Iceland’s main airport is evolving to meet passenger demand and will become part of a wider masterplan to capitalise on the region’s economic potential.

Iceland’s primary airport, Keflavík International Airport (KEF), established itself many years ago as an important stopover between Europe and the US, and air traffic has grown substantially as a result.

Airport operator Isavia anticipates that 8.49 million passengers will travel through KEF in 2024, representing a 9.6% increase from the 7.74 million travellers the previous year. To meet the escalating demand, the airport is in a state of continuous evolution, with the latest development including a new terminal extension and taxiway.

But the vision for the airport, and the surrounding area, is much more extensive and ambitious.

The Keflavík Airport Area masterplan, called K64, provides a long-term strategic vision for the area by bringing together a strategic spatial framework combined with an economic programme that will unlock the immense potential of the region and help diversify the economy. The area, which includes the airport and the communities in its immediate vicinity, Reykjanesbær and Suðurnesjabær, is only 50km from Iceland’s capital, Reykjavik, and is a part of the Suðurnes region, a unique area of Iceland with UNESCO Global Geoparks status.

The vision is that by 2050, the area will host a mix of industrial activities, boosting Iceland’s resilience against economic shocks such as the recent pandemic and climate change, while leveraging its unique features such as renewable energy, a young and diverse workforce and strong sustainability principles.

Raft of opportunities

The development plans open up a raft of opportunities to attract foreign direct investment and private investment from Icelandic companies in high-value industrial activities. Planners have already created dynamic partnerships and networks for international and local partners, including with
local municipalities and private sector players.

The masterplan is the result of several years’ work and collaboration between four key stakeholders: the two municipalities; Isavia (the airport operator); and the Ministry of Finance and Economic Affairs. These four partners form the board of Kadeco – the Keflavik Airport Development Company,  originally founded in 2006. Kadeco is a state-owned company that is leading the work and is the one-stop-shop for investors and developers that want to work in the area. The masterplan will be marketed under the K64 brand.

“These are future-minded plans and are all interlinked. It’s important that we are doing this all together in collaboration and looking 25 years ahead.”

Pálmi Freyr Randversson, Kadeco

The strategy’s guiding principles are Iceland’s commitment to a carbon-neutral future and the UN Sustainable Development Goals, innovation and green technology, as well as collaboration with stakeholders and engagement with local communities.

“These are future-minded plans and are all interlinked. It’s important that we are doing this
all together in collaboration and looking 25 years ahead,” says Pálmi Freyr Randversson, managing director of Kadeco who is overseeing the K64 project. “Of course, plans will evolve each year and we will have new opportunities as we go along.”

Until now, the airport has mainly functioned as infrastructure. The masterplan, however, outlines the enormous potential of the airport area as a bigger economic driver for the immediate region and the country as a whole. K64 combines transport, energy, industrial, commercial and social planning, and aims to diversify the local economy towards high-value sectors supported by world-class living and cultural spaces.

Strategic areas

To avoid dispersed urbanisation, the spatial masterplan proposes to focus on the development of a few strategic areas with a high impact in terms of identity and value creation.

With Keflavík airport in the centre and in synergy with the wider region, these focus areas include Helguvík-Bergvík and Keflavík airport terminal forecourt, as well as key sites at Aðalgata and Ásbrú. Furthermore, rural areas are connected through active mobility and landscape networks.

The focus areas within K64 are conceived as places with distinctive character that offer complementary experiences and economic opportunities, with diverse industrial and commercial activities directly related to the airport operations, but also benefitting from the nexus of airport-related functions.

According to the plan:

• Helguvík-Bergvík will be transformed into an eco-industrial park;
• The airport forecourt offers commercial and visitor amenities, improved car rental facilities and a public transport terminal;
• Aðalgata will become a mixed-use cluster including research and development, community and residential programmes;
• Ásbrú will include residential and manufacturing clusters, including an urban centre and the airside area focusing on aviation activities.

The eco-industrial park, which will be located between the airport and the deep sea Port of Helguvík, is a signature project for the wider masterplan with potential to spearhead energy transition and to support Iceland’s broader sustainability strategy. Economic activity at the park will promote resource efficiency and cleaner production, industrial symbiosis and carbon capture and storage.

There are opportunities also to develop a fishing and tourism sector in the short term, and hi-tech agriculture, biotech and eventually advanced aviation fuels and hydrogen in the medium to long term.