Isavia CEO: Iceland airport expansion signals brighter future

Iceland is investing EUR 100 million to increase the capacity of its main international airport, Keflavik. The need is due to the steady increase in passengers during recent years, which is expected to continue. “Our investment requirements are certainly indicative of better times. The increase in tourism has brought valuable business to local communities and has been a saviour after the crisis. It signals growth and a brighter future”, Bjorn Oli Hauksson, CEO of Isavia, tells the NIB Newsletter in an interview.

Keflavik International is already now operating at maximum capacity during early morning, late afternoon and midnight departures.

“We expect the number of passengers at Keflavik International to rise from 3.8 million in 2014 to 5.2 million in 2017. This is primarily a result of increased tourist traffic to Iceland as well as the expected growth in transatlantic traffic”, Mr Hauksson explains.

Investments are needed, among other things, in new lanes in security control, expanding the arrival and check-in areas, aircraft parking stands, runways and navigation systems for the airfield. The annual capacity will increase by approximately 43%, with available hourly departures up from 16 to 23. Airlines and their passengers will benefit most from the expanded and improved airport facilities.

A normal airline passenger should enjoy more efficient and comfortable facilities with fewer bottlenecks during their transit through the airport. The expansion should also open the Icelandic sky to more competition.

“With increased availability of peak hour departure times, airlines should be able to compete on their own terms. Transatlantic operators will be able to offer consistent transfer efficiency and improved passenger experience in competition with operators at other transatlantic service airports”, says Mr Hauksson.

The increased tourism is not only affecting Keflavik, but also regional airports run by Isavia.

“Iceland has gained a status as a fascinating destination offering a truly unique experience. As yet, the most visited places lie in the south-western part of the country, but there are also immense opportunities for other parts and regional airports of Isavia, such as Akureyri in the north and Egilsstaðir in eastern Iceland.”

“Potential limits are mostly in terms of general service infrastructure in Iceland and environmental concerns that point out the importance of balancing the tourism throughout the country.”

Iceland benefits from its favourable location between Europe and North America.

“Without the transatlantic hub-and-spoke network, there would be fewer destinations from Iceland to the rest of the world and a smaller visitor market, so the benefit is huge in terms of direct service. The future transit/tourist ratio is expected to develop equally at around 10% for the coming years”, Mr Hauksson continues.

Natural conditions in Iceland are sometimes quite challenging. For example, four years ago the eruption of an Icelandic volcano grounded thousands of flights in Europe.

“There is great emphasis on procedures, training and equipment to handle sudden and difficult situations in a professional manner. Isavia works closely with the national disaster preparedness authorities and business partners in preparation for any such eventuality. A measure of success is the stellar performance by the Isavia team during the eruption crisis in 2011.”

NIB and Isavia have signed a EUR 32 million loan agreement for the expansion of Keflavik International Airport. Mr Hauksson is convinced that having NIB as a financing partner adds value to the investment project:

“NIB has financed numerous Nordic airport projects and brings a wealth of experience that has already benefited us. We also consider the Bank to be quite competitive in this specialised field of finance.”