Iceland’s airport developments are ready for take-off

Opportunities abound for investors and developers as Iceland prepares to expand Keflavik.

Iceland’s Keflavik International Airport is expanding in response to growth in passenger numbers and the size of the terminal is being increased by about a third. Alongside this, a number of opportunities for external investors are emerging as new facilities are needed to serve travellers’ requirements.

Brynjar Vatnsdal, development manager at Keflavik Airport, explained that the developments are the first major project since the airport was opened in the 1950s. In addition to a new taxiway, the masterplan will add 200,000 sq m to the terminal alone.

“The challenge has been to grow in the way that we want to with service levels and everything else because the growth during the peak [times] has been quite high,” Vatnsdal told RealFDI. “We are a hub airport so the peak hours are quite big in our case, probably bigger than in many cases in airports in Europe.”

He said the main challenge has been to allow peak growth to occur, but to ensure that the airport is utilised throughout each day and all year round.

The opportunities for foreign investors and partners include helping the airport with finance and construction of a new hotel, as well as operating the hotel.

“That’s not our core business. We don’t really want to be in that area, so we’re looking for some sort of a concession on that for some decades,” Vatnsdal said.

New logistics hub

The same is true of a proposed new logistics hub. “As a state-owned company, we are investing mostly in the terminal and airfield infrastructure, so we need investment in those support functions to be able to build them as quickly as we can and utilise the opportunities.”

Keflavik Airport Development Company (KADECO) is responsible for leveraging the potential of the increasingly busy airport for the benefit of the surrounding area and using the expansion to diversify job opportunities.

A year ago, KADECO launched the K64 programme, and projects are already materialising from that which are of national importance, according to managing director Pálmi Randversson.

“We are getting around eight million passengers per year. For a very small community, it puts stress on all of the infrastructure and it also generates a lot of opportunities of course.”

The company is looking at projects at the nearby harbour where there are opportunities around hydrogen production, while a waste incinerator will generate energy for the area.

“We’re very fortunate in Iceland. We have almost totally renewable energy already with hydro power and geothermal power, but we would still like to have more energy to work with so we are looking into alternative energy sources at this site.” Wind turbines are among the options being considered.

A sustainable future

The transport link between the airport and Iceland’s capital Reykjavik is also being examined. “It needs to be improved. It’s either going to be a rail or a highway with green buses that will operate into the future, so that’s absolutely something that we would like to put more focus on,” said Randversson.

The aim is to create a sustainable future that includes Iceland’s entire community, the airport and critical infrastructure, including looking at the future of aviation fuels.

“We’re also looking into how the municipalities and the communities need to evolve according to the future plans. There are lot of jobs that will be created and there’s a lot of infrastructure that needs to be built, such as schools and health centres and, of course, a lot of residential development as well,” said Randversson.