In recent history Iceland has probably been best known in aviation terms for the unpronounceable volcano, Eyjafjallajökull, that brought European air services to standstill for days when it erupted in April 2010. However, half a decade later the country has emerged to become one of Europe’s fast emerging destinations and home, according to The Blue Swan Daily analysis, of the continent’s fastest-growing airport over the first half of 2017.
The eruption of the long dormant Eyjafjallajökull had compounded a banking system collapse, a major economic and political event that was significantly impacting trade and tourism in the country. Relative to the size of its economy, the collapse of all three of the country’s major privately owned commercial banks is believed to remain the largest experienced by any country in economic history and had left the country in a deep crisis.
But, fast-forward half a decade and these lows have been transformed into a growing market and and despite its at time chilly environment, Iceland has become one of Europe’s hottest and fastest growing destinations. Air travel has rebounded and demand has increased to levels never previously witnessed following the arrival of new entrants into the Icelandic market and the growth of two strong local carriers – Icelandair and LCC WOWair.
As an island, it’s no surprise that air travel plays a key role in connectivity, but with a small resident population of just 330,000 tourism plays an essential role in its economy. A proactive air service development policy has seen the number of airlines serving Iceland rise from 23 in 2015 to over 30 this year. This has seen the number of non-stop markets served from Iceland’s main gateway Keflavik International Airport increase from 80 in 2015 to 98 in 2016 and 110 this year.
Schedule data for the first half of 2017 from intelligence provider OAG shows that departure capacity from Keflavik International Airport increased 40.7% from 1.5 million seats to over 2.2 million. This ranked the facility as the fastest growing airport with more than one million departing seats during the period.
CHART – Monthly and Annual Demand at Keflavik International Airport in IcelandSource: CAPA – Centre for Aviation and OAG Schedules Analyser
At the end of last year travel search engine Skyscanner announced that Iceland’s capital city Reykjavik was the top emerging destination for 2017 with searches for the city up 81% on average over a three year period. Although new entrants have played a major role in linking Keflavik International with an increasing number of points across Europe, the bulk of the additional seats have been delivered by Icelandair and WOWair.
Since 2009, the Icelandair route network has nearly tripled in size, with a capacity increase from 1.3 million to approximately 3.7 million seats. The airline has been a catalyst in bridging North America and mainland Europe through Iceland, helping boost tourism to its home country in record numbers in the process.
Icelandair’s successful business model is now also being rivalled in the Transatlantic market by low-cost carrier WOWair which in 2015 inaugurated flights into the US and has subsequently expanded its North America offer with additional west coast services in the US and flights into Canada supported by the introduction of its first Airbus A330 widebodies.
ADD CHART – Fastest Growing European Airports With More Than One Million Departure Seats (H1 2017 versus H1 2016)Source: The Blue Swan Daily and OAG Schedules Analyser
The growth at Keflavik placed it ahead of Sofia Airport (39.1%), Boryspil International Airport (37.3%), Eindhoven Airport (28.3%) and Nuremburg Albrecht Dürer Airport (27.1%) as the fastest growing airport (with more than one million departure seats) during the first half of the year.
The strong performance was not enough to make Iceland (39.6%) the fastest growing country market during the first half of 2017, a position held by Georgia (40.5%) thanks to the ongoing rise in its connectivity and growth at all three of its international airports Shota Rustaveli Tbilisi International, Alexander Kartveli Batumi International and the newly developed David the Builder Kutaisi International which is proving popular with LCCs.
The rise in Central and Eastern European markets mean they dominate the fastest growing country list with Bulgaria (36.1%), Armenia (35.0%) and Ukraine (33.9) all seeing departure capacity increase by more than a third over the first six months of 2017. Another notable growth market was Faroe Islands (36.9%).