Iceland's Niceair Halts Operations In Dispute With Aircraft Owner

Icelandic carrier Niceair has decided to cancel all flights as of April 6 due to a dispute over lease payments between wet-lease specialist Hi Fly and the owner of the aircraft Avolon.  

Niceair CEO Thorvaldur Ludvik Sigurjonsson told Aviation Daily in a late evening interview April 7 that the Akureyri-based carrier had quite a successful start. 

“We are desperate that our single aircraft, an Airbus A319, has been taken away. We had no idea about the problems [between Hi Fly and Avolon],” Sigurjonsson said.

Aviation Daily has investigated the documents behind the wet lease arrangement. The A319 is leased to Hi Fly Ltd by Avolon Aerospace Leasing under an operating lease agreement dated April 24, 2019, between Hi Fly and the lessor. 

Based on an Avolon document, the aircraft is owned by Wilmington Trust SP Services (Dublin) Limited, which was leased to Hi Fly Limited and wet leased to Niceair. Lessor Avolon gave notice that the leasing of the aircraft was terminated on March 24, 2023, and “Hi Fly Limited, and any other purported operator, including but not limited to Niceair, is no longer entitled to possess, use or operate the aircraft.” 

Niceair has canceled flights from April 6 and paused all its operations. It has been flying scheduled flights to Copenhagen and Tenerife from Akureyri, a city regarded as the capital of North Iceland. Average load factor has been 71%.

“Now we are trying to get the same aircraft from Avolon or we will try to find another one,” the CEO said. This, however, is not an easy task in an environment where airlines around the world are short on aircraft capacity.  

“We also have already contracts with other airlines to operate wet-lease for them,” Sigurjonsson said. “That’s why it is so aggravating.”  

“We also want to better increase connectivity from North Iceland with the world. We have proved that it is possible. North Iceland is a good market. On our flights, 30% of our passengers have been foreigners; 70% are locals,” he said.

For the coming summer, Niceair has planned three weekly flights from Akureyri to Copenhagen. Services to Alicante, Spain, and the UK are planned as well. 

“For the image of our company, this situation is a real damage that can cost us the operation,” Sigurjonsson said. But the CEO made clear that to rescue the company, Niceair must return to operation, the sooner the better. “We’ll try, or die trying,” he said.