Lean, green and ambitious

Isavia CEO, Sveinbjörn Indridason, tells Joe Bates more about the growth and development plans of Iceland’s Keflavík Airport.

Keflavík International Airport (KEF), Iceland’s gateway to the world, states that it is constantly evolving to keep up with demand and meet the growing needs of passengers and the aviation industry.

And like the rugged and ever changing Reykjanes peninsula around it in south west Iceland which has seen four volcanic eruptions since December 2023, the airport is currently very active in terms of new infrastructure, route development and customer service initiatives.

Last year saw the construction of a new taxiway and the opening of a new baggage hall and an improved border control area as part of the airport’s East Wing extension designed to improve the arrivals experience for non-Schengen passengers.

A host of new retail and F&B outlets also opened at KEF last year. These included popular Danish restaurant, Jómfrúin and new eateries Baked and Elda.

Next on the agenda as part of its new master plan for 2020 to 2045 are further expansion of KEF’s terminal buildings, improving access to the airport and a new taxiway project.

Operator, Isavia, has no doubt that all will be needed as traffic continues to rise at KEF as Iceland, and the world, takes the next step in its recovery from the COVID pandemic.

“We need the new facilities to help us better serve our guests, passengers, and the airlines,” says Sveinbjörn Indridason, CEO of Icelandic airport operator, Isavia.

Highlights of 2023

A total of 7.7 million passengers passed through Keflavík in 2023, a huge 27% rise on the previous year and a healthy 7% up on pre-pandemic 2019’s traffic total.

KEF exclusively handles international traffic with all domestic services to and from Iceland’s capital city operating from the smaller and older Reykjavík Airport, located three kilometres from the city centre.

Reflecting on a busy year, Indridason notes that KEF’s new MIKE taxiway is Isavia’s first addition to the airfield as the airport’s runways, apron and taxiways were effectively built by NATO or the US military.

The new taxiway allows aircraft to get off and onto runways earlier, increasing the capacity of the runway system, improving airfield safety and speeding up aircraft handling.

The opening of the new and more spacious baggage hall means that KEF’s East Wing is beginning to take shape. The new baggage hall features four expansive and broad baggage claim belts, with provision for adding another in the future.

As you would expect, the new arrivals area for non-Schengen passengers is designed to enhance the airport experience for those arriving from outside of the Schengen area by reducing queues at border control.

So, did all of the new infrastructure additions and soaring passenger numbers mean that 2023 was a good year for KEF?

“It was definitely a good one,” enthuses Indridason. “Our passenger growth and expanding route network is down to many factors. Firstly, we have an excellent staff, a group of people who work tirelessly for the airport to advance its position and status.

“If we put these stats into a larger context, we quickly arrive at the fact that the number of destinations in relation to the population in the domestic market is unheard of. The inherent value in these numerous flight connections is enormous when it comes to the quality of life and prosperity in Iceland because they are one of the key drivers of economic growth.

“Keflavík Airport has served a key role, along with the hub airlines, in connecting Iceland with the continents on both sides of the Atlantic. Our strategy is to connect the world through Iceland. It is an ambitious goal, but a feasible one, and something we work towards achieving every day.”

Reviewed master plan for Keflavík Airport

In line with its policy of updating its master plan for Keflavík Airport every five years, Isavia recently fine-tuned its current plan, Masterplan KEF, covering the period 2020-2045.

Valid for the next two decades, the master plan remains largely based on the previous development plan covering 2015 to 2040.

The ongoing East Wing expansion is the largest project in Isavia’s history, and will feature gates capable of handling two different flights at the same time.

Next up is the construction of a new building connecting KEF’s North and South Buildings, which will be used by all passengers passing through the airport. The new connector building is expected to vastly improve services for passengers with connections via Keflavík Airport.

To put things in perspective, when fully open, the new East Wing and connector building will lead to a 70% increase in the size of the airport’s terminal buildings.

Sustainability and benefit to the community are said to be the guiding principles of the master plan. Indeed, Indridason notes that Isavia’s construction programme will adhere to its sustainability policy, ensuring that all new buildings at KEF are BREEAM certified, in other words internationally recognised for their sustainable construction.

Social, environmental and economic impact

How important to Isavia and KEF is the sustainable development of the airport and being a good neighbour to local residents?

“It is very important to us as sustainability is a guiding principle in all of Isavia’s activities, and the company focuses on pulling its weight when it comes to sustainability in its operations,” says Indridason.

“We are very conscious about our impact on the neighbouring municipalities – both for the positive and the negative. We are very reliant on these municipalities for employees, contractors and other resources, for example, but we also know that having an international airport on their doorstep has its downsides.

“We try our best to accommodate for the negative effects and enjoy a close dialogue and co-operation with our neighbouring communities, which I believe has helped created a win win situation for everyone.”

He goes on: “In the past few years, Isavia has taken large and important strides towards sustainability, and the company’s sustainability policy is accompanied by a five-year action plan in which our emphases, goals and criteria in the field are set out.

“They were selected with reference to the company’s policies, comments from external stakeholders, our commitment to the UN Global Compact, the United Nations Global Goals and government priorities.

“Isavia issues its annual reports pursuant to GRI standards and its special clauses regarding airports. The most recent report gives an overview of the company’s operations in 2023 and their impact on the economy, the environment, the community and human rights. The report is also submitted as a progress report for our support of the UN Global Compact.

“It is a statement of our intent to continue to work towards the ten basic principles of the United Nations regarding social responsibility in the fields of human rights, labour, the environment, and anti-corruption measures.”

KEF certainly boasts some impressive green credentials. The airport is one of only a few in the world to use 100% renewable energy courtesy of geothermal or hydropower, and this has gone a long way in helping it reach Level 3+ ‘Neutrality’ status in ACI’s Airport Carbon Accreditation programme.

The achievement is in line with Isavia’s goal of reaching net zero operations by 2030.

Isavia’s latest financial statement shows that KEF generated in excess of ISK45,058 million (just under €300 million) in revenue in 2023 and is directly responsible for around 1,247 jobs.

In terms of measuring the social value of Keflavík Airport’s operations, Indridason says Isavia launched project to more accurately assess its impact and work more purposefully towards raising this value in co-operation with business partners and suppliers.

“The project Value2Society was used for the assessment and social value was measured in positive and negative value,” Indridason explains. “The results indicate how Keflavík’s operations are fulfilling the company’s purpose of increasing the quality of life and prosperity in Iceland and provide a better analysis of improvement opportunities for the operations.

“The goal is to maximise the company’s profitability and value creation through the entire value chain, while systematically working on improvements in environmental and social issues where human rights and people’s quality of life are at the forefront.

“To better understand the impact of Isavia’s value creation it is interesting to compare Isavia’s income with the social value creation. In 2022 the social value creation was 1.5 times the company’s revenue, and if we take the supply chain into account, the ratio is more like twofold.”

Traffic trends

Almost 8.5 million passengers are expected to travel through Keflavík Airport (KEF) this year, according to the airport’s passenger forecast for 2024.

If the forecast proves accurate, KEF will handle a healthy 9.6% more passengers this year than in 2023, making it the third best year in its history after the 8.8 million and 9.8 million passengers that used the airport in 2017 and 2018 respectively.

The 2024 traffic projection predicts that nearly 2.4 million foreign tourists will arrive in Iceland through the airport. If the projection holds, it will be the highest number of foreign tourists to ever visit Iceland.

During summer 2024, 25 airlines will operate scheduled flights to 82 destinations, and 20 airlines will serve 69 destinations during the winter months.

When considering the months classified as winter months by KEF (January, February, March, November and December), passenger numbers are expected to grow by 15.2% or 354,000. During the summer months (April to October), passenger numbers are projected to increase by 391,000, representing a 7.2% year-on-year rise.

The forecast projects that transit passengers will account for approximately 30% of the total passenger count in 2025, compared to around 27% in the current year.

Indridason notes that this indicates a higher percentage of passengers using KEF as a connecting hub without staying in Iceland. The highest ever percentage of connecting passengers occurred in 2018 at around 40%.

He adds “We are forecasting 8.5 million passengers in 2024 and longer-term forecasts assume that we will reach 12-14 million passengers by 2033.”

Airlines and route network

The top five airlines at KEF in terms of market share are easyJet, Icelandair, Play, SAS and Wizz while the most popular routes are Amsterdam, Boston, Paris, Copenhagen and London.

And KEF’s route network continues to grow, Aalborg, Athens, Porto and Hamilton (Play), Detroit (Delta and Icelandair) and Tel Aviv (Icelandair) being added in 2023 and Calgary (Westjet), Halifax and Pittsburgh (Icelandair), Split (Play) and Stuttgart (Eurowings) this year.

The list doesn’t include new carriers on existing routes, such as the new easyJet service to Paris Orly launched in March 2024, which means that the low cost carrier now serves seven destinations from KEF – Bristol, Edinburgh, London Gatwick, London Luton and Manchester in the UK, Milan in Italy, and Paris, in France.

Recruiting new staff

Airports globally are struggling to recruit staff to replace those that left or they were forced to let go during the global pandemic. Has this been an issue in Iceland where the recruitment pool is so much smaller than most other countries?

Indridason replies: “We were fortunate enough to be quite successful in recruiting staff post the pandemic. When the pandemic hit us, we made decisions to keep knowledge within the airport because we knew that it would both be expensive and time consuming to recruit and retrain people when travelling would resume.

“At the beginning of 2022 we took a leap of faith and started recruiting and training people before Iceland lifted the travel restrictions that were in place. That gave us the opportunity to be ready when we reached the pre-pandemic passenger numbers in July 2022.

“However, what we are facing now is a lack of resources when it comes to developing the airport. The current and upcoming constructions are of such a magnitude that it will affect the economy in Iceland and there are not enough resources currently in the country to accommodate our needs.

“We will find a solution going forward, but it is important for us to look at this as one of our main risk factors.”

Volcanic activity in Iceland

The recent volcanic eruptions in Iceland have rightly grabbed news headlines across the world as a spectacular example of the power of Mother Nature. Indridason is however happy to reveal that they caused no disruption to daily operations at Keflavík, which is located around 50 kilometres west of Reykjavík.

“The recent volcanic activities at Reykjanes have required various responses from us but, fortunately, have not adversely impacted on operations at Keflavík,” he says.

“We have a strong and focused emergency response team, and our employees are extremely qualified to respond to all kinds of external disturbances. We live and operate in Iceland and there is a huge resilience imbedded in the Icelandic culture to cope with the sometimes-harsh nature.

“The eruptions didn’t impact on flights in and out of Iceland. The airport itself is positioned in a way that lava will not threaten the infrastructure itself, but it can influence our access to electricity and water. The feeding of hot and cold water was, for example, disrupted earlier this year, but we still managed to maintain undisrupted operation at the airport.

“Today we are self-sufficient regarding electricity and hot water, and we will continue to improve our contingency plans to stay alert.

“Iceland is a volcanic island, and we show nature full respect but having said that, according to our risk assessment, these recent events didn’t call for anything that hasn’t already been implemented.”

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