Iceland's Keflavik Airport to Undergo $1 Billion Renovation

Daily Newsletter

Reward your inbox with the TPG Daily newsletter

Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts

Email address

Sign up

By signing up, you will receive newsletters and promotional content and agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.

In case you haven't heard, tourism in Iceland has been booming in recent years. In fact, according to Bloomberg, traffic at Reykjavik's Keflavik Airport (KEF) has grown more than five-fold over the past nine years. This year, the airport will see a predicted 10 million passengers pass through its terminals. But since the boom in tourism KEF has remained relatively unchanged — until now.

During the next seven to eight years, the airport expects to invest about $1 billion to help it accommodate more airlines, as the airport is the main gateway to the country — and the rest of Europe — for many travelers. It then hopes to see the investment and ability to accommodate more airlines as being able to offer more nonstop routes to the US and throughout Europe. As part of this investment, the potential to physically grow the airport is there, as it's surrounded by open lava fields. The airport was originally built by the US military during World War II.

In order to complete the proposed $1 billion in renovations, it'll require monetary assistance from foreign investors. The airport renovation would be a move that falls into the growing infrastructure push throughout the country. The newly appointed government expects investments to increase by 21% during the next five years — part of which would include KEF. The city of Reykjavik almost doubled its investments in 2017.

With the expansion of low-cost carrier WOW Air by connecting smaller US cities to Iceland, as well as Icelandair continuing its US expansion, there are more options than ever. Most recently, Icelandair announced that it was adding three US cities to its route network, including giving Kansas City (MCI) its first-ever nonstop transatlantic route. Plus, several legacy US carriers now offer — or are planning to offer — nonstop flights from the US to KEF. Its position also gives KEF the benefit of acting as a great stopover option for Europe-bound travelers.

As the tourism boom in Iceland continues, the ability for the country to be able to accommodate the influx of tourists becomes even more vital. Given that Keflavik Airport (KEF) is a major gateway to the country and Europe as a whole, this investment is needed to ensure that the airport can handle even more tourists flocking to the country.