Icelandair (A): An 80-Year-Old Saga

  • Reference: SM-1687-E

  • Year: 2017-2019

  • Number of pages: 30

  • Publication Date: Dec 17, 2019

  • Source: IESE (España)

  • Type of Document: Case

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Description

This three-part case series considers Icelandair at a couple of key inflection points in its recent history. Case A, set in early 2017 on the airline's 80th anniversary, the airline is faced to question its strategy after its impressive seven-year run of dynamic growth and solid returns comes to a somewhat abrupt end due to extreme pricing competition and upward cost pressure. The case delves into the development of the airline and its "hybrid" business model straddling between a full-service and Low-Cost Carrier (LCC) and specifically, how it competes against the new Icelandic LCC upstart, WOW Air. Students are asked to understand Icelandair's strategy and consider if any adaptations should be made in light of increasing pressure from WOW Air.

Learning Objective

The main purpose is to understand how a company straddling both sides of a business model - the "hybrid" between a full-service airline and Low-Cost Carrier (LCC) - can compete.

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Keywords

airlines Competing with Business Models Competitive Strategy Iceland Low-Cost Airlines Pricing strategy tourism