Icelandair is the flag carrier of Iceland. – Linked from here It is part of the Icelandair Group and operates to destinations on both sides of the Atlantic Ocean from its main hub at Keflavík International Airport. Its smaller domestic-only hub is located at Reykjavík Airport.
The geographical position of Iceland is convenient for one-stop transatlantic flights via the Atlantic Bridge route, which is one pillar of the airline's business strategy, along with traffic to, from, and within the country. Their headquarters are located in Hafnarfjörður.
History Flugfélag Íslands in the early decades
Icelandair traces its roots back to 1937, when Flugfélag Akureyrar was founded in Akureyri on the north coast of Iceland. Flight operations started in 1938 with a single Waco YKS-7 configured as a floatplane. In 1939 the airline was grounded when this aircraft was destroyed in a capsizing accident. In March 1940, Flugfélag Akureyrar moved its hub to Reykjavík and moved its operations to fixed-wing seaplane scheduled flights from the Vatnsmýri area, and changed its name to Flugfélag Íslands, where it acquired another Waco aircraft and was relaunched in 1940 as Flugfélag Íslands, which translates as Flight Company of Iceland. Seaplane flights were operated in the vicinity of Vatnsmýri in Skerjafjörður and Vatnagarðar. Previously, two unrelated airlines of the same name (Flugfélag Íslands) had existed in the country (from 1919 to 1920, and between 1928 and 1931). For international purposes, the name Iceland Airways was adopted.
In 1940, Iceland was invaded by the British and Reykjavík Airport was established south of the capital during the war. In 1946, the airport was handed over to Icelandic civilian authorities, now called Isavia. Iceland Airways (Icelandair) inherited a small building constructed by the British Army on the west side of the airport. Since 1947, the building has been gradually expanded but is still in use by Icelandair as a domestic terminal in 2024. By the 1950s, Iceland Airways operated flights to Britain and Northern Europe from the airport, as well as domestic flights.
The airline was based from Reykjavík Airport, close to the city centre, and the fleet was expanded with a Beechcraft Model 18 in 1942; and with two De Havilland Dragon Rapides and a Consolidated PBY Catalina in 1944, the latter being the first ever aircraft registered in Iceland to be flown to Iceland by an Icelandic crew from North America. On 11 July 1945, this aircraft operated the first commercial flight over the Atlantic Ocean for the airline, which led from Reykjavík to Largs in Scotland, with four passengers and four crew members on board. Regular flights to Prestwick Airport in Scotland and Copenhagen in Denmark, using Consolidated B-24 Liberator aircraft leased from Scottish Airlines were launched in 1946.
In the same year, the comfort and performance of domestic flights in Iceland was improved with the introduction of the Douglas DC-3. A total of six were purchased, which remained in service with the airline until 1972. Until the late 1960s, Flugfélag concentrated mostly on domestic service, but it also continued operating internationally; in 1948, the Douglas DC-4 was introduced on international routes, and in 1957, two new Vickers 759 Viscounts were acquired, the first turboprop airliners to be operated by an Icelandic airline. In the 1950s, Flugfélag began to use Icelandair branding for flights beyond Iceland.
In 1967, Flugfélag was the first Icelandic airline to join the jet age, when a Boeing 727-100 dubbed Gullfaxi was put into service. The B-727 jet aircraft was operated from Keflavík Airport, as the aircraft was considered too large for the smaller Reykjavík Airport. Most of Flugfélag's international operations transferred to Keflavík by this time. This left only shorter-distance flights to Greenland and the Faroes as the only international services from Reykjavík Airport. Another 727 was acquired in 1971, and the aircraft type was operated until 1990. In 2008, the cockpit section of Gullfaxi was put on display at the Akureyri Aviation Museum.
Loftleiðir
Another company, Loftleiðir, called Icelandic Airlines internationally, was formed in 1944 by three young pilots returning from their flight training in Canada. The company, whose name roughly means "Skyways", initially concentrated on Icelandic domestic routes using two Stinson Reliants and then a Grumman G-21 Goose amphibious aircraft.
Loftleiðir began scheduled international operations in 1947 from a small shed on the east apron of Reykjavík Airport. Loftleiðir soon began challenging Flugfélag's dominance within Iceland; by 1952, the Icelandic authorities became concerned that the fierce domestic rivalry would cripple both companies, and attempted to force them to merge. Unable to consummate a merger, the authorities instead divided domestic routes between the two airlines, prompting Loftleiðir to exit the domestic market and concentrate instead on international flights. Its pioneering low-fare service across the North Atlantic commenced in 1953. Loftleiðir is considered a precursor to the low-cost carriers, that emerged worldwide in the 1970s, as it was not part of or subject to IATA fares or rules. Loftleiðir, anticipating increased demand, began construction of a large passenger terminal at Reykjavík Airport.
The late 1960s were an exciting time for Loftleiðir. In 1964, the airline acquired Canadair CL-44 aircraft, which were the largest transatlantic aircraft operating at the time. As a result of the large size of the new aircraft, Loftleiðir moved its entire operation to Keflavík Airport in the same year, abandoning Reykjavík Airport completely. The planned passenger terminal at Reykjavik Airport later became a hotel and headquarters for Loftleiðir. It continued to house the headquarters of Icelandair until 2024. The Loftleiðir hotel was operated under the Icelandair brand until 2022.
In 1969, the company acquired International Air Bahama, a small Bahamian airline that operated transatlantic nonstop service between Nassau and Luxembourg using Douglas DC-8 jetliners, and a year later, Loftleiðir became one of the founders of Cargolux, a cargo airline. Also in 1970, Loftleiðir entered the jet age with its first two DC-8 aircraft.
During those years, many people including the company's own staff called Loftleiðir "the Hippie Airline" or "the Hippie Express". The airline was not known for speed or punctuality, but flying with the company became a sort of rite of passage for young "hippies" from America travelling to Europe, one of whom was future U.S. president Bill Clinton.
Merger with Loftleiðir During the 1970s energy crisis, the economic situation for both Flugfélag Íslands and Loftleiðir worsened. The government of Iceland initiated a new attempt to merge the two airlines, and this was successful in 1973 following lengthy and difficult negotiations, A holding company called Flugleiðir was created, which combined the two companies and began to streamline staff and operations.
In 1975, the Icelandic government provided a $13.5 million loan to Flugleiðir. The staff of Loftleiðir complained that Flugfélag Íslands, although smaller, had gained the upper hand in the united company. At the time of the merger, international transatlantic crossings made up two-thirds of the passenger traffic of the airline, and the fleet of Douglas DC-3s and Boeing 727s of Flugfélag Íslands was joined by the Douglas DC-8s of Loftleiðir. In 1979, the two airlines Flugfélag Íslands and Loftleiðir merged into one airline, Flugleiðir ("Flight Routes"), and the airline was renamed as Icelandair.
Post-merger Icelandair
In 1980, the Icelandic government provided a loan to Icelandair due to the company's bad financial situation.
The aircraft fleet of Icelandair remained mainly unchanged until the Boeing 757-200 became the new backbone for transatlantic flights during the 1990s. The domestic Fokker F27s were replaced by Fokker 50s and Boeing 737s deployed on European routes. The European hub at Luxembourg Airport had been taken over from Loftleiðir. Passenger count topped one million in 1997 as the company's business grew on a reputation as a "backpacker airline", similar to Loftleiðir, which had been referred to as "Hippie Airline" since the late 1960s. In the same year, it was begun to dismantle the Luxembourg hub in favour of today's decentralized European network, linking the largest cities non-stop to Reykjavík, closing it down altogether by 1999.
In 1997, the domestic operations of Icelandair, part of which had previously been operated under the 'Flugfélag Nordurlands' branding, were combined with a small airline Nordurflug to form the Air Iceland (Icelandic: Flugfélag Íslands) subsidiary, allowing mainline Icelandair to fully concentrate on international flights since then. On 20 November 1999, a new aircraft livery was introduced, as part of an image campaign designed to retire Icelandair's "backpacker" label in favour of an emphasis on business travel.
Development in the early 2000s In 2001, the Icelandair hub was moved to Keflavík International Airport. As Icelandair particularly focuses on flights to North America, the company was significantly affected by the airspace closure following the September 11 attacks in the same year. The Flugleiðir holding was reorganized as Icelandair Group (for aviation business) and FL Group (for non-aviation finance and investment business) between 2002 and 2005, with Icelandair becoming the largest and most important of eleven subsidiaries. The wet-lease and charter department, which was founded in 2003, was named Loftleiðir Icelandic, thus re-introducing a familiar name.
Icelandair was hit by the 2008 financial crisis in the country and was further impacted by a volcanic eruption in 2010. Air traffic restrictions following the 2010 eruptions of Eyjafjallajökull resulted in large parts of the European airspace being closed down. The air travel disruption coincided with the start of the important summer season for the company. The in-house crisis management organisation began assessing the situation once the scale of the problem had become known. Thrice-daily crisis meetings were held at the airline's headquarters. Icelandair tried to operate as many passenger flights as possible, keeping its hub at Keflavík open and diverting European flights to airports that were still open. The eventual closure of Keflavík due to the volcanic ash cloud coincided with an improvement in the situation towards Europe, which allowed Icelandair to move its headquarters with 200 staff to Glasgow and operate flights from there for ten days, with shuttle flights to Iceland's Akureyri Airport and round-the-clock bus shuttles onwards to Reykjavík.
In the aftermath of the eruption, the government of Iceland launched the successful "Inspired by Iceland" campaign to regain confidence in travelling to Iceland for tourists and business people, of which Icelandair was a leading participant and initiator.
When the Grímsvötn volcano erupted in 2011, Icelandair once again had to cope with airspace closures in Europe. However, this time to a lesser extent due to a higher level of political preparedness. Weekly newspaper The Economist claimed that Icelandair could even take advantage when catering for disaster tourists.