October 12, 2020

What's the Future of Keflavík?

Keflavík International Airport is a critical hub that drives growth for the entire Icelandic economy. It is also the country’s largest employment center, providing jobs for 2% of the national workforce. Over the past decade, the Keflavík airport area has been Iceland’s fastest growing region, attracting new families and talented individuals both domestically and from abroad.

As a result of the coronavirus, global airport hubs such as Keflavík are entering one of the most challenging periods in the history of aviation. The potential negative consequences—both for communities on the southern peninsula and for Iceland as a whole—are staggering.

Many airport areas around the world have seen similar challenges as the Southern Peninsula, but for some the effects are milder. What those areas have in common is a diverse economy that doesn’t rely on passenger traffic alone. In these times when people have almost stopped travelling, various products and goods still need to be transported between countries, and the need is even greater than before.

I am currently in Iceland (writing this article from quarantine) to continue my work with the Keflavík Airport Development Company (Kadeco) and main stakeholders in the airport area, studying the development opportunities for Keflavik with the airport as a driver for economic and social sustainability. Currently we are focusing on cargo operations, consulting with Icelandic specialists in the field. Because of Iceland’s location between Europe and North America, Keflavik has become an important hub for passenger traffic between the two continents. Building further on the country’s unique position, there are similar opportunities for strengthening international cargo operations at the airport. This would increase diversity both for the local economy in the Southern Peninsula and Iceland as a whole.

I’m excited to participate in the development of this dynamic area with Kadeco and urban planning firm Alta. Kadeco, on behalf of the Icelandic state, Isavia, Reykjanesbær and Suðurnesjabær, is preparing a master plan for the airport area that is designed to diversify the local economy and boost Keflavík’s global competitiveness. Focusing on three guiding principles—economic resilience, social innovation, and environmental sustainability—the Kadeco plan serves as a platform for innovation and value creation in key sectors including aviation, logistics, seafood, and renewable energy. The plan seeks to strengthen Keflavik’s hub status: empowering the southern peninsula’s key industries to leverage transformations in technology, consumer habits, and trade; and attracting international businesses and investors to one of Iceland’s most dynamic regions. By diversifying the peninsula’s economy and taking a holistic urban planning approach to the entire region, the development plan seeks to enhance Keflavík’s attractiveness as a place to live, work, and visit.

Dr. Max Hirsh (PhD, Harvard)





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