Iceland has a population barely over 400,000. Fewer than Tulsa, Oklahoma. A volcanic rock in the middle of the North Atlantic with no rail, no motorways to anywhere, and a domestic economy smaller than most mid-sized American cities.

It also operates a profitable transatlantic airline. That shouldn't be possible.

Icelandair's weapon is geometry. Keflavík sits almost exactly halfway between North America and Northern Europe. New York to Reykjavík is 4,200 kilometres. Reykjavík to London is 1,900. Instead of competing with Emirates on premium or Ryanair on price, Icelandair offers something neither can: a free stopover of up to seven days in Iceland on any transatlantic ticket.

The fare is priced competitively with direct flights. The stopover costs the airline nothing.

Iceland's visitor numbers went from 300,000 in 2000 to over 2 million by 2023 — in a country with 400,000 residents. Icelandair didn't just benefit from the tourism boom. It caused it.

The fleet strategy is where this gets surgical. In 2026, Icelandair retired its last Boeing 767-300ER, becoming a purely narrow-body transatlantic operator. The fleet now runs on Boeing 737 MAX 8s, MAX 9s, and Airbus A321LRs — the long-range variant with a 7,400-kilometre range that unlocks the US Midwest and Southern Europe without a widebody's cost structure.

Narrow-body seat-mile economics on widebody routes. Lower fuel burn. Faster turnarounds. Higher daily frequencies.

Keflavík itself is engineered for the job. Two crosswind runways — 02/20 and 11/29 — laid in a cruciform pattern across 3,000-metre strips, specifically designed to handle North Atlantic weather from any direction. When storms shut down single-runway airports across Northern Europe, KEF stays open.

The entire model depends on passengers choosing a connection over a direct flight. But for a country with fewer people than a London borough, turning a mid-Atlantic refuelling point into a national economic engine is the most elegant airline strategy ever designed.

Four hundred thousand people. Two runways. One idea.

It works.