Icelandair to Announce Future Aircraft Fleet Strategy

Icelandair is close to announcing the airline’s fleet strategy, as it looks to a future without the iconic Boeing 757 aircraft. The Icelandic carrier currently has thirteen 757s in the operation of both the -200 and -300 variants that the airline cites as giving long range and versatility ‘making them ideal for U.S. West Coast and Canada operations’. The Boeing 757-200 aircraft has a total passenger capacity of 184 in a two-class configuration, while the ‘stretched’ -300 variant accommodates 225 passengers.

Icelandair’s current international fleet consists of widebody Boeing 767-300ERs and narrowbody 737 MAX 8 and MAX 9 aircraft servicing the airline’s network alongside the 757s. The all-Boeing nature of Icelandair’s international fleet is currently ‘perfectly suited to serve Icelandair’s route network’, according to the airline’s online fleet description.

Speaking to the media last week at the airline’s Mid-Atlantic Tradeshow event in Reykjavik, chief executive officer Bogi Nils Bogason discussed Icelandair’s future fleet strategy. Icelandair has recovered well post-pandemic, and in 2021, the airline merged international and domestic operations with Air Iceland Connect. Mr. Bogason said the airline has seen success with the launch of services to Raleigh-Durham, N.C. and will commence operations to Tel Aviv, Israel in May. He also stated that the airline had been supported well during the pandemic leading to the creation of a diverse group of shareholders.

Icelandair’s fleet makeup has been one of the key factors in the success of the airline’s round-trip stopover strategy through the Keflavik, Iceland hub. Passengers from Europe and North America are able to break up their journey and remain in the country for up to seven days. Bogason advised that the 757s would continue to operate in the passenger network until 2025/2026 and that the executive team was weighing up two options when it comes to replacing the aircraft type.

Given that Boeing last year sidelined plans to launch a new midsize airplane program, Bogason said that one option for Icelandair would be to increase the number of 737 MAX aircraft in the fleet and eventually replace the 767-300ER with 787 Dreamliners. This option would retain the all-Boeing nature of the fleet’s composition and retain the simplicity of dealing with a single manufacturer that some airlines maintain for cost-saving and other benefits.

However, according to Bogason, Icelandair is also considering a second option that could introduce Airbus A321LR and Airbus A321XLR aircraft into the international fleet. Though this option would lead to a mix of both manufacturer’s aircraft on the network Mr. Bogason said that this could be for a period of 5-10 years before a possible full replacement of Airbus aircraft.

The future fleet strategy will be announced “within months” and will have an impact on all areas of the airline’s business from a commercial and operational perspective. At the media event, several Icelandair executives including Tómas Ingason (Chief Revenue Officer), Sylvía Kristín Ólafsdóttir (Chief Customer Officer), Jens Bjarnason (Chief Operating Officer), Gísli Brynjólfsson (Global Marketing Director) and Ásdís Ýr Pétursdóttir (Director Communications and Sustainability) were in attendance.

During discussions on the future fleet strategy, it was mentioned that any expansion of Icelandair’s network would be considered within the range of existing aircraft. Icelandair’s 767-300ER has a flight range of up to 4,900 miles and according to Airbus, the A321XLR can reach ‘up to 4,700 nautical miles (nm) in a comfortable two-class layout’ with the Boeing Dreamliners having a maximum range of 6330 nm for the 787-10 up to 7305 nm and 7565 nm for the 787-8 and B787-9. However, the maximum range touted by the manufacturers may be somewhat curtailed by ‘hot and high’ operations to airports such as Denver International Airport, a part of Icelandair’s network.

Other areas of discussion at the event included Icelandair’s alliance strategy with Mr. Ingason saying that Icelandair would be looking to build on the relationships it currently has with North American partners JetBlue and Alaska Airlines and European airlines such as SAS and Finnair. Icelandair has no plans to join one of the three major global strategic alliances, but Mr. Ingason said the airline is instead “exploring opportunities.”

The question of lie-flat beds being introduced into the airline’s Saga Premium business class product was raised. However, the executives were clear that the current level of the hard product fits well with the airline’s route network and flight times. To conclude, Mr. Bogason acknowledged the challenge of Icelandair’s operating environment however it was clear from the last year that people “want to travel.” With Q3 2022 recording record passenger revenue, load factor and high unit revenue the airline’s upcoming annual results should validate this.

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John Flett

John has always had a passion for aviation and through a career with Air New Zealand has gained a strong understanding of aviation operations and the strategic nature of the industry.

During his career with the airline, John held multiple leadership roles and was involved in projects such as the introduction of both the 777-200 and -300 type aircraft and the development of the IFE for the 777-300. He was also part of a small team that created and published the internal communications magazines for Air New Zealand’s pilots, cabin crew and ground staff, balancing a mix of corporate and social content.

John is educated to postgraduate level achieving a Masters degree with Distinction in Airline and Airport Management. He has been the course director of an undergraduate commercial pilot training programme at a leading London university and a member of Heathrow Community Trust’s ‘Communities for Tomorrow’ panel.

John is currently living in Canada and is contracted as an external instructor for aviation-related organizations.

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