In 2008 Icelandair carried 1.5 million passengers on its scheduled flights between Iceland, Europe and North America to a total of 24 destinations. The company operated a fleet of 11 Boeing 757 aircraft during the summer season for its scheduled operations.
The Icelandair business strategy is based on the geographical position of Iceland on the flight route between northern Europe and the eastern shore of the USA/Canada. By combining in its aircraft, passengers visiting Iceland, passengers departing from Iceland and passengers traveling across the Atlantic via Iceland, Icelandair divides its customer base into three main markets:
Passengers from Iceland
With its large network Icelandair offered Icelandic customers direct scheduled flights to 24 destinations in Europe and North America, an astounding range for a market of 300 thousand people. The biggest routes in the Network are to London and Copenhagen. The Icelandair frequent flyer program (Vildarklúbbur) now has over 150,000 members in Iceland and is still growing. The pricing policy of Icelandair and it's schedule is built up to meet different needs of customers flying to, from and via Iceland. Main focus is business and must go travelers as well as high end leisure tourist traffic.
Passengers to Iceland
Iceland has enjoyed increasing popularity as a tourist destination over the past 25 years. The number of tourists visiting Iceland grew from 72 thousand in 1981 to 460 thousand in 2008, which corresponds to an increase of over 12% annually. The vast majority of these tourists travel to Iceland by Icelandair. The company has fuelled this increase by the establishment and development of a network with a very high frequency of flights to Iceland and by strong marketing efforts in Europe and North America.
Transatlantic passengers traveling via Iceland
Even though its market share on the North Atlantic market is less than 1%, it is a key factor in Icelandair's operation. Due to the immense size of this market and the nominal market share held by Icelandair, it serves in effect as a gigantic reservoir of passengers. In its "via" marketing Icelandair focuses on city pairs with limited direct flights, and with its centrally located hub and quick turnaround times at Keflavik International Airport the company is able to offer competitive prices and flying times.
Arsæll HardarsonDirector, China & Asia