Icelandair C-Suite Interview: Vision and Strategy

REYKJAVÍK — From January 30 to February 2, 2025, Icelandair (FI) hosted its 30th Mid-Atlantic Tradeshow in Reykjavík, bringing together travel professionals from Iceland, Greenland, Europe, the United States, and Canada.

After a pause due to COVID-19, this biennial gathering returned in 2023 and has quickly regained its spot as a key networking event for the aviation and tourism industries.

A Strategic Hub for Aviation, Tourism

Held in Reykjavík, Iceland’s capital city, the trade show highlights the country’s importance as a bridge between North America and Europe. Over these four days, participants shared ideas, developed new partnerships, and closely examined emerging travel trends. 

Airways was invited to attend this year’s show and got an inside view of FI's new headquarters. Conveniently located inside the new HQ is the CAE Training Center, which helps prepare the airline’s crews and staff. 

One of the tradeshow's highlights was the open forum with the airline's top executives. Led by CEO Bogi Nils Bogason, the panel included Chief Commercial Officer Tómas Ingason, Director of Global Marketing Gísli S. Brynjólfsson, Finance lead Ivar S. Kristinsson, PR representatives Guðni Sigurðsson and Ásdís Ýr, and North America Comms Manager Michael Raucheisen. 

This session offered Airways and all the media at the event a chance to hear directly from the airline’s leadership about their vision for FI, the shifts they see in travel and tourism, and how they plan to meet future challenges head-on. 

Interview

Q: This is somewhat offbeat, but I’d love to know more about your Antarctica special operations. How did that come about?

Bogi Nils Bogason (CEO): We started these operations a few years ago. Originally, we created the setup to utilize extra aircraft capacity in the off-season. We’re quite seasonal: we need more aircraft in summer, so in winter, we sometimes have excess capacity.

Over time, our team has done a great job finding various special-project charters. We now operate three aircraft in what we call “VIP charter services,” flying around the world with lie-flat seats. 

We also partnered with a ALE, a tour operator that sells trips to Antarctica and for the Norwegian Polar Institute. It’s a challenging operation, but our crews love going there. Demand among our pilots and cabin crew is high, and it’s been going well. Our last flight for this season is actually this week, so that’s the story behind that.

Q: I’m interested in hearing about your expansion plans. There has been a lot of buzz about your partnership with Southwest Airlines (WN) and other possible expansion plans.

Tomas Ingason (CCO):

Yes, our partnership team has been very busy recently. We signed an agreement with Turkish Airlines, enabling connections to the Middle East and Asia. Last year we also signed agreements with TAP Air Portugal, Emirates, Air Greenland, Atlantic Airways in the Faroe Islands, and ITA Airways.

Our strategy is to extend our network through these partnerships, which gives us access to their sales and distribution networks while they get access to ours. It’s a win-win.

Regarding capacity, we’re looking at about an 8% increase in ASKs (Available Seat Kilometers) in 2024–25. We’re not adding extra aircraft for the peak summer season but rather extending our shoulder seasons—starting flights earlier in spring and running them later into autumn.

We have a few new destinations this year: Nashville, Miami, and Gothenburg. Also, our new Istanbul route with Turkish Airlines is a great example of how partnerships help us develop markets that rely on beyond-traffic, in this case, connecting via Istanbul to Asia.

In the longer term, we are planning a fleet renewal. By late 2029, we’ll have our first Airbus A321XLRs, which will open up further destinations on the U.S. West Coast and potentially in Asia.

Q: You’re adding Airbus aircraft alongside Boeing. After 2029, do you see Icelandair adding new wide-bodies or focusing only on narrow-bodies?

Bogi:

We have three wide-bodies right now—Boeing 767s—that we use on high-demand routes like Amsterdam and New York, and for cargo-heavy flights, such as seafood exports. We’ll probably operate them until at least 2029.

We need to decide on a long-term strategy: do we keep some wide-bodies, and if so, which ones (e.g., Boeing 777 or 787, or Airbus alternatives)? Or do we become a fully narrow-body operator with something like the A321XLR? We’re studying these questions now and hope to have an answer within a year.

Q: How will your new Airbus single-aisle aircraft improve your business model? Will they lower costs? Open new partnerships? Could you keep operating wide-bodies alongside Airbus narrow-bodies?

Tomas:

The A321XLR will open significant opportunities for us—flights to California, Texas, and Dubai (with our Emirates partnership)—and offer roughly 30% better fuel efficiency than older 757s. That in itself creates new possibilities.

We’re also updating our onboard product, with new seats and inflight entertainment. That’s important for long-haul flights.

Separately, we’re still deciding on the long-term direction of our narrow-body fleet. We currently operate Boeing 737 MAXs and will have Airbus A321XLRs as well. We have to see whether we’ll eventually consolidate into all-Airbus or maintain a mixed fleet. We have a couple of good options, and it’s something we’ll decide in the coming years.

Q: How do you balance bringing tourists to Iceland (as a final destination) versus positioning Iceland as a stopover en route to Europe or North America?

Bogi:

All of those markets work together to create flexibility. We serve traffic to Iceland, from Iceland, and via Iceland. For instance, if demand to Iceland softens, we can pivot to connecting traffic. But inbound tourism is absolutely crucial to us; we focus a lot of our marketing on attracting visitors here.

We also have our stopover program, where about 15–25% of passengers traveling transatlantic choose to stay in Iceland for up to seven days at no extra fare. That has been very popular.

Tomas:

We partner closely with other airlines and with tour operators to promote Iceland. We also have great connections beyond Iceland, such as Greenland and the Faroe Islands. So it’s a unique selling point to combine a trip to Iceland with visits to those destinations as well.

Q: Have you ever considered adding a secondary hub—perhaps in Istanbul or Dubai—to reach further into Asia or India directly?

Bogi:

Our core strength is our hub at Keflavík, leveraging Iceland’s location in the middle of the Atlantic. We market Iceland as a destination in its own right, then work with partner airlines to extend our reach to places like Asia or the Middle East. Building our own secondary hub outside Iceland doesn’t fit our model.

Tomas:

It would have to be something that strongly plays to our strengths, and right now, we focus on selling Iceland and operating successfully from Keflavík. We once explored a possible secondary hub in Cabo Verde, but that project ended up on hold. Our plan remains to focus on Iceland.

Q: I’m curious about the onboard experience—specifically inflight Wi-Fi. Have you looked at Starlink for connectivity?

Tomas:

We’ve evaluated Starlink and other connectivity solutions. Currently, we’re in a partnership with Viasat. We don’t have any immediate plans to switch to Starlink, but we’re watching developments closely.

Q: Is there anything you wish travelers or travel advisors knew about Icelandair or Iceland that they often don’t?

Bogi:

Many visitors stick to the Golden Circle and the southwestern part of Iceland. We encourage people to explore more—north, east, west, or the Westfjords—where there are many hidden gems.

Also, as mentioned, our stopover program: you can stay in Iceland for up to seven days at no extra fare if you’re flying transatlantic. Not everyone knows about it, but it’s a fantastic way to explore Iceland on a “2-for-1” trip.

Tomas:

Additionally, we operate domestic flights to places like Akureyri in the north, which allows visitors to see more of the country.

Q: What are the prices for domestic flights? Are they affordable enough to encourage travelers to fly internally?

Bogi:

We think they’re reasonably priced, especially if you book in advance. Operating a domestic network in Iceland can be expensive, but if you compare a 45-minute flight from Reykjavík to Akureyri with a long taxi ride in Reykjavík, the flight is often pretty reasonable.

Many locals do complain, but from our perspective, for what you get—and considering the convenience—it’s quite good. You can arrive at the airport just 30 minutes before departure. We once took our U.S.-based board members north to Akureyri, and they said it was one of their best airport experiences ever.

Q: You recently announced an MOU with Southwest Airlines. Icelandair is also one of the few airlines not in any major alliance (Star Alliance, oneworld, SkyTeam). Are you planning to join one of them in the future, or do you prefer to remain independent?

Bogi:

We’ve studied the pros and cons of joining a global alliance. So far, we’ve concluded it’s best for us to remain independent but develop strong bilateral partnerships. We’re a relatively small airline, and this flexibility works in our favor. That said, it’s not off the table—we’ll likely revisit the question in a couple of years.

Q: With mid-sized European airlines consolidating, how can Icelandair stay independent, especially with significant investment needs and not always guaranteed profitability?

Bogi:

It’s a valid point; consolidation is ongoing. Our focus is on remaining profitable and on leveraging our unique position. You never know what opportunities the future holds, but for now, our strategy is to keep strengthening our standalone business.

Q: Would you ever consider daytime flights from the East Coast to Iceland? It’s a short redeye, and some travelers prefer a daytime option.

Bogi:

We do offer some departures from Iceland to certain cities. But for flights from, say, New York to Iceland, the scheduling can be trickier. Still, we’re always reviewing departure times to see what makes sense.

Tomas:

We have had a few mid-day flights to and from North America, and they’re popular, though smaller in scale. Connectivity with onward flights in our hub can be more limited, but at the same time, these flights generally connect better with our partners in the outstations.

Q: Regarding alliances and consolidation, is it difficult to cooperate with major airline groups, given Icelandair’s unique model of connecting via Keflavík?

Bogi:

It can be challenging, because we do compete with large carriers. But we find strong, targeted partnerships work better for us than joining one of the big alliances.

Tomas:

Exactly. We want to keep marketing Iceland as our main hub, which is distinct from the large alliance hubs on the continent. We’ve always been fairly independent, forming partnerships where it benefits both sides.

Q: What are your dream future destinations, five or seven years out?

Bogi:

The A321XLR will let us fly farther across the U.S.—to California, Texas, maybe beyond—and potentially to destinations in Asia or the Middle East. Everything depends on market viability and our business model.

Tomas:

We previously served places like San Francisco and Los Angeles with wide-bodies, but it was difficult. The A321XLR might make those routes more feasible again.

Ásdís:

We dream up new ideas all the time—South America, Hawaii, Japan—but many require evaluating distance, aircraft range, and market demand. We’ll see what the future holds.

Q: You currently fly to Greenland, and they have a larger runway now and want to boost tourism. Are you expecting an increase in flights or demand to Greenland?

Bogi:

Greenland is fascinating but also very complex. You can’t just build a runway—you also need hotels, tourism operators, local infrastructure. It’ll take time to develop. This summer, a fair amount of capacity is going into Nuuk, but it’s a small market facing a big influx. We plan to keep serving it, but growth will be gradual.

Fifteen or twenty years ago, Iceland itself was underdeveloped in tourism. We at Icelandair even built and operated our own hotels early on to accommodate visitors. Over time, it paid off, and Iceland’s entire industry grew. We hope Greenland can do the same, though it will require collaboration among government, airlines, and tourism companies.

Bogi:

Tourism has transformed Iceland over the past two decades. We used to see heavy visitation only in a six-week summer window. That wasn’t sustainable. Working with the government and other tourism stakeholders, we emphasized shoulder- and off-season travel. Today, we have visitors nearly year-round.

Ásdís:

The culinary scene also exploded. Iceland now has top chefs and world-class restaurants, and the food is excellent—fresh fish, lamb, dairy—often surprising visitors who didn’t expect such quality. Tourism’s growth has improved infrastructure, hotels, and overall quality of life here.

Q: What has been your proudest moment as CEO of Icelandair?

Bogi:

I took over in late 2018, and it’s been challenging—starting with the Boeing 737 MAX grounding and then COVID-19. I’m proud we navigated the pandemic without direct government aid. We used a government-backed credit facility as a safeguard but never utilized it.

Also, seeing the company recover to have its largest-ever summer operation and then opening our new headquarters—those were high points. Standing in our new building last night with everyone, including all of you, was a proud moment. It’s an honor to lead this great company with such a long history.

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