Iceland plans fixed subsidy for rural flights, may raise support to 9,000 króna per leg

Iceland’s government will change subsidies for domestic air travel under the Loftbrú programme, moving from a percentage discount to a fixed amount per flight leg from the start of next year, RÚV reports. The government said each subsidy code will now be worth 7,000 krónur per flight leg (14,000 krónur for a return trip) for eligible rural residents.

The programme, which offers support for people living outside the greater capital region to offset high domestic flight costs, currently provides a 40% discount on ticket prices. Around 62,000 countryside residents qualify for Loftbrú codes. Users remain eligible for six discounted flight legs each, per the newly announced rules.

Eyjólfur Ármannsson, Minister of Infrastructure, told RÚV he intends to review the planned change and said the government is considering raising the per-leg subsidy further, up to 9,000 krónur. No final decision or timeline for this possible increase has been announced.

The state’s annual allocation for Loftbrú is currently about 600 million krónur, and according to the government this has remained unchanged in recent years. However, overall costs have run higher than budgeted: in 2025, expenditures were around 140 million krónur above estimated levels. More than 80,000 journeys are made using Loftbrú discounts each year, based on recent years’ figures.

Thoroddur Bjarnason, a professor of sociology at the University of Iceland (Háskóli Íslands), has criticised the assumptions underlying the planned change to fixed subsidies. In a comment to Heimildin, he called for full results from the Loftbrú project to be evaluated before its subsidy design is altered. The government has yet to respond publicly to his remarks.

Background

Loftbrú discount codes are intended to make domestic travel more affordable for Icelanders living outside the capital area, helping to link rural communities with Reykjavík for essential services or family connections. All amounts are stated in Icelandic krónur (ISK): 1,000 krónur is about 7 US dollars or 6.5 euros.

TopicsEyjólfur ÁrmannssonIceland domestic flightsIcelandic GovernmentLoftbrúUniversity of Iceland