July 2018: Every cloud has a silver lining

Iceland’s aviation sector has experienced impressive growth since that infamous volcanic ash cloud caused havoc across European airspace. Chloë Greenbank caught up with Björn Oli Hauksson, Isavia’s CEO, to find out what’s been driving this growth and why the country’s regional airports system mustn’t be left in Keflavik’s dust.

Having started out working for the Red Cross, primarily in the field of water, sanitation and hygiene, Björn Oli Hauksson, CEO of Isavia (which operates all airports and air navigation services in Iceland), certainly didn’t follow a natural path into the aviation sector.

“But like so many of my colleagues in this industry, I couldn’t imagine working anywhere else now in the civil aviation business,” he says laughing. “I’m hooked!”

With an M.Sc qualification in Industrial Engineering and Management, Hauksson joined the Red Cross in 1991, after the Gulf War. He was posted to work for the United Nations Mission in Kosovo (UNMIK) where he was appointed head of various regulatory units, including civil aviation. In 2004 he was tasked with overseeing the development of Pristina International Airport, before being made the airport’s managing director. He eventually returned to Iceland and in 2008 was appointed managing director of Keflavik Airport before being made CEO of Isavia in 2010.

“There was no soft landing,” says Hauksson, explaining that one of his first roles as the head of Isavia was to deal with the aftermath of the infamous volcanic ash cloud following eruptions of Eyjafjallajökull. The ash cloud caused mass disruption to air travel across western and northern Europe with most of Europe’s airspace and many of its airports having to close. But he survived and since then has steered Iceland’s airports through a period of unprecedented growth.

Efficient regional airports system

In addition to overseeing operations at Iceland’s main international airport – Keflavik – Hauksson’s role as CEO of Isavia means he oversees the management of the country’s domestic airports and landing strips too. There are around 13 domestic airports in the country, including Reykjavik, Isafjordur, Akureyri, Egilsstadir, Vestmannaeyjar, Husavik, Hornafjordur, Saudarkrokur, Grimsey, Bildudalur, Vopnafjordur, Thorshofn and Gjögur. Each one has its own operational director who reports back to Hauksson and his second in command.

“The airports are all state owned but Isavia is contracted to manage them,” Hauksson says, explaining that the contracts are currently renewed each year, but he would like to see a more long-term structure in place. The government also contributes around 75% of the operational costs of the country’s domestic airports.

As Keflavik is the main international hub, Hauksson admits it’s also where his focus is in terms of profit and development. The airport has experienced 400% growth at Keflavik over the last decade, so it’s understandable that most of his working day is focused on synchronising activities and developing operations there.

“But it’s vital that we have an efficient regional airports system too,” he argues. “In fact,” he points out, “we are running one of the most efficient regional airport systems in Europe, if not the world.” Hauksson determines although passenger numbers at these smaller airports aren’t as impressive as those at Keflavik, these airports remain a valued part of the country’s transport network and must not be overlooked.

Building for future growth

Keflavik has undergone a major overhaul in the last couple of years. The runway has been resurfaced, rapid exit taxiways constructed, and new bridges added. New passenger processing technology has also been implemented to ease passenger flow. “We are finally where we wanted to be back in 2010 in terms of bringing the airport’s infrastructure up to the best possible standards. But there is still potential for improvement and the next step is to expand the terminal by adding a new pier,” reveals Hauksson.

Describing the terminals at Akureyri and Reykjavik airports as “way too small,” Hauksson says these two hubs would also benefit from expansion, but “ultimately it comes down to cost and at the moment there simply isn’t the budget.”

The focus at the domestic airports, he says, needs to be on improving efficiency rather than capacity. “Most of the existing carriers serving these airports have good load factors. They are using small aircraft so don’t have an issue of unused seats.” But, he adds, the big challenge lies in getting carriers to “offer scheduled flights to and from some of these smaller airports.”

Icelandair has already started flying directly from Keflavik to Akureyri, which means that passengers travelling from northern Iceland can now easily access Keflavik’s extensive network around the world.

If we could increase scheduled services from airports like Akureyri and Egilsstadir, that would change the business model for these airports and hopefully drive growth.

The low-fare link

Improving connectivity is integral to Hauksson’s master plan and low-fare traffic will continue to play an integral role in boosting passenger traffic throughout the country. Both WOW and Icelandair, already use Keflavik as a transfer hub and this has encouraged strong growth from other carriers to the Icelandic capital. Four of the big transatlantic carriers – American Airlines, Delta Air Lines, Air Canada and United Airlines – are now serving both Keflavik and Reykjavik airports.

Hauksson does emphasise however that “whilst low-fare carriers have increased traffic, it’s a different kind of traffic… We’ve had to adapt our business model to cater for this and be more diligent about non-aeronautical revenues.”

But, this doesn’t negate from the fact that low-fare activity from the likes of WOW and Icelandair has been a driver of growth both for inbound and outbound traffic. It’s also fed into Isavia’s vision of becoming an aviation hub between North America, Europe and Asia. WOW already has a strong presence in Europe and America and later this year is expanding its services to India.

Geographically, Iceland is well positioned to accommodate traffic from these three continents and Hauksson explains that Keflavik has the capacity to cater for additional passengers. “While most other major European airports are bursting at the seams, Keflavik still has the space for an additional runway and the ability to handle additional passengers.” He also adds that as Isavia’s route network grows, it’s important to factor in all hubs in the country when catering for point-to-point traffic.

“It’s about being flexible and able to adapt to the changing demands,” declares Hauksson.

That’s something that he has had plenty of exposure to since joining Isavia. When he started out as CEO, the country’s airport network was serving roughly 1 million passengers and now it’s more like 10 million. Crediting his team as being integral to his success Hauksson concludes: “This huge increase in passenger numbers to and from Iceland has been our biggest challenge. But I’m happy to say we have managed. And managed well!”

« Back to Industry Insight