Air Iceland Regional StrategyGuðmundur Óskarsson | 11 November 2016

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2014 2015 2016F

Air Iceland operates extensive and flexible flight schedule in Iceland, the West

Nordic countries and Scotland

Air Iceland is a regional carrier operating scheduled

services to domestic destinations across Iceland

and to Greenland, FaroeIslands and Scotland

Number of passengersIn thousands 2014-2016

220

employees

72.3%

load factor

Jan-Oct 2016

5

8.473

Flights

annually

Seat capacity of 72-76 seats

Jet speed equivalent of 667 km/h

Range of 1.000 nautical miles

BOMBARDIER

Q400

Seat capacity of 37 seats

Speed of 537 km/h

Range of 945+ nautical miles

BOMBARDIER

Q200

Major fleet change in 2016 with the replacement of Fokker 50 aircraft for new Bombardier aircraft.

Jet speed equivalence, one training line for all pilots, added seat capacity and increased range.

Q400

Increased speed

Larger aircraft with more seats

Increased range

Q200

Unique performance

Fuel tank addition

Upgraded control equipment

Air Iceland aircraft fleet 2017

Bombardier Q400 Range Level

Passengers: 72

Still Air Range: 1.000 nm

Air Iceland strategic focus as a North Atlantic Regional carrier

Domestic Routes

Serving the Icelandic domestic

market with gateways in Iceland

along with supporting the

market to and from Iceland.

Regional Routes

Acting as the carrier connecting

the West Nordic market along

with supporting the networks at

Keflavik and Reykjavik Airports.

International Routes

Serving smaller International

routes, contributing to the

Icelandair Network and

strengthening Keflavik Airport as

a connecting hub.

National airline of the Faroe Islands, operating from its base at Vágar Airport,

on the Faroese island of Vágar. Atlantic Airways operates between Vágar and

Keflavik/Reykjavik on sales partnership with Air Iceland.

ATLANTIC AIRWAYS

Strategic Partners

Main airline of Iceland, operating from its hub Keflavik Airport in Iceland.

Icelandair operates between North America and Europe partnering with Air

Iceland on Domestic, Regional and International routes.

ICELANDAIR

Norlandair is an Icelandic airline offering scheduled flights to Nerlerit Inaat in

Greenland along with Þórshöfn, Vopnafjörður and Grímsey in Iceland on sales

partnership with Air Iceland.

NORLANDAIR

Air Iceland partnerships

15%20%

2015 2016

85%

80%

IcelandersTourists

Proportion of foreign travellers on

domestic flights:

Starting February 2017 Air Iceland offers domestic flights between Keflavik

Airport and Akureyri connecting to international flights to and from Iceland

6 times per week in winter season

3 times per week in summer season

Enables visitors to experience

the country side of Iceland

in an easy and convenient way

Opens opportunities

for the tourism industry in the

North of Iceland

Increased service

for the people living in northern

and eastern Iceland

Large increase in number of flights through Keflavik

0

500

1000

1500

2000

2500

3000

3500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

14 airlines operating in winter

Great increase in number of airlines operating

over winter in the past few years.

Over 50% increase in number of flights

between years during parts of winter.

Number of flights 2017

Number of flights 2014

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1,600,000

1,700,000

1,800,000

1999

1998

2004

1997

2000

2001

2008

2015

1996

2011

2010

2009

2006

2007

2003

2005

F2

016

2014

2013

2002

2012

1994

1990

1991

1993

1992

1995

Source = Icelandic Tourist Board

No. of visitors

to Iceland

Air Iceland Keflavik presence brings unique opportunities to capture the fast

growing tourism to Iceland, helping visitors travel further within Iceland

Extensive

opportunities

for Air Iceland

growth

+800.000

8,4%17,4%

15,6%

9.6%

55%36,2%

29%

96,4%

Almost all foreign visitors to Iceland visited Reykjavík in winter 2015/16 while

only a portion of visitors travelled further than the south west corner of Iceland

Traveling onward

Over half of all visitors to Iceland visit south

Iceland in winter while only 17% visit the

north and 15% visit the east.

This leaves great opportunities for these

regions which have invested in

infrastructure able to accommodate much

higher portion of visitors in the winter.

Source = Icelandic Tourist Board 2016

Why all year operation?

Length of stay

Visitors in winter and shoulder

season typically stay for shorter

periods allowing less time for

ground transport.

Infrastructure

Underutilized infrastructure

with great potential.

Tourism Companies

Interest among „incoming“ tourism

companies in North Iceland to

decrease seasonality.

Consistent Product

Flying all year brings a consistent

and reliable product to the market

that the tourism sector can rely on.

Air Iceland has operated KEF-AEY on behalf of Icelandair the past three summers, bringing valuable

experience. Now Air Iceland expands the route to all year.

Alaska Horizon

Regional subsidiary of

Alaska Air Group, operating

short haul services out of

SeaTac on behalf of Alaska

Airlines.

Fleet: 27

Destinations: 47

KLM Cityhopper

Regional subsidiary of

KLM Royal Dutch Airlines,

operating short haul

services on behalf of

KLM.

Fleet: 47

Destinations: 44

Supporting the Icelandair Network

Air Iceland international service creates a competitive edge for Icelandair,

allowing regional service into markets too limited to be flown upon

Icelandair mainline equipment and therefore contributing to the mainline

network.

The operation makes it possible to service niche markets that don’t fit the

Icelandair fleet, allowing entrance into smaller destinations.

Globally proven network business model

Air Iceland international service offers development of smaller routes previously

not feasible due to fleet combination

Boeing 767-300 Boeing 757-200 Bombardier Q400

Icelandair

Sales Network

Large sales network

and distribution

expertese.

Sales offices in all the

strongest markets in

Europe and North

America.

Highly knowledgeable

and dedicated sales

personell in every

relevant market.

Icelandair Sales Offices

Agent Sales Agreement

Marketing strength

With Icelandair as the marketing specialist in each

market, all marketing material is carefully

designed and represented by the Icelandair brand.

AIR ICELAND

WELCOME ABOARD

Fjárfestadagur

Icelandair Group

11. nóvember 2016