Fiercely Competitive Reykjavík Keflavik Airport (KEF)
✅ KEF grew 26.5% YoY in May 2018
✅ Icelandair controls ~50% of seats to North America
✅ WOW air controls ~40% of seats to North America
✅ 39% of passengers connect at KEF
Iceland – Fastest Growing Transatlantic Market
Iceland is the fastest growing transatlantic market from the U.S. in 2018, according to a recent report from CAPA Centre for Aviation. Seat capacity from the U.S. to Iceland grew by over 30% in both 2018 (YoY from 2017) and 2017 (YoY from 2016).
Low-cost carriers Icelandair and WOW air are mainly driving this impressive growth, although American and United both added service to KEF in 2018, in addition to Delta’s service from two U.S. gateways.
Icelandair and WOW air added a combined ten new U.S. routes just in 2018, including the only nonstop transatlantic service to Cleveland (CLE), Kansas City (MCI) and St. Louis (STL).
Icelandair also added Baltimore (BWI), Kansas City (MCI), and San Francisco (SFO) while WOW added Cincinnati (CVG), Detroit (DTW) and St. Louis (STL). Both carriers added service to Cleveland (CLE) and Dallas/Forth Worth (DFW).
Icelandair Is Growing Fast – But Losing Its Share
Icelandair has steadily lost market share since new kid on the block WOW air sprawled during its unprecedented six-year growth spurt.
In 2012 – the year WOW air launched service – Icelandair’s share was 80.4% of all seats to and from Iceland, according to a report from CAPA. Icelandair’s market share has since fallen to 47.1%, the first time ever the ‘original hometown’ airline has fallen below 50%.
Annual traffic continues to soar, according to data compiled by Keflavik Airport:
American Carriers Join the KEF Boom
Delta became the first US carrier to serve Iceland in 2011 with seasonal service (now year-round) to its New York JFK hub. The carrier has since expanded its Icelandic presence with summer-seasonal service to KEF from Minneapolis/St. Paul (MSP).
In Summer 2018, American and United joined Delta and the ‘Icelandic Duo’ in bolstering summer-seasonal service to KEF. American serves KEF from its Dallas/Fort Worth hub and United from Newark (EWR) – both using a similarly configured Boeing 757-200.
How Does a City of 300,000 Receive 8+ Million Passengers?
Geography, mostly – both in terms of stunning natural beauty and proximity to North America and Europe. We tend to think of transatlantic flights as ‘across’ the pond, but KEF’s northern position is equidistant from Florida and Alaska.
Most of North America (and all of Europe) is within the range of narrowbody aircraft like the Boeing 757-200 and Airbus A321neo, allowing Icelandair and WOW air to serve secondary markets like Cleveland (CLE), Pittsburgh (PIT), and St. Louis (STL).
Both Carriers Turn to Next-Gen Narrowbodies
For years, Icelandair’s primary strategy was to fly older, fully-owned (and paid-off) Boeing 757 aircraft with lower utilization rates. In any cities – Denver, for example – Icelandair’s 757 sits on the group for 22+ hours. That strategy is changing, however, as Icelandair recently started operating Boeing 737 MAX aircraft.
According to Icelandair, its Boeing 737 MAX uses 37% less fuel per trip compared to its Boeing 757-200. Icelandair has a total of 16 737 MAX aircraft on order, including the MAX 8 and MAX 9 variants.
WOW air operates an all-Airbus fleet of 3 A320, 13 A321, and 3 A330 aircraft. WOW has four A330-900neo widebody aircraft and two additional A321ceo aircraft on order.
While Icelandair operates one of the oldest fleets, WOW air’s average aircraft age is just 2.9 years old. You can read more about WOW’s fleet here, including cute aircraft names like TF-CAT and TF-DOG.
The Next WOW Wonder: Asia
With its impressive growth, WOW air has already demonstrated it can both stimulate demand and keep up with impressive 30% growth figures. WOW Air Founder and CEO Skúli Mogensen believes transatlantic low-cost carriers can take on the ‘legacy cartel’ and control up to a quarter of North America to Europe market:
Historically, 99 percent of the transatlantic market has been controlled by what I call the legacy cartel. I am confident the low-cost carrier model can capture up to 25 percent.
– Skuli Mogensen, WOW Air Founder and CEO
The carrier doesn’t plan to stop at North America, however. In May 2018, WOW air announced plans to launch Delhi in December 2018, targeting US connecting passengers. Rather than connecting in New York, for example, a passenger could fly Dallas (DFW) – Reykjavik (KEF) – Delhi (DEL).
WOW air CEO Skúli Mogensen has ambitious plans to turn KEF into the “Dubai in the north” – connecting up to as many as 15 destinations in Asia! Again, KEF has a tremendous geographic advantage. The following destinations are easily within range of WOW’s soon-to-be-delivered A330-900neo aircraft:
One thing is certain: WOW is just getting started.
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