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Keflavík International Airport — a Major Industry in Steady Growth What Is the Importance of the Development of Keflavík International Airport for the Future?

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Keflavík International Airport — a Major Industry in Steady Growth What Is the Importance of the Development of Keflavík International Airport for the Future? Keflavík International Airport — A major industry in steady growth What is the importance of the development of Keflavík International Airport for the future? 3 Table of contents A major industry in steady growth Summary of Results 4 The Airport’s History 9 Tourist Services 10 ISAVIA and Keflavík Airport’s Developmental Plan 14 Passenger Numbers at Keflavík Airport 19 Direct Jobs in Companies at Keflavík Airport 28 Conclusions 38 Report Authors Dr Huginn Freyr Þorsteinsson Valdimar Halldórsson Ingvar Sverrisson Aton ehf. Layout and design: Hvíta húsið 4 Keflavik International Airport Summary of Results Tourism in Iceland is a fast-growing The recently issued Roadmap for Tourism industry and its scope of activities has Iceland predicts continued growth in the increased in all fields. The growth is so activities of the sector and a significant prodigious that it tests infrastructure in increase in foreign exchange earnings. many areas. Isavia’s development schedule is a phased development plan based on forecasts of The foreign exchange earnings generated passenger numbers in coming years. by the tourism industry have grown concurrently with the increased number of Isavia’s financial position has strengthened passengers travelling to the country. The considerably in recent years in line with its tourism industry has reached the point increased scope of operations. These are of being the industry generating most of an important prerequisite to enable the Iceland’s foreign exchange earnings. company to cover the increased leveraging with the necessary developments ahead. Isavia, the Icelandic authorities, the airlines and other stakeholders have been Isavia’s passenger forecast is based on the successful in promoting Keflavík Airport to forecasts of the main airlines operating foreign airlines, particularly outside peak in Keflavik Airport. The total number of hours. Passenger numbers outside peak passengers passing through Keflavík hours have grown proportionately faster Airport is expected to increase by 37% than during peak hours in recent years. The in 2016. There were 25 airlines flying to greatest growth in passenger numbers has Keflavík Airport during peak periods been in September and October. this year. In 2010, there were eleven. We anticipate continued growth over the Keflavík Airport is the largest gateway into next few years although not as much Iceland and is one of the most important proportionately as in recent years. The individual aspects of the tourism industry. forecast for the future is a 3% increase in It is important that care is taken as regards passenger numbers, which is in accordance the enlargement plans for Keflavík Airport, with the long-term forecast of the World which are necessary for the airport to be Tourism Organisation (UNWTO). able to welcome the growing number of passengers in the future. It is clear that if As before, the heaviest traffic through Keflavík Airport is properly developed, it Keflavík Airport is early in the morning and will be profitable, not only for the operation then again in the afternoon. This is for the of the airport but for the entire economy most part due to the manner in which the of Iceland. We must, however, ensure that route networks of Icelandair and WOW air developments are carried out in such a are organised. Considerable success has manner that they do not cause the economy been achieved in getting in new airlines to overheat. that arrive and depart outside peak hours. It is important for this trend to continue, to ensure optimal utilisation of the installations at Keflavík Airport. 5 A major industry in steady growth Of the total number of passengers, the 40% of these jobs are directly connected greatest increase is expected to be in to the Icelandic airlines (pilots, cabin crew, connecting passengers, mainly passengers etc.) and other jobs are direct service jobs travelling with Icelandair and WOW air. It is at the airport. assumed that around 43% of all passengers passing through Keflavík Airport will be In light of the fact that there is little connecting passengers by the end of the unemployment in the Reykjanes region, and forecast period in 2040. In comparison, it is in fact in Iceland as a whole, it is clear that a assumed that this percentage will be 33% large proportion of these new jobs will have this year (2016). to be filled from outside the Reykjanes area and also from overseas. It is clear that the The current passenger forecast assumes employment situation in Reykjanes, already a significantly speedier increase in the quite good, will become even better, which number of passengers than the one used should make the area a sought-after place in the preparation of the Keflavík Airport’s to live in. By the end of 2016, approximately development schedule in the autumn 3% of the total workforce in Iceland will of 2015. be directly linked to the operations of Keflavík Airport. Isavia’s passenger number forecast is proportionately somewhat lower than the Great opportunities lie in establishing forecast for foreign currency income set what has been called Airport City, which forth in the Roadmap for Tourism Iceland consists of the area that covers the airport, issued by the Travel Industry Association the terminal, cargo areas, office buildings, and the Ministry of Industry. The Roadmap shops and services as well as hotels. The appears to assume that foreign currency area could support the development of income from each foreign traveller will operations, both flight-related and non- increase from what it is today. flight-related, that seek to be located near an international airport with strong Icelanders are frequent flyers, measured flight connections. Such development at per capita, in comparison to other European Keflavík Airport is realistic. Mention should countries, according to a recent study be made of the fact that the availability of carried out by the ACI (Airports Council direct flights from Iceland to the US and International). Of all European countries, Canada during the summer is similar to the only Luxemburg has more direct airport total availability at all major international jobs per capita than Iceland. airports in Scandinavia. Based on the ACI’s calculation model of the Clear policies towards using flight number of direct airport jobs and having connections to gain a competitive taken into account the current number advantage can result in an increase in of jobs at Keflavík Airport, the number of goods and services transactions, attract direct jobs will increase significantly over increased foreign investment in Iceland, the next few years. Thus over 1,300 new increase the number of valuable jobs and jobs will be created this year and around increase the prosperity of all Icelanders. 1,110 in 2017. Based on Isavia’s passenger number forecast to 2040, an average of 415 new jobs will be created in Keflavík Airport every year from 2018 to 2040. These jobs will be distributed among many companies that operate in the airport. Approximately 6 Keflavik International Airport 7 A major industry in steady growth 8 Keflavik International Airport Keflavik International Airport in 1954 9 The Airport’s History A major industry in steady growth Formal opening of the airport Leif Eiriksson Air Terminal organisation of the ground and second Keflavik International Airport was The Leif Eiriksson Air Terminal was brought floors of the air terminal. The second floor formally opened on 23 March 1943 and into use in April 1987 to separate civil was dedicated to shops and passenger was constructed by US armed forces in aviation from the operations of the navy. services. The total floor area was then WWII. The airport was owned by the armed The US and Iceland divided the cost of the approximately 56,000 m2. The north forces and was an important stopover for airport operation in such a manner that the building, originally around 22,000 m2, flights on the way over the North Atlantic US paid two-thirds of the total cost. The had been enlarged to 39,000 m2. During Ocean. After the war, in 1946, the airport operation of the airport was managed by the summer of 2008, further work on was transferred to Icelandic ownership, the Keflavík Civil Aviation Administration improvements to the customs search area although the US navy continued to use it until 1998, when the government and several minor tasks were halted due to due to occupation in Europe and therefore body ‘Flugstöð Leifs Eiríkssonar’ was uncertainties in the economy. covered the cost of its operation. Keflavik established to manage the operation of International Airport played an important the airport. The advisory management 16 billion in 2016 role in the development of civil aviation of the air terminal, appointed in August In 2014, work formally began on the 5,000 between Europe and America. 1999 to prepare proposals for the future m2 enlargement of the south building arrangement of the operation, proposed to the west. This added six new gates, a The defence agreement fundamental changes. waiting area for passengers and increased The Icelandic Civil Aviation Administration the ability of the air terminal to segregate of Keflavík Airport took over the The public bodies ‘Fríhöfnin á passengers according to whether they management of all aircraft at the airport Keflavíkurflugvelli’ (Keflavík Duty Free were arriving from a Shengen area or a non- in 1955 and managed approach controls for Store) and ‘Flugstöð Leifs Eiríkssonar’ (Leif Schengen area. Keflavík and Reykjavik airports as of 1978. Eiriksson Air Terminal) were subsequently merged into a single limited liability Considerable construction work has been Two Icelandic airlines operated company owned by the State. The Leifur carried out at Keflavík Airport recently. For international flights – Loftleiðir hf. flew to Eiríksson International Air Terminal Ltd. 2016, the financial scope of the projects Europe and the US while Flugfélag Íslands was established by an Act of Parliament undertaken is approximately ISK 16bn.
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