Does Keflavik Airport Need To Be Expanded Now WOW Air Is Gone?

Before WOW Air collapsed, Iceland’s Keflavik International Airport was slated to be gearing up for a major expansion. Isavia had outlined the plans for the airport, pegged at a $1bn investment. Now that there’s no WOW, will the expansion go ahead?

With no more WOW Air, does Keflavik Airport even need expanding? Photo: Nicky Boogaard via Flickr

Previously the airline operator Isavia had been criticized for their slow response to the increased number of tourists visiting the island. But, with the sudden collapse of WOW, the expansion of the airport suddenly seems less pressing.

According to CAPA, Isavia estimate that there will be a 10% drop in passenger numbers as a direct consequence of WOW’s demise. As such, they’ve got to be asking themselves whether the planned expansions is really needed at all?

The expansion plans

Keflavik International Airport was never really set up to handle millions of passengers. Although, like many airports, is was growing organically, it was originally predicted to be capable of handling around 8.8 million passengers by 2025.

However, the competition between WOW and Icelandair, as well as the increased awareness of Iceland as an awesome stopover destination, saw the number of tourists to the island triple between 2011 and 2016. Over the course of 2018, Keflavik airport handled just short of 10 million passengers.

KEF airport
Keflavik wasn’t designed to handle 10m passengers a year. Photo: Isavia

New projections estimated this number to grow even further, with a capacity of 17 million expected by 2030. As such, the expansion plans for the airport were formulated, as reported by Airways Mag last summer.

Overall, the airport was planning to grow by 26 gates, 16 of which would be connected directly to the airport. Retail and dining  space were to be expanded. Isavia even figured out how to fund all this, with plans for increased landing fees, concessions and other revenue streams. Bloomberg report that the planned investment in the airport was to be around $1bn.

Then everything changed

WOW went out of business not quickly but somewhat dramatically. Most of the world had expected something to be worked out, what with offers from Indigo Partners and Icelandair on the table to rescue the carrier. But, one by one, the offers fizzled out, until one Thursday morning in March, the carrier declared bankruptcy, leaving thousands of passengers stranded all over the world.

As a result, Icelandair were left with a staggering 72% capacity at the airport. However, while they’re wrangling with their own financial issues, it seems unlikely that they’d be in a position to take advantage of this. WOW’s services often duplicated Icelandair’s anyway, and the carrier has been largely focused on route consolidation rather than expansion.

Icelandair have had their own issues to deal with. Photo: Wikimedia

Although other low cost carriers might consider starting service at Keflavik, it seems unlikely. Isavia’s fees are not cheap (hence why Ryanair isn’t there), and as much as Iceland is nice to visit, it’s not enough of a destination to make it a profitable route. Its value comes from connections, so airlines would ideally be flying transatlantic if they wanted to make it work.

Blue Swan Daily reports that Isavia have already said that they will be “examining the extent of the consequences that WOW air’s withdrawal may have” and are fully expecting a slowdown in passengers. Whether this consequence will include cancellation or scaling back of the airport expansion plans remains to be seen.

WOW air at KEF
Isavia are anticipating a 10% passenger decline at KEF. Photo: Wikimedia

In fact, it seems that Isavia are already looking at other ways to increase revenue from the airport. Just last week, the airport authority confirmed it would reinstate cross wind testing at the airport. This will not only see a large number of flights (and fees) for Keflavik, but also an influx of aviation specialists, opening doors for other initiatives down the line.

Perhaps Isavia will go ahead with the planned expansion, in the hope that either more airlines start arriving at Keflavik or that Icelandair has a more profitable summer. We’ll have to wait and see.