Iceland: Airborne David v. Goliath

Against the competition from more than 100 huge jetliners flown over the Atlantic by the world’s leading airlines, tiny Icelandic Airlines has pitted only five oldfashioned, slow, piston DC-6Bs.

Yet while many big airlines are losing money on the North Atlantic run, Icelandic turns a handsome profit. Chief reason: its fares are so low that its planes fly with the highest load factor of any Atlantic carrier—80% v. 42% for Air France and 52% for Pan American.

Last week Icelandic moved to offer a little more speed along with the low fares. For $8,000,000 it bought two Canadair CL-44 turboprops that will cut Icelandic’s New York-to-London flying time to eleven hours, compared with 16 hours for the DC-6Bs and six hours for the jets.

By refusing to join the International Air Transport Association, which sets identical fares for the world’s major airlines, Icelandic remains free to underprice its competitors. Its fare between New York and London is $231 v. a standard jet economy fare of $263; between New York and Oslo it is $250 v. $305. When I.A.T.A. carriers cut their fares in April, Icelandic plans reductions of its own to keep an average 20% below the I.A.T.A. level.

In its 20-year history, the line has not once been on government subsidy, last year carried 80,000 transatlantic passengers, twice the number it flew in 1953. Icelandic, which is owned by 700 Icelanders, is content with its small share of a big and growing market. Says Managing Director Alfred Eliasson: “We have no desire to kill any of the Goliaths, but wish only to continue living in the image of David in peaceful coexistence with the Philistines.”