Icelandair sees Q2 profit fall as seismic activity hits demand

Icelandair Group eked out a small profit during Q2 as it shifted more of its network towards lower-yielding transatlantic connections amid the impact of seismic activity on demand for travel to Iceland. While eruptions and earthquakes are commonplace in Iceland, seismic activity in the southwest of the country has attracted international attention in recent months, particularly coverage of evacuations from the town of Grindavik. Icelandair has previously suggested that the media was giving undue attention to those developments, denting demand for travel to the country. That lower demand continued into the April-June quarter, Icelandair said on 18 July, prompting it to pivot more towards transatlantic connecting traffic at its Keflavik hub. The airline therefore offset a 15% drop in passengers travelling to Iceland as a destination during the quarter with a 25% increase in connecting passengers. But the lower yields associated with the airline’s “via Iceland” traffic meant profitability was hit, even as the business cut unit costs by 2.4%. Furthermore, “from” traffic fell by 9%, with the carrier citing its unwillingness to compete with “unsustainable” low fares offered by local competition.<br/>