The carrier is growing its seat capacity by 17.7% next year. Of that, 4.3% can be allocated to the new destinations, 7.2% to more European and 6.2% to more North America flying. Vancouver and Edmonton will have more than 80% connecting passengers, Icelandair predicts.
The last major turning point was in 2009—reducing dependence on the home market, becoming a bigger transatlantic player, remodeling aircraft rotations – and another one will be in 2018. That is when Icelandair will take delivery of its first Boeing 737 MAX. It has ordered 16 aircraft, a mix of 737-8s and -9s. The first three -8s will arrive in 2018, followed by four more and two -9s the next year. In 2020, four -9s and one -8 will be delivered and two more -9s will be accepted in 2021.
The introduction of the MAX will have a deeper influence on the business model than might be visible at first glance. Because of the higher capital costs, the MAX can't be parked anywhere like the 757. That may not happen much anyway because the aircraft will be used on shorter sectors, but the introduction of factory-new aircraft will also mean that Icelandair has to build an even less seasonal network.
The airline has historically parked a significant part of its fleet in the low-demand winter. It is already trying to even out the differences as much as possible. Betting on transatlantic connections does not make seasonality disappear, but the fluctuations are already not as large as they would be if the airline still depended more on the Icelandic home market. But even there, a lot is happening to attract tourism, even in the winter. A real tourism boom, not least caused by the volcano outbreaks that were responsible for severe but short-term operational disruptions, was another important factor contributing to Icelandair's already-steep growth.
The way the airline now deals with the fluctuations is by pushing all the heavy maintenance work into the winter while flying day and night in the summer. It also typically leases out two aircraft with the help of its sister company and charter specialist Loftleidir. This winter, the carrier plans to operate the equivalent of 14 aircraft, with some being rotated through heavy checks.
Because the MAX is smaller than the 757, the aircraft can be used on thinner routes. That will be one more important strategic advantage of the airline, because it will be even harder for its much bigger competitors to defend those markets. In thinking further ahead, the model could be expanded even more by using aircraft such as the soon-to-be-modernized Embraer 190/195s. Although range would likely be a limit for the aircraft to be used on North America flights, it would open up more opportunities in Europe.
The introduction of the MAX will not lead to the 757's retirement, which the airline plans to continue flying until around 2025.