Iceland

Iceland Aviation Inc turns up the heat on its Nordic competitors

The debate continues as to whether or not Scandinavia’s airlines would benefit by merging in the current economic climate (meaning SAS Group, Finnair and Norwegian), but across the southern Arctic Ocean to the west there is another airline, together with its home airport and country, that are doing rather well and which, like Copa, Tocumen Airport and Panama City, are gaining regional influence that belies their relative size.

While Iceland/Icelandair/Keflavik Airport may not yet be Singapore/SIA/Changi Airport, or Dubai/Emirates/Dubai Airport in size and scope they are, owing – perversely - partly to a financial crash and an aberrant volcano, a collective force that cannot be ignored. But there is a caveat. Downtown Reykjavik’s Lake Tjörnin is a famous magnet for internationally travelling geese and other birds during the summer season. Yet could the influx of airlines that has taken place in Iceland during the year, and which looks likely to gain momentum, kill the goose that laid the golden egg?

Faroe Island-based Atlantic Airways has excelled in mastering unaccommodating operational challenges

At first glance Atlantic Airways has the perfect life: it is majority state owned and it has no competition in its home market. It is the sole airline providing air service to and from the Faroe Islands since now defunct Maersk Air stopped serving the country in 2004.

However, a deeper look into the small Faroese carrier’s operations quickly reveals that its situation is not enviable; it is quite the opposite, as it operates in an extremely challenging environment that includes a mountainous topography allowing only narrow and offset approach paths, extreme seasonality and the prevailing volatile North Atlantic weather. Cancellations or diversions due to the low cloud base, unfavourable winds or snowfall can cause knock-on disruptions for days at a time as the nearest alternates to Vágar Airport, the airline’s base, are in Iceland, Scotland or Norway.

Icelandair’s model has withstood the test of time but 757 replacement dilemma poses a challenge

Iceland’s de facto national carrier is operating the largest schedule and the largest fleet in its 75-year history after increasing frequencies on existing routes, adding a ninth North American gateway and placing into service additional Boeing 757s. Icelandair commenced a four times weekly service from Reykjavik’s Keflavik International Airport to Denver in Colorado on 11-May-2012, expanding its network in North America to nine destinations (two in Canada and seven in the US). The new route to Denver is an extension of Icelandair’s expansion strategy which builds on the country's geographical location mid-way between North America and northern Europe.

The airline’s predecessor Loftleidir pioneered sixth freedom rights and low-fare trans-Atlantic travel via Iceland in 1953 and in 1990 Icelandair was the first airline to offer scheduled trans-Atlantic flights on a 757.  Icelandair now operates a single fleet of 757s aircraft across its entire international network, spanning 22 destinations in Europe and North America. The single-type fleet creates significant cost efficiency in terms of maintenance and training for crew and engineers.

WOW Air confirms Iceland is one of Europe's emerging LCC markets

Located in the North Atlantic Sea, the Republic of Iceland's aviation market, like its volcanic geography, is constantly evolving. An increasing number of LCCs are attempting to enter the market. Iceland’s visibility increased significantly in the past few of years - for the wrong reasons - as the volcanic eruptions of the unpronounceable Eyjafjallajökull volcano caused mass-disruption for the European air transportation industry and as the national economy faced meltdown during the global financial crisis.

Aviation in Iceland is in the headlines again. From Jun-2012, a new LCC WOW Air is launching operations from Reykjavik Keflavik International Airport, the country’s main international gateway and home for national carrier Icelandair and Iceland Express, currently the sole LCC in the Icelandic market. WOW Air plans to operate two 158-seat A320 equipment leased from Avion Express, a Lithuanian cargo and charter carrier.

The carrier’s initial network will consist of 12 services to destinations across Europe including Alicante, Basel, Berlin, Cologne, Copenhagen, London Stansted, Lyon, Paris, Stuttgart and Zurich. WOW Air’s first service will be three times weekly Reykjavik Keflavik-London Stansted commencing 01-Jun-2012.

Increasing tourism, economic growth and oil make Uganda an attractive destination

It has been said that if Uganda’s infrastructure were to be improved, its resources could feed the entire African continent. Instead, the nation is one of the poorest and least developed countries in the world. However the potential for further development is undeniably present, and this is what has drawn large international airlines to enter the market. British Airways, Emirates, EgyptAir, KLM and South African Airways have been in the market for years, but it is the entry of Middle Eastern carriers such as Gulf Air and Qatar Airways in Oct-2011 through Dec-2011 that is boosting the nation’s aviation standing.

The country’s main international airport in Entebbe expects to break 1.5 million passengers in 2011 due to these services and is undergoing extensive improvement work to attract more carriers. The Ugandan Government approved the right for foreign investors to develop the airport, which will likely see a consortium of Middle Eastern developers take interest. The country’s designated national carrier, Air Uganda, is improving its offering as well, and is on course to launch domestic and more international services under its turnaround business plan.

Icelandair Group sees strong organic growth in profitable second quarter

Icelandair Group reported strong organic growth in a profitable second quarter (three months ended 30-Jun-2011) despite a 49% year-on-year increase in fuel costs. The carrier stated the outlook looks “generally good” and it is “well positioned” to address challenges ahead, aided by a “sound” balance sheet, “very positive” liquidity and a “strong” competitive position in the market.