Icelandair strike threatens billions in tourism losses

An indefinite strike by Icelandair aircraft engineers could cause losses running into billions and damage Iceland’s reputation as a reliable destination, mbl.is reports. The strike is scheduled to begin at midnight on Tuesday unless an agreement is reached.

“This planned strike is simply another manifestation of the outdated labour market model we have, where groups that negotiate later make much higher demands, far beyond what has already been agreed in the general labour market,” Pétur Þ. Óskarsson, chairman of the Icelandic Travel Industry Association, told Morgunblaðið.

He said the state and municipalities had also failed to set a good example in this regard.

“This shows how urgent it is to update the labour market model we have in Iceland and give the state mediator broader powers to conclude disputes like this. If we mean anything by the Central Bank of Iceland’s 2.5% inflation target, collective agreements need to follow that principle,” Óskarsson said.

He said everyone loses under the current system, which is based on legislation from 1938 and is completely outdated.

Björgvin Jóhannesson, chairman of the Association of Hotel and Accommodation Companies, shared those concerns. He said hotel operators had not yet experienced a flood of cancellations as a direct result of the planned strike, although there had been some cancellations and changes to bookings.

People in the industry were highly concerned about the longer-term effects, he said, because uncertainty over Icelandair flights could influence travel decisions. When that happens, travellers tend to switch to foreign airlines that operate in Iceland only during part of the year.

The board of the Icelandic Travel Industry Association said the losses could reach billions within just a few days, while the damage to Iceland’s reputation as a reliable destination could last much longer.

Óskar Einarsson, chairman of the aircraft engineers’ union, told Morgunblaðið that there was no new information about the dispute and declined to give a further interview. Icelandair representatives did not comment.

State mediator Ástráður Haraldsson said on Sunday evening that talks were ongoing, but that no meetings had been scheduled.

“I am in constant communication with the parties and am trying to move this forward, to persuade them to agree to proposals for mediation or some form of intervention,” Haraldsson told mbl.is.

According to information obtained by the newspaper, other airlines have not added flights at Keflavík Airport because of the planned strike.