United cuts Iceland route just 3 months before it's supposed to restart

The demand for travel to Iceland this summer may be cooling off.

United Airlines just cut its Newark-to-Reykjavik route, as first seen in Cirium schedules and later confirmed by a carrier spokesperson.

The airline had planned to restart seasonal summer service on this 2,601-mile route May 12, and operate daily flights through Oct. 27. United started serving this market seasonally in May 2018.

Now, just more than three months before the route was supposed to restart, United is pulling the plug on it entirely. "We regularly adjust our schedule for a variety of reasons including demand and the broader needs of our network," a spokesperson explained.

Without the Newark connection, United flyers will need to fly to Iceland via the airline's hub in Chicago's O'Hare International Airport (ORD). The carrier will maintain daily service between ORD and Keflavik Airport (KEF) from May 12 to Sept. 27.

It wasn't immediately clear whether United plans to deploy the 169-seat Boeing 757-200 somewhere else since it won't operate the Newark-to-Iceland route. This single-aisle airplane is capable of overwater missions. United is even planning to send it to Malaga, Spain — one of its most exciting new route map pins included in the airline's upcoming big transatlantic expansion.

The airline may instead just cycle the aircraft through its existing domestic and international network, instead of adding a new route so close to the beginning of summer.

Airlines typically like to announce their long-haul routes with enough lead time to stimulate demand and market the new service among key audiences.

That said, United's move may come as a head-scratcher to some industry observers, especially since Iceland was a popular destination for American tourists in past summers. The country was one of the first to reopen from the pandemic lockdowns, and it saw a flurry of new and expanded air service in response to the increased demand.

Seemingly, United isn't seeing strong enough booking and yield indicators to keep the Newark-to-Iceland route around.

Icelandair, the country's flag carrier, will become the only airline serving the aforementioned route now that United is pulling out of the market.

Meanwhile, the competition from nearby John F. Kennedy International Airport (JFK) in Queens, New York, is slightly stronger, with Icelandair and Delta Air Lines going head-to-head on the New York-to-Reykjavik route.

While Iceland is a popular tourist market, airlines historically haven't been able to generate impressive yields on these roughly five-hour flights. With ultra-low-cost carriers flooding the market — along with Icelandair's frequent fare sales — the U.S. airlines have been forced to compete more closely on price. This has led to lower overall fares.

It's pretty common to see round-trip airfare going for around $400 to $500 on Icelandair — and many of these itineraries even include a free stopover in Iceland with a connection onward to Europe. The U.S. airlines can't offer any connectivity beyond Iceland, so they're competing for the O&D (origin and destination) traffic.

Plus, Icelandair and other discount carriers, such as Play, have been growing recently; they have added service to Detroit; Dulles, Virginia; and Hamilton, Ontario, to name a few. It seems that United now thinks the North America-to-Iceland market is oversaturated, and its Newark flight is no longer economically viable.

Of the U.S. airlines, Delta will be the leader in Iceland service this summer, offering nonstop flights from Detroit, Minneapolis and New York.

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