The Icelandic Canadian - 01.09.2003, Síða 12

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THE ICELANDIC CANADIAN
Vol. 58 #1
direction again. The two most significant
trade agreements Iceland has signed in the
post war era were the European Free Trade
Agreement in 1971 and the European
Economic Area agreement in 1992.
Nevertheless the relationship between
Iceland and America that had been estab-
lished and strengthened during the war and
in the post war period, has continued to be
one of the most important planks of
Icelandic international relations, in trade as
well as in other areas.
The United States is still Iceland's sin-
gle most important trading partner, being
over a quarter of the value of Iceland's for-
eign trade. In terms of export from Iceland,
frozen fish is still the most important item,
but more recently we have experienced a
very fast growth in the export of fresh fish,
flown daily to 3-4 destinations by
Icelandair.
One of the most important and inter-
esting trade developments between the two
countries in the last 15 years has been the
growth in tourism from North America to
Iceland. Today more travelers enter Iceland
from the United States than any other
country. The number of tourists coming
from USA to Iceland has more than dou-
bled in 10 years.
This is very important, as tourism has
been a key driver in the Icelandic economy
over the past decade. The Institute of
Economics at the University of Iceland
stated in a report last year, that the growth
in tourism to Iceland over the last ten
years, which was more than twice the
European average, was primarily the result
of massive investments in capacity by
Icelandair and the growth of the company's
route network. This growth in tourism has
made the travel industry the second largest
currency earning industry in the country.
The strategy of Icelandair has focused
on two main markets. The most important
is the market to and from Iceland. That was
however a very small market and in order
to grow in this market the company decid-
ed it had to create capacity and flight fre-
quency from both sides of the Atlantic to
make Iceland more accessible to foreign
tourists. To create the basis for growth,
Icelandair took advantage of its mid-
Atlantic position and channeled a small
part of the vast transatlantic market
between Europe and America via its hub
airport in Iceland. This worked. The
growth in the number of passengers on
routes to and from Iceland over a five-year
period has been 66%.
The competition on the transatlantic
market has become more and more difficult
and the events on September 11th last year
have made matters worse. There is still a
growing market to Iceland. Icelandair is
therefore increasing its focus on the tourist
market from Europe and America to
Iceland and at the same time withdrawing
some of its capacity from the transatlantic
market.
It is interesting to compare flight ser-
vices between the United States and Iceland
to the direct services between the United
States and Scandinavia. There are now 4
flights a day between Iceland and the USA,
That is more than the number of flights
between between USA and Norway,
Sweden and Finland combined. And it is
worth bearing in mind that there are now
no direct flights between the United States
and Norway.
More than 75% of the Icelandair air-
line revenue comes from the international
market and a third of that comes from the
North American market. This strong
dependency on the international market is
a direct result of the small size of the
Icelandic home market. This is a good
example of how dependent Icelandic busi-
nesses in general are on foreign trade.
Ladies and Gentlemen: I dwell on avi-
ation for two reasons. First of course I like
to promote the airline. Everyone should fly
Icelandair. Secondly, I do believe that good
airline schedules, direct flights, high fre-
quency and good selection of destinations
has contributed greatly to successful rela-
tions between Iceland and America in other
areas than travel and tourism.
The airline has provided the infrastuc-
ture needed to carry out business success-
fully. In my mind there is no doubt that
this has also helped foster the political rela-
tionship, helped strengthen cultural ties
and last but not least has been a key factor
in an exceptionally strong educational rela-