Aviator reports that Russia has refused to grant overflight rights to Icelandic carriers, ending a year of secret negotiations without a deal.
Both WOW and Icelandair sought Russian overflight permissions as part of plans to develop Reykjavík (KEF) as a transit hub for passengers traveling between North America or Europe and destinations across Asia, including China, Japan and Seoul. Using KEF as a connecting point would allow both carriers to offer more routes linking those regions.
Talks collapsed after Russia proposed charging up to $100 per passenger for overflight rights. Because Russia and China have not adopted the 1944 International Civil Aviation Organization agreement that governs overflight freedoms for most countries, they retain the ability to selectively permit airlines to cross their airspace and to impose fees for the privilege.
For low-cost carriers such as WOW, which operate on thin margins to keep ticket prices competitive, an additional per-passenger levy would significantly raise operating costs and undermine the carrier’s business model. The proposed fee thus proved unacceptable to Icelandic airlines.
Norwegian has encountered similar obstacles in negotiations with Russia; despite several years of talks, it also has not reached an agreement on overflight rights.
As a result of the failed negotiations, Icelandic carriers will need to consider alternative routings and partnerships to serve Asian markets, or explore other regulatory and commercial options that could make long-haul transits via Reykjavík viable without incurring prohibitive overflight charges.