Icelandic airline Niceair forced to stop flights due to supplier’s default
Icelandic carrier Niceair has suspended all operations from April 6, 2023.
However, unlike most cases when an airline stops flying, the reasons for this rather unexpected move are not found in Niceair’s operational and financial performance, but in a legal and financial dispute involving two third parties.
Niceair was launched in 2022 with the purpose of connecting Akureyryi Airport (AEY), in the North of Iceland with several destinations in Europe, bypassing Keflavik International Airport (KEF), Iceland’s main air hub and its traditional international gateway.
As part of its strategy to build its business progressively while keeping a limited fixed cost structure, Niceair opted to subcontract its operations to an airline already possessing an AOC.
The Malta-based subsidiary of Portuguese ACMI operator HiFly, which was the carrier selected for the task, provided the aircraft and the crew, while Niceair took care of marketing, distribution and customer service.
The problem arose when, reportedly, HiFly defaulted on its payments to leasing firm Avolon (the owner of the aircraft) and the airliner, an Airbus A319 (registration 9H-XFW) was repossessed on March 30, 2023, while it was at Copenhagen Airport (CPH) and flown to Knock, Ireland (NOC).
Since Niceair operated only this specific aircraft, its withdrawal from service has left Niceair unable to fulfill its flight program. Many of its customers were also left stranded overseas and had to be brought back by Niceair through alternative means.
In a conversation with AeroTime, Niceair’s founder and CEO, Thorvaldur Ludvik Sigurjonsson, was adamant that the Icelandic firm had been fulfilling all its financial obligations and blamed HiFly for the whole situation.
“HiFly left us in an impossible situation at the worst possible time, right at the start of the summer seaso,” he explained.
According to Sigurjonsson, Niceair’s performance so far had been in line with expectations.
“We are happy with our load rates”, the CEO explained.
Niceair’s business plan counted on the growing popularity of Iceland as a tourist destination, which has meant many repeat visitors are willing to explore the country venturing well beyond its southwestern corner, where the capital is located. Likewise, Sigurjonsson confirmed that destinations such as the Canary Islands had been proving popular with local traffic too.
Niceair’s management is currently looking for alternative ACMI providers to resume service, but there is not clear indication of when this could happen.
“We need to see how we can continue. It is very early to give a definite answer to what is the future of the airline” concluded Sigurjonsson.