Icelandair: The story of the world’s first low-cost airline

How a plane crash, a glacier and a never-say-die entrepreneur opened up air travel for everyone.

Sixty-six years ago, Icelandic Airlines, owned by Alfred Eliasson, was about to go under. Competition, low domestic demand and hardly any flying routes to boast of combined to force the company to pull out of the aviation business.

However, nobody had bargained for Eliasson’s grit. In 1950, an Icelandic Airlines plane carrying cargo from Luxembourg to Iceland crashed on the Vatnajokull glacier. A US Air Force rescue team found the crew alive but the rescue aircraft – a DC-3 - could not take off after it had picked up the crew and had to be abandoned. USAF wrote off the craft.

Months later, Eliasson made a deal with the USAF and bought the salvage rights of the DC-3 for $600. He repaired, retrofitted it in the UK and rechristened it as Jokull. Just then, Icelandic was offered $75,000 for the plane by Spanish airline Iberia. That money saved Icelandic Airlines from going under.

From the 1950s till about the 1980s, the IATA (International Air Transport Association) ruled over ticket prices and had a stranglehold over operations. Eliasson, however, went out on a limb and promoted trans-Atlantic flights that were cheaper by $100 over most flights – all perfectly legally but by dodging regulations. Icelandic Airlines (now Icelandair) became one of the fastest growing companies. In the 1980s, others like Laker Airways, Ryanair and Southwest followed in Icelandair’s slipstream. And low cost flying took off.

Source : https://www.fastcompany.com/40414742/a-plane-crash-a-glacier-an-entrepreneur-how-icelandair-opened-up-air-travel-for-everyone