Icelandair eyes capacity growth of 18 percent in 2016

Icelandair plans to increase capacity by 18 percent next year by luring customers to a network of niche North American cities and tempting them with onboard wifi services, helping it compete on trans-Atlantic routes.

Icelandair flies between European and U.S. cities via its Iceland hub, which means it can use smaller, cheaper planes than other airlines on trans-Atlantic routes. It estimates it has a 2 percent share of the North Atlantic market.

"We are planning next year to grow 18 percent in terms of available seat kilometres," said Helgi Mar Bjorgvinsson, senior vice president of marketing & sales, referring to a standard measure of an airline's passenger carrying capacity.

That compares with an average annual growth rate of 15 percent over the last five years.

The airline is facing competition on Europe to North America routes from budget airlines such as Wow Air, a rival Iceland-based airline that also uses the Reykjavik stop-off model, and Norwegian, which offers low-cost direct flights.

Wow Air said on Monday it would add new routes between Reykjavík and Los Angeles and San Francisco in 2016.

Also from next year, Canada's WestJet will start flying direct routes from London Gatwick to Toronto and other cities at budget prices.

In an interview on Monday, Bjorgvinsson said flying to destinations like Edmonton, Denver, Seattle, Portland and Anchorage gave the airline access to niche markets that have fairly few direct flights to Europe.

Icelandair, which has a market capitalization of 171 billion Icelandic crowns ($1.3 billion), also competes through its hybrid low-cost but-full service offering, said Bjorgvinsson.

Unlike on some budget airlines, passengers do not have to pay to check in their bag, and from the end of this year, the whole fleet will be wifi-enabled, he added.

 - Source: http://www.reuters.com