Icelandair Stays the Course

Airlines reinvent themselves all the time. Not Icelandair. It's pretty much the same as ever — now with an interline agreement with Southwest.

Dear readers,

A few years ago, Icelandair chief commercial officer Tómas Ingason found himself in an unusual situation. He and his team hosted a delegation from Southwest and found that they — the employees of a small, scrappy airline located about 1,800 miles from the North Pole — needed to show one of the world's largest carriers how to negotiate an interline agreement.

"It's just the practical things, right?" Ingason told me in an interview. "If you haven't done interlining, if you haven't done codeshares before, you have a whole lot of questions of how this all works. Now, obviously Southwest has hired some people with experience in the field, but back three years ago, they simply didn't have that experience at hand. I know how silly it sounds — that Icelandair is teaching something to Southwest — but this is actually one area that we had more experience in than they did."

My apologies to Ingason, a loyal paid subscriber, for starting this piece by talking about Southwest. He and I had scheduled this interview to discuss Icelandair, an interesting and iconic (it traces its history to 1937) airline that has remained relevant¹ despite two trends working against it — the rise of fuel-efficient, twin-engine airplanes that network competitors use to connect many secondary cities in Europe and the United States, and a surge of low-cost carriers flying transatlantic routes. Some of those are gone, yes, but in Iceland, Play hangs on.² (Barely).

I will get to Icelandair’s fortunes soon. But yikes, Southwest. Ingason said the two airlines had been hammering out an interline deal — the one³ Southwest announced at its investor day last month — for three years. But if you know about the internal machinations at Southwest, you will not be surprised to learn that this process started two years before that, when the carriers began talking. Ingason told me not to obsess so much about this timeline, saying that "just a lot has had to come together for us to be able to announce this," but five years feels long, considering Virgin Atlantic announced a codeshare deal last week with SAS, one year after it became apparent that SAS would join SkyTeam and one month after it happened.

What do you think? Am I reading too much into this? Or is this a symptom of what ails Southwest? Send me an email with your thoughts. Or, if you’re a paying subscriber, leave a comment.

Now, let’s go deep into Icelandair…