Turnover of the air transport sector in Iceland 2009-2023

In 2023, the annual turnover of the air transport industry in Iceland amounted to over 319 billion Icelandic krónur. This was an increase of 21 percent compared to the previous year. The 2023 value was also the peak in industrial revenue over the given period.

Aviation industry in Iceland

Considering the country's comparatively small size, Iceland has established itself as a relatively significant trans-Atlantic aviation hub due to its central location between North America and Europe. Using Iceland as a stop-over allows airlines to shorten flight times and operate trans-Atlantic routes with smaller, narrow-body airplanes.

The aviation sector is responsible for a large percentage of the country's transport industry turnover. The remote nature of many of Iceland's towns and cities outside the capital area makes domestic flights an integral part of Iceland's transportation system, with 665,554 domestic passengers recorded at Icelandic airports in 2023. Out of the thirteen airports in Iceland with scheduled flights, the largest airports for domestic travel are in Reykjavík and Akureyri. However, Iceland's leading international passenger and cargo hub is Keflavík International Airport—home of Iceland's largest airline, Icelandair. In 2023,international air passengers in Iceland outnumbered domestic passengers.

In addition to Icelandair, 27 other airlines have flights to and from Keflavík. The Icelandic low-cost carrier WOW air was also based at Keflavík Airport until it ceased trading in 2019, significantly impacting passenger numbers at the airport. A new low-cost carrier, PLAY, established itself in Iceland in 2019 and operated its first flight in 2021, looking to fill the gap in the market left by WOW air. Among the predominantly European and North American airlines flying to the country, Icelandair and United Airlines operate the largest number of flights to and from Iceland.