Loftbrú subsidy cost 12,000 krónur per eligible resident
Tuesday 27th October 2026 on 11:31 in
Iceland
The state spent about 12,000 krónur per eligible resident on the Loftbrú domestic air travel subsidy in 2025, according to figures cited by sociology professor Þóroddur Bjarnason in an article reported by mbl.is.
About 62,000 people are eligible for the scheme, which helps cover domestic airfares. The state’s 2025 spending was 740 million krónur, or about 1,000 krónur per eligible resident each month, Bjarnason wrote in an article on Substack.
State funding for Loftbrú has remained at 600 million krónur a year since 2021, its first full year of operation. Adjusted for inflation, that amount would have been 779 million krónur in 2025, 39 million more than the scheme’s actual spending that year. The 600 million allocation is equivalent to 572 million krónur at this year’s prices, according to Bjarnason.
He said spending on the scheme had not exceeded its original allocation in real terms. The apparent rise in spending beyond the annual budget was due to funding not keeping pace with inflation, he argued. The planned cuts would reduce the scheme’s scope by a quarter, rather than respond to costs exceeding the original estimate.
Infrastructure Minister Eyjólfur Ármannsson initially proposed replacing the 40 per cent fare contribution with a fixed payment of 7,000 krónur per trip. Rural MPs from both government and opposition parties strongly opposed the plan. They also said the minister had gone back on a promise to consult Parliament on changes.
The minister later raised the proposed payment to 9,000 krónur per trip, but there was still no consultation, the article reported.
Bjarnason wrote that domestic flights help people across the country access public services and institutions concentrated in Reykjavík. In the 2025 budget, the state allocated about 150 billion krónur to the National University Hospital, universities in Reykjavík and major state cultural institutions in the capital. He said Loftbrú cost about 0.49 per cent of that sum and helped the 16 per cent of the population living farthest from Austurvöllur access those shared services.