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Íslandsflug

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An Icelandic airline and aircraft leasing company that operated passenger, cargo, and domestic aviation services from 1991 until its merger into Air Atlanta Icelandic in 2005.

Last updated August 31, 2026

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Overview

Íslandsflug was an Icelandic airline and aircraft leasing company headquartered at Keflavík International Airport near Reykjavík. It was formed in 1991 through the merger of two small domestic scheduled operators, Arnarflug innanlands hf. and Flugtak. The company developed from a principally domestic aviation business into a diversified operator serving passenger, freight, parcel, and aircraft-leasing markets. A significant part of Íslandsflug's development involved the expansion of cargo and mixed passenger-freight operations. In 1994, it introduced overnight parcel flights to East Midlands Airport in the United Kingdom, using a Fairchild Metro aircraft. This service connected Iceland with a major European logistics hub and demonstrated the company's move beyond purely domestic scheduled flying. The airline added an ATR 42 in 1996, broadening its capacity for regional passenger and cargo operations. Íslandsflug entered the jet era in 1997 when it took delivery of a Boeing 737-200QC. The aircraft's quick-change configuration allowed it to be used for both passenger and freight missions, matching the airline's hybrid operating model. The company subsequently operated Boeing 737 aircraft and larger Airbus freighters and passenger aircraft, building a fleet that included Boeing 737-200, 737-300, and 737-400 aircraft, as well as Airbus A300 and A310 widebodies. Its fleet also included regional and utility aircraft such as the Dornier 228, Dornier 328, ATR 42, Beech 99, and Swearingen Merlin. In 2001, Íslandsflug received its first Airbus A310. This made it the first airline in Iceland to operate an Airbus aircraft and marked a further step in its international and widebody capabilities. The A310 complemented the company's cargo and passenger activities and reflected its broader role as an operator and aircraft-leasing business rather than a narrowly focused domestic carrier. The company ceased to exist as an independent airline in 2005, when it merged into Air Atlanta Icelandic. Landsflug assumed Íslandsflug's domestic operations. As a result, the Íslandsflug name belongs to a historical Icelandic aviation business rather than an active airline brand. Its legacy is associated with the consolidation of Iceland's small-airline sector, the development of mixed passenger-freight operations, and the country's early use of Airbus widebody aircraft.

History

Íslandsflug emerged in 1991 from the merger of Arnarflug innanlands hf. and Flugtak, two small Icelandic domestic scheduled airlines. The combination created a larger operator based at Keflavík International Airport and positioned the company to serve both domestic routes and international aviation contracts. During its first years, the airline broadened its business beyond conventional passenger flying. In 1994, it began operating overnight parcel services to East Midlands Airport with a Fairchild Metro. East Midlands was an important European freight and logistics gateway, and the service gave Íslandsflug an international cargo role. The operation also illustrated the company's willingness to use aircraft and schedules for specialist logistics work rather than relying exclusively on scheduled passenger demand. The airline took delivery of its first ATR 42 in 1996. This regional turboprop added capacity for shorter routes and supported the company's combination of passenger and freight work. In 1997, Íslandsflug became a jet operator after receiving its first Boeing 737-200QC. The quick-change aircraft could be adapted for passenger or cargo use, an especially useful feature for an airline with a mixed operating profile. Íslandsflug continued to increase the scale and variety of its fleet. Its reported aircraft included Boeing 737-200, 737-300, and 737-400 aircraft; Airbus A300 and A310 widebodies; Dornier 228 and Dornier 328 regional aircraft; ATR 42 turboprops; Beech 99 aircraft; and a Swearingen Merlin. The variety reflected activity across domestic aviation, regional passenger services, freight, parcel transportation, and aircraft leasing. A major milestone came in 2001 with the delivery of the airline's first Airbus A310. Íslandsflug thereby became the first Airbus operator in Iceland. The A310 gave the company widebody capability and strengthened its ability to undertake larger passenger and cargo operations. It also represented a significant expansion from the small domestic aircraft with which the company had begun. The airline experienced an operational incident on 23 June 2004, when Dornier 228 TF-ELH made a belly landing at Siglufjörður Airport. The published account attributes the event to pilot error. The only occupants were the two pilots, neither of whom was injured. In 2005, Íslandsflug was merged into Air Atlanta Icelandic. Landsflug assumed the former company's domestic operations. This transaction ended Íslandsflug's existence as an independent airline and transformed the brand from an active operator into a historical name in Icelandic aviation. Its development nevertheless illustrates the evolution of Iceland's airline sector from small domestic carriers toward more diversified companies combining passenger services, cargo, specialist logistics, and aircraft assets.

  • 2005

    Merger into Air Atlanta Icelandic

    [1]

    Íslandsflug merged into Air Atlanta Icelandic, and Landsflug took over its domestic operations.

  • 2001

    First Icelandic Airbus operator

    [1]

    Delivery of an Airbus A310 made Íslandsflug the first airline in Iceland to operate an Airbus aircraft.

  • 1997

    Entry into jet operations

    [1]

    The company became a jet operator with the delivery of a Boeing 737-200QC for passenger and freight missions.

  • 1996

    First ATR 42 delivery

    [1]

    Íslandsflug received its first ATR 42, expanding its regional operating capability.

  • 1994

    Start of overnight parcel flying

    [1]

    The airline introduced overnight parcel services to East Midlands Airport using a Fairchild Metro aircraft.

  • 1991

    Formation through airline merger

    [1]

    Íslandsflug was established through the merger of Arnarflug innanlands hf. and Flugtak.

Products and positioning

A flexible Icelandic aviation operator combining domestic and international passenger flying with cargo, parcel logistics, mixed passenger-freight aircraft, and aircraft leasing.

  • Passenger airline services · 1991

    Scheduled passenger services

    Íslandsflug operated scheduled passenger aviation from its Icelandic base, initially drawing on the domestic networks of its predecessor airlines and later using regional aircraft and Boeing 737 jets. Its fleet structure allowed the company to serve a range of route lengths and passenger-demand patterns.

  • Air freight · 1994

    Air cargo and parcel services

    Cargo was a central part of the company's operating model. In 1994, Íslandsflug began overnight parcel flights to East Midlands Airport with a Fairchild Metro. Later Boeing 737 quick-change aircraft and Airbus widebodies supported the broader passenger-and-freight business.

  • Aviation asset services

    Aircraft leasing

    In addition to operating aircraft, Íslandsflug was described as an aircraft leasing company. This activity complemented its airline business and formed part of the company's broader aviation-services profile.

  • Mixed passenger-freight aviation · 1997

    Boeing 737-200QC operations

    The Boeing 737-200QC introduced jet capability in 1997 and could be used for either passenger or freight operations. Its quick-change configuration suited Íslandsflug's flexible, multi-segment business model.

  • Widebody passenger and cargo aviation · 2001

    Airbus A310 operations

    Íslandsflug's first Airbus A310 arrived in 2001. The aircraft provided widebody capacity for larger passenger and cargo assignments and made the airline Iceland's first Airbus operator.

Brand decisions

  • 2005

    Merge into Air Atlanta IcelandicM&A

    Background

    Íslandsflug's independent operations were consolidated within another Icelandic aviation company.

    Action taken

    The airline merged into Air Atlanta Icelandic, while Landsflug assumed the domestic operations.

    Aftermath

    Íslandsflug ceased operating as an independent airline and its brand became defunct.

  • 2001

    Introduce Airbus A310 widebody operationsProduct launch

    Background

    The company sought greater capacity for international passenger and cargo operations.

    Action taken

    Íslandsflug accepted delivery of its first Airbus A310.

    Aftermath

    The airline became the first Airbus operator in Iceland and gained widebody capability.

  • 1997

    Adopt quick-change jet capabilityStrategy

    Background

    The airline was developing a business that combined passenger and freight activity.

    Action taken

    Íslandsflug took delivery of a Boeing 737-200QC capable of being used for both passenger and cargo missions.

    Aftermath

    The delivery made Íslandsflug a jet operator and reinforced its flexible mixed-use operating model.

  • 1991

    Create Íslandsflug through mergerM&A

    Background

    Two small Icelandic domestic scheduled airlines, Arnarflug innanlands hf. and Flugtak, combined their operations.

    Action taken

    The merged business began operating under the Íslandsflug name.

    Aftermath

    The transaction established the platform from which Íslandsflug expanded into international cargo, passenger-freight operations, and aircraft leasing.

Sources1 sources

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