Collapse of Airberlin greatly affected Icelandic tourism sector

Airberlin carried an estimated 25,000 foreign travellers to Iceland last year. This summer, 18,000 fewer German nationalities visited Iceland, partly due to the collapse of Airberlin.

Credit: Airberlin

During the pre-financial crisis years, few international carriers offered direct year-round flights to Iceland. Back then, the now bankrupt carrier Airberlin was one of the few airlines to offer scheduled flights to Iceland year-round: the carrier flew to Iceland from numerous German air hubs during summer months, and twice-weekly from Berlin and Dusseldorf during low-season.

According to estimates, the airline carried roughly 25 thousand foreign travellers to Keflavík airport during summer of 2017, the majority of which being German nationalities. The collapse of Airberlin earlier this year did indeed leave a niche in the market for other carriers (Icelandair and WOW air included), but it also heavily affected the tourism sector in Iceland; this summer alone, around 18 thousand fewer German tourists visited the country.

However, this downturn cannot solely be blamed on Airberlin’s disappearance. Icelandair startet new route to Tegel in Berlin but did cut down the number of flights to Munchen and Frankfurt. In addition to that, neither Eurowings nor Lufthansa decided to tap further into the Icelandic travel market when racing to take advantage of market openings that came with Airberlin’s collapse.

The Icelandic government’s previous plans to increase value added tax on the local tourist sector and the strengthening of the Icelandic króna have also greatly affected business as Iceland has become an increasingly expensive destination to visit.

Icelandair has admitted placing too much focus on North-American routes this year and intends to turn its attention to European destinations for next year. Neither Lufthansa nor Eurowings have decided whether they will offer more frequent flights to Iceland next summer; currently both airlines offer scheduled year-round flights to Iceland from Frankfurt, as well as flights from Munchen during high-season.

Whether this will help to turn-around the decrease in German visitors will remain to be seen.