Icelandair Offers To Buy 51% Of Cabo Verde Airlines – Can Icelandair’s Business Model Be Replicated For The South?

The Icelandair group has submitted an offer to purchase a majority stake of 51% in Cabo Verde Airlines. The news comes just weeks after Icelandair announced it was buying low-cost rival WOW, subject to approval. The airline could be looking to introduce “the stopover” to the south, as the airline is operating out of Cape Verde. As such, it operates flights to Europe, North America, and South America. According to other sources, the move comes after Icelandair dropped a bid for Azores Airlines after sensitive documents became public.

Who are Cabo Verde Airlines?

Cabo Verde Airlines was founded in 1958. The airline is the flag carrier of Cape Verde, a group of islands located off of the west coast of Africa. The airline currently flies to 9 cities including its hub, while 7 destinations are international, only one is domestic.

According to Airfleets.net, Cabo Verde operates a fleet of 2 aircraft. A B757 which it owns, in addition to a B767 leased from Jordan Aviation. As such, it shouldn’t be too large of a move for Icelandair to purchase the airline.

Why Cabo Verde?

Cabo Verde isn’t an airline picked out of the blue by Icelandair. In fact, the Icelandic flag carrier already operates codeshare flights with the small airline. Additionally, Icelandair is famous for offering the stopover. This is an option currently offered to passengers flying transatlantic routes via Iceland. Essentially, passengers are able to extend their layover by a few nights. This, in turn, allows passengers who wouldn’t necessarily visit Iceland the perfect opportunity.

African Expansion

Iceland Air’s base in Keflavík is unique in that it is situated part way between Europe and North America. As such, it is the perfect place to operate a hub and spoke model across Europe and North America, as opposed to point to point routes. Cape Verde is located in a similar position between South America and Africa. As such, by having access to Cape Verde, Icelandair could conceivably create a southern stopover. Combined with Africa’s growing aviation industry, this could offer a big opportunity for Icelandair, who, following the acquisition of rivals WOW, is clearly keen to grow.

Árni Hermannsson, Managing Director of Loftleidir Icelandic, added to the possibility by saying: “The participation in the acquisition of a majority share in Cabo Verde Airlines holds great opportunities for Loftleidir Icelandic, especially in light of the expected growth in passenger demand in Africa in the coming years.” While no offer price has currently been given, it is understood that part of the cost will include work that Icelandair has already provided for Cabo Verde.

Do you think Icelandair will launch the Southern Stopover? Let us know in the comments down below!

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