Icelandair Group’s regional carrier, Air Iceland Connect, offers domestic flights to five destinations in Iceland and regional flights to four destinations in Greenland. Air Iceland Connect aims to inspire customers to experience an adventure by visiting remote North Atlantic destinations. The company’s focus is on offering a smooth and enjoyable travel experience. Dependable regional flight services also enable business undertakings and public agencies requiring travels to operate more efficiently. Co-operation with other airlines enables interregional connections, both domestically in Iceland and to other North-Atlantic destinations.

At the beginning of last year, Icelandair announced the integration of Icelandair and Air Iceland Connect (AIC). Since then, a lot of effort and work has been put into integrating the two companies to create a unified organization. The objective of the integration is to ensure a sustainable future for domestic operations and the West Nordic region and at the same time strengthen and simplify the company’s operations. From mid-March 2021 onwards, the network of Icelandair and AIC will be integrated into one stronger network and all sales and marketing efforts joined under the Icelandair brand Icelandair’s products and services will from then on be accessible in one place, for both the domestic and international market on the Icelandair website.

Like the rest of the tourism industry, Air Iceland Connect was heavily hit by the impact of COVID-19. In the spring, demand dropped down by over 90%. However, the domestic market was relatively quick to recover and AIC was operating at around 65% of its flights' schedule during the summer. When the second COVID-19 wave hit after the summer, demand fell dramatically again, with a much slower recovery rate this time around. Greenland closed its borders in June and remained heavily restricted throughout the year. These restrictions led to very limited flights to Greenland. Air Iceland Connect only flew one flight a week to Nuuk for the most part of that time.

Air Iceland Connect added a new route to its flight schedule, Vestmannaeyjar, an island located south of Iceland. The Icelandic Government initiated a tender for a limited schedule to Vestmannaeyjar for the winter 20/21 which Air Iceland Connect won and started its schedule in December 2020. Air Iceland Connect is currently preparing its summer schedule to and from Vestmannaeyjar in 2021.

The proposal for a scheme to support air travel for the local population in remote regions in Iceland was agreed upon and is called Loftbrú. Loftbrú was implemented in September with a user-friendly solution that entitles eligible customers a 40% discount on their airfare. The scheme was very well perceived by customers and was utilised significantly.

Air Iceland Connect domestic operation has historically shown a strong correlation with the local economy’s underlying performance. With the Icelandic economy slowing down and the tourism industry slowly recovering as the year progresses, the outlook for 2021 is moderate. Adjusting the production according to market conditions is the key to the sustainability of the operation.

Although mining and oil exploration in Greenland are currently at a low, the demand for Greenland as a tourist destination, in the long run, is growing. However, short term, there is uncertainty when borders will open and tourism services resume. Air Iceland Connect long-term focus on the tourist market to Greenland will be further extended as the demand for travel to Greenland continues to grow in both existing and new markets. With new and extended airports in Greenland, scheduled to open in 2023, the accessibility to Greenland will be improved, giving Air Iceland Connect exciting opportunities for both passenger and cargo operation between Iceland and Greenland.