Price war


As Loftleidir Icelandic’s operations began to bear fruit, the company decided not to join the International Air Transport Association, IATA. This was a significant step, as the association helped airlines economise in some areas, but also decided fares on many routes.

The principality of Luxembourg was not bound by IATA decisions, which was very convenient for Loftleidir. No airlines flew scheduled flights to Luxembourg and the government there was very interested in a joint venture. The result was the introduction of passenger flights in 1955. Loftleidir Icelandic could offer low prices between Europe and America, and ticket sales increased rapidly. During its busiest years, the company flew 300,000 passengers to Luxembourg. From there, they travelled by rail or coach to towns and cities all over Europe.

But there was more behind this success. Loftleidir Icelandic’s marketing staff were innovative, and introduced pioneering sales techniques. Among many new ideas, passengers could pay for their tickets over an extended period of up to two years. Doing business in this manner was unheard of at the time. They also offered guided tours and special packages to passengers stopping over in Iceland on their way across the Atlantic.