Government cuts funding for Loftbrú travel discounts

Iceland’s government will replace Loftbrú’s 40 percent air-fare discount with a fixed discount of ISK 7,000 per flight leg from the start of next year, mbl.is reports. Loftbrú is a travel discount scheme for residents outside the capital area.

The discount will amount to ISK 14,000 for a return trip. Each resident will still be able to use discount codes for up to six flight legs.

Infrastructure Minister Eyjólfur Ármannsson said the changes aim to preserve the scheme’s benefits while making its costs more predictable and keeping them within the budget. He said the percentage discount could be higher for people who book early and secure cheaper fares, and lower as fares rise.

Ármannsson said the new arrangement could also reduce incentives for air fares to rise alongside government subsidies, potentially helping to curb inflation.

The annual budget allocation for Loftbrú has been about ISK 600 million in recent years and will remain unchanged. However, total costs exceeded estimates between 2023 and 2025, requiring additional funding. In 2025, spending was about ISK 140 million over budget, according to the government announcement.