Icelandic carriers are looking to a boost in incoming traffic to help counter the impact of the country's financial crisis
Iceland's main airlines are being forced to cope with an adjusting traffic pattern as a result of the financial crisis which has enveloped the Nordic state.
But Icelandair Group believes its diversification strategy undertaken over the last few years will limit the company's exposure to a depleted home market. A third of Icelandair's traffic normally comprises originating passengers, another third is destination traffic and the remaining third is through-traffic on north Atlantic crossings.
"We're picking up more 'to' traffic, and the 'via' traffic continues to be strong. But the 'from' traffic, of course, will drop. Icelanders have effectively had their salaries cut in half," says Icelandair senior vice-president commercial strategy Erlendur Svavarsson. The carrier's Glasgow-Reykjavik route will be suspended until mid-March, a casualty of the economic misery.
The group's overall business derives 75% of its revenues non-domestically and, while the banking chaos arrived too late to inflict much damage on its nine-month figures, deputy chief Sigthor Einarsson says its broad activity base offers protection.
"When one of our companies faces demand changes, we are able to put that capacity to profitable use elsewhere in the group," he says. Leasing subsidiary Loftleidir is placing Boeing 757 aircraft with carriers as varied as Yakutia, Santa Barbara Airlines and Air Niugini.
Its businesses include leasing operation SmartLynx and Icelease, and the Czech Travel Service, and while its group fleet comprises some 69 aircraft, its fuel-risk exposure is limited only to about a third of them.
Iceland Express claims the fall in the Icelandic krona is driving an inbound travel spike to Reykjavik, almost compensating for the fall in outbound traffic.
"We can expect the traffic from Iceland to decline for the next year at least, so we have to focus on incoming traffic," says project manager at the Icelandic budget carrier, Sigur Sigurdsson.
"We are trying to use this [bad] publicity from Iceland to highlight that it has never been cheaper to visit than now. The UK market has grown more than 40% during the past one-and-a-half years."
The airline is switching its UK operation from London Stansted to Gatwick, partly to take advantage of a larger catchment and partly to be closer to Gatwick-based leasing company Astraeus which provides Boeing 737 and 757 aircraft to the carrier.
Source: Airline Business
