Icelandair’s airfreight and logistics operation focuses on air freight services to and from Iceland, by leveraging the passenger route network together with scheduled air freighter flights, operating two B757- 200 cargo aircraft in addition to the passenger fleet.
Icelandair Cargo performed well in the year 2021 despite the pandemic having a significant impact on the operation like the year before. Generally, one of the main emphases when planning the cargo schedule and operation is to maximize the utilization of the belly capacity available in the Icelandair passenger network. During the pandemic, this has been extremely challenging as the passenger network has been very much affected by less demand and border restrictions. Belly capacity was particularly limited in the first half of the year but improved in the second half with more frequent passenger flights.
In order to meet less cargo capacity in the passenger network, additional freighter flights were scheduled to Liege and Boston. The irregularity in belly capacity and utilization can be explained as a replication of the Covid situation each time, but 42% of the freight was moved by passenger aircraft which is a big step from the 28% share the year before. However, this is far below the 64% belly share before the pandemic.
A large part of our operations revolves around transporting fresh Icelandic fish to destinations in Icelandair‘s extensive international route network, reaching around 40 destinations in Europe and North America. Icelandic seafood is known for its freshness and when transported with passenger flights the fish can be on consumers’ plate in Europe and North America within 36 hours after being caught. This advantage gives the product a unique freshness which is difficult for even the locals to compete with. Fresh seafood is a high value product and the estimated export value of Icelandic fish transported with Icelandair Cargo in 2021 is around USD 460 million.
Gunnar Már Sigurfinnsson
Managing Director - Air freight and logistics
Import has been strong during the pandemic but the main markets are in Central Europe. As before, perishables, spare parts, fashion goods, and e-commerce are a big part of the import operation. Pharma and medical transport have also been increasing during Covid as, for example, vaccines and other medical equipment.
In 2021, Icelandair Cargo increased its emphasis on transit freight, which is being transported between Europe and North America. Before the pandemic, there was not a strong focus on this product but a changing environment with a decline in global cargo capacity and fast-growing e-commerce business have made this an interesting market. In the year 2021, 11% of the company’s cargo revenues were generated from transit activities but only 3% in the year 2019.
During the pandemic, charter opportunities have increased considerably. Charter projects from China with medical equipment for European and American authorities was a big part of the successful operational year in the year 2020. Almost 4% of the revenues were generated by charter services on the North Atlantic route with European products to North America.
The year 2021 marked a turning point for Icelandair Cargo when an agreement was reached for the lease of two Boeing 767-300 wide-body freighters which are expected to be introduced in the autumn of 2022. The two new aircraft will strengthen the company's competitive position and provide growth opportunities with increased capacity and extensive range to serve new markets. At the same time, a decision was made to expand the company's warehouse building at our hub in Keflavik airport, which will play a large role in this project.