Icelandair, Iceland’s largest airline, says new operational changes are now bringing annual benefits worth about 20 billion krónur, though fuel cost increases and critical scrutiny of its fares and subsidies have cast uncertainty on the company’s future. Vísir was first to report management’s disclosures about recent gains and its response to ongoing political debate over domestic air travel pricing.
According to Icelandair management, the company’s underlying profitability is stronger than what is shown by its latest published accounts. However, they warn that its outlook is worsening due to rising fuel prices. Details were not provided on which parts of the accounts understate the company’s performance, or on how future fuel-cost changes could affect the company.
The pricing of Icelandair tickets and the impact of public subsidies were sharply criticised by Lilja Rafney Magnúsdóttir, a member of parliament. “When a flight from Ísafjörður to Reykjavík can cost 49,000, something is wrong, and a 7,000 ISK subsidy disappears,” she said. The parliamentarian added, “This is unacceptable.” Both quotes were translated from Icelandic.
Magnúsdóttir expressed dissatisfaction with proposed changes to the so-called Loftbrú, a domestic travel subsidy programme intended to support affordable air connections within the country. These changes were recently announced by the Ministry of Infrastructure (Innviðaráðuneytið), whose current minister is Eyjólfur Ármannsson, a member of Magnúsdóttir’s party. Specifics of the Loftbrú changes have not yet been detailed publicly.
Background
Icelandair is the flag carrier of Iceland and part of the Icelandair Group, flying transatlantic routes from its hub at Keflavík International Airport. Its domestic hub is Reykjavík Airport and its headquarters are in Hafnarfjörður. The airline traces its origins to 1937, when Flugfélag Akureyrar was founded and later became Flugfélag Íslands.
Sources
- Vísir (first reported) in Icelandic
- Miðjan in Icelandic
- DV in Icelandic
