Icelandair, the national carrier of Iceland, has confirmed it will follow UK low-fare carrier Flybe and introduce a regular link between the country’s main international gateway, Keflavik International Airport, and Birmingham Airport. The new route will operate on a twice weekly basis from February 5, 2015 and will be the carrier’s fifth destination in the UK and 39th across its expanding network.

“We are delighted to announce Birmingham as our newest gateway in the UK. Our first route from the Midlands will not only open up opportunities of travelling to and from Iceland but also a refreshing and convenient way to North America,” said Andres Jonsson, general manager UK, Icelandair.

Flybe announced last month that it would introduce a three times weekly seasonal flight between Birmingham and Reykjavik, which is served by Keflavik International Airport, between June 29, 2014 and September 7, 2014 using an 88-seat Embraer E175 and in the past couple of weeks outlined plans to extend the route through the winter 2014/2015 schedule.

The Flybe link - alongside new routes to Ibiza and Palma – are being marketed as ‘Twilight Flights’ and will depart Birmingham late at night and return in the early hours of the morning, supporting the carrier’s plans to enhance fleet utilisation. However, due to the popularity of the Reykjavik service the carrier has already switched this to operate a more conventional daytime schedule from October 26, 2014.

The arrival of Icelandair and its usage of larger 183-seat Boeing 757-200s on the Reykjavik – Birmingham route will increase available weekly capacity by 138.6 per cent from February 2015 to 630 seats in each direction. Alongside supporting the point-to-point demand, the carrier believes its wider network and links into North America will be an attractive option for travelers between the two regions.

“By using Iceland’s geographical position midway between Europe and North America we can offer some of the fastest elapse times from Birmingham to popular destinations such as Washington D.C. and Seattle,” added Jonsson.

Iceland’s nature, including the Northern Lights and the hot springs, has always been a big attraction for visitors from across the UK and Icelandic locals also have a reputation of offering a warm welcome with the Nordic country voted as the friendliest nation on earth in a recent poll by World Economic Forum.

In addition to Birmingham, Icelandair also offers year round service from the UK to Iceland from London – Heathrow and Gatwick - Manchester and Glasgow, while easyJet offers links from Bristol, Edinburgh, London Luton and Manchester and Icelandic low-cost carrier WOW Air flies to London Gatwick.

In our analysis, below, we use UK Civil Aviation Authority (CAA) data to look in more detail at passenger traffic between the UK and Iceland since 2000. The graph clearly shows how the 2008–2011 Icelandic financial crisis, a major economic and political event in Iceland, impacted passenger demand to the country from the UK. Relative to the size of its economy, the collapse of all three of the country's major privately owned commercial banks, is the largest experienced by any country in economic history.

The banking system collapse was also compounded by the April 2010 eruption of Eyjafjallajökull that forced the unprecedented closure of European airspace. However, the growth shows how air travel has rebounded and demand has increased to levels never previously witnessed as the arrival of easyJet in the Icelandic market has boosted connectivity.

According to our own analysis of demand in 2013, easyJet had grown to a 18.7 per cent share of the O&D traffic between the UK and Iceland, reducing Icelandair's share to 38.0 per cent, albeit the latter's total traffic would have been boosted by connecting passengers.