Icelandair has decided to lease out aircraft and capacity during the upcoming winter season as it looks to navigate ongoing shifts in demand.
The Struggle For Airlines
Icelandair is hardly the first and won’t be the last to express struggles during specific times of the year when demand drops significantly.
Several low-cost transatlantic carriers, including Norse Atlantic and formerly Norwegian, among many others, have encountered something similar. While summer sees demand levels skyrocket, demand drops as the weather worsens.
These airlines thus will struggle financially in these months. While summer performance is solid, the negatives of winter mean uncertainty over the long-term sustainability of such a business.
As a result, airlines have attempted to mitigate some losses by adjusting their route network during the winter months, leasing aircraft out or adopting another initiative. Icelandair says they’re now looking at leasing out capacity.
The Icelandair Situation
The company’s Chief Executive highlighted that demand during the winter months is at its absolute lowest point in a post-pandemic world.
While leisure demand has recovered, this is seasonal rather than year-round, and as highlighted by several leading analysts and figures reported by airlines, business travel has lagged.
Icelandair believes leasing out capacity to other airlines in need during the winter will be key to mitigating some of the low points and better utilising the resources they’re fortunate enough to have.
While Icelandair’s future outlook has been solid, and there are many opportunities in the transatlantic space, they must first successfully navigate the visible challenges that lie in front of them.
Leasing out capacity during the low demand points is only one of several initiatives identified by the Chief Executive that were ultimately not named but are also being explored to lower the unit cost.
What Does Icelandair Offer
Icelandair is currently going through a major fleet upgrade and has made several commitments to new aircraft types with a view to replacing existing units.
However, at this point, the airline has 45 total aircraft, split between 35 active units and 10 parked.
The 737 MAX is the airline’s most prominent aircraft family, with the -8 and -9 features bringing the average age to 4.8 years and 18 units to their name.
The company also operates the Boeing 757 and Boeing 767; these units average over 25 years of age. However, Icelandair believes there’s an appeal to utilise these aircraft for flying elsewhere during the winter season if not on their network.
Looking ahead, Icelandair will transition towards some Airbus-produced aircraft to bring greater efficiency to its day-to-day operation.