Iceland is on my mind. No, not because the weather near the 66th parallel has been relatively better than in the midstate lately. I want to know what I'll be encountering when I go there this summer.
“Go there” may be a bit strong. Flight plans willing, I’ll be in Keflavik International for two hours, a stopover between London and New Jersey. So how much I can pack into that time in the airport? What food and shops will be available? What currency will be accepted, and what credit cards? What’s the language?
Thanks to the Internet, I answered all those questions fairly quickly.
Then the bigger questions started to loom. What will I miss by being stuck in the aiport? Is Iceland a place I’d like to make a destination? Suddenly I’m researching flights, hotels and attractions.
Iceland – land of fire and ice, land of the sagas. Also land of the brilliant marketers.
If Iceland were a state, it would fall between Indiana and Kentucky in size. When it comes to population, we’re talking Pennsylvania-county-sized, a little more than Dauphin and Perry counties combined.
The tiny country took a massive financial hit in the global meltdown of 2008. When its banks cried “too big to fail!” the government let them fail anyway, resulting in an $85 billion default. Today, the country is working hard on bringing its unemployment down from 4 percent (yes, that is single-digit “4”) and the economy is expected to grow 4.2 percent this year, according to Bloomberg.
Iceland doesn’t have a lot of industry, so like many small nations in warmer climes, it wants to grow its tourism. This is happening, in part because of Icelandair.
Why did I buy a ticket on Icelandair? The airline is aggressively competitive. The closest comparable flight I could find on the day I need to travel cost nearly 60 percent more. And I almost forgot to mention – no baggage fees.
Ordinarily, I’d worry. After all, you get what you pay for, right? But the airline has a good safety record and its amenities seem comparable to what I’d get – or not get – on the better-known airlines. The price of that bargain fare is that two-hour layover in Keflavik.
But enough about me and my vacation plans. I want to focus on the business of this.
In a detailed analysis produced by international accounting network PFK last year, Icelandair’s “aggressive growth strategy through a ‘hub and spoke’ model” is given a great deal of credit for helping to drive the tourism effort. If you travel by air much, you’ve experienced hub-and-spoke. That’s when, no matter where you want to go, you wind up in Detroit at some point.
How do you get people to do business with you? In addition to attractive pricing, Icelandair gives away free samples – of its country. (“Stop by Iceland for a couple of hours and see what we’re like. Try some local dishes, interact with our friendly citizens, get a glimpse of you could be doing on a longer stay!”)
And Icelandair is successfully executing a strategy that simultaneously grows its customer base while building partner businesses around it that, in turn, will bring it still more growth.
Do you bring that kind of value to your vendors and neighboring businesses? Do they do that for you?
This is not a government-subsidized effort. It’s private enterprise finding opportunities and acting on them. In fact, the PFK report expresses a wish for government investment in tourism.
The challenge for Icelandair soon could be its own success. As tourism expands, other airlines are adding Iceland to their schedules, as are cruise ships. No “free samples” as of yet, though.
It will be interesting to see how competition affects both Icelandair and the nation’s tourist economy.
You’ve got the location, you’re doing the right things. But nothing seems to work out and, before you know it, you’ve join a line of proprietors who tried and failed at the same site. What’s going on? Reporter Mike Sadowski, in this week’s issue, looks at the history of such a place and offers a few answers.
Also in this week’s issue, Heather Stauffer sits down with PinnacleHealth CEO Michael Young to talk about how the hospital system is navigating dramatic changes in the health care landscape.
The Inside Business focus is on business growth in Cumberland and Dauphin counties.
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Iceland is a fascinating republic. Its governing body, the Athling, first convened in 930. It’s a founding member of NATO, though no American military have been stationed there since 2006.
To get an idea of its scale, consider that Icelandair, a publicly traded company, is one of just 17 companies listed on the Iceland stock exchange. Not a volatile market!
When it comes to key competitors for tourism dollars, what does Iceland consider its top rival? Alaska.
And it was in 2010 that we learned to fear Iceland’s volcanoes, as this PBS documentary explains.