Iceland Express seeks domestic market entry

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Icelandic budget carrier Iceland Express is aiming to launch domestic operations, but its plans are being hampered by terminal constraints at Reykjavik Airport.

The Icelandic capital is served by two airports, Keflavik and Reykjavik. Iceland Express operates from Keflavik, the country’s main international airport, which is situated 50km southwest of the city. Reykjavik Airport is a small, downtown facility, serving domestic destinations, Greenland and the Faroe Islands.

Reykjavik’s terminal is owned by Air Iceland, but the 1940s facility is too small to accommodate another operator. Iceland Express is therefore seeking to acquire airport land to build a new 6,500m2 (70,000ft2) terminal for its domestic and international operations.

An Icelandair Express spokesman says: “The reason why we want to build it is that the current terminal at Reykjavik is basically too small and to be competitive Air Iceland have denied us access to the current terminal.

“The only option that we have is to build a new one. We need to do this so that we can have the option of domestic flights. Our dream would be to get access to the current terminal building, but Air Iceland is blocking that. The terminal building belongs to Air Iceland so they don’t have to let us in there.”

An Air Iceland spokesman says: “[Reykjavik] is too little for us. We were willing to help [Iceland Express] everywhere else, but not in Reykjavik. There is no ramp space for anyone else.

“The Government and the City of Reykjavik have been discussing a new terminal. They need to make a decision. Hopefully they will start building that this autumn; not Iceland Express, but the Government. We have been waiting for them for many, many years.”

In addition to its main operations from Keflavik, Iceland Express serves Copenhagen from Akureyri in northern Iceland and Egilsstadir in the east of the country. Iceland Express wants to use domestic flights to link Reykjavik with Akureyri and Egilsstadir.

The Iceland Express spokesman says the City of Reykjavik may reach a decision on the land application in around four months. Rival contenders for the same plot include Reykjavik University.

A plan to move Reykjavik Airport has been under long-term consideration, but the Iceland Express spokesman says this does not affect the airline’s plans: “The discussion has been going on for 15 years. It could happen, but it won’t happen in the next 10 years. If it did move, we would move with it.”