Icelandair CEO Eyes New Transatlantic Connections
In May 2022, Icelandair “jumped in” to the Raleigh-Durham (RDU) market, in the words of CEO Bogi Nils Bogason, a somewhat experimental move into a second-tier US airport in the state of North Carolina.
The carrier has since been operating between Reykjavik Keflavik (KEF) and RDU 4X-weekly using a 160-seat Boeing 737-8. The service is seasonal and was supposed to be dropped by now, but has been extended into January and, after a pause, will resume again next spring, and earlier than this year’s May start, Bogason told Routes in a Oct. 26 interview.
The success of the route has led Icelandair to explore connecting passengers between secondary US markets and secondary European markets, taking advantage of the location of its KEF hub as an intermediary point and the size of its aircraft, particularly its 737 MAXs, which require less demand than a widebody transatlantic service. The airline operates 14 737 MAX aircraft, including both the -8 and -9.
The KEF-RDU route has been “very well received,” Bogason said. “We’re analyzing more [second-tier] destinations in the US like that” as route options, he said, pointing to opportunities to connect passengers between RDU and European cities such as Salzburg (SZG) in Austria, to which the airline will begin flights in December.
RDU-KEF is one of three transatlantic routes from the North Carolina airport; American Airlines operates to London Heathrow (LHR) from RDU while Delta Air Lines flies to Paris Charles de Gaulle (CDG).
Bogason said passengers in North Carolina are connecting through KEF to Europe, coming to KEF as a destination or doing a combination: Icelandair offers an “Iceland Stopover” service in which passengers vacation in Iceland for a day or more on their way to Europe with the same fare as if they were connecting through on the same day.
Bogason said the COVID-19 pandemic has reshaped airline networks, in part because more people have migrated away from major hub catchment areas with the option of remote work. “The world has changed, so we are not operating to exactly the same [network] of destinations as before the pandemic,” he said.
Icelandair operated 83% of its 2019 capacity levels in the third quarter and will fly 98% of its pre-pandemic capacity in the fourth quarter. “The short-term outlook is good, but we have some uncertainty going forward,” Bogason said. “We believe we will keep rebuilding at a moderate pace.”
But he noted that “costs are up everywhere” with inflation a prevalent problem, “causing uncertainty into next year.” While near-term bookings remain strong, inflation will “definitely impact demand” at some point, Bogason warned, adding: “We have to be flexible with our network.”