Icelandair is able to offer competitive and low baseline airfares through a combination of its strategic geographic hub model, high aircraft utilization, and an unbundled pricing structure. Situated midway between North America and Europe at Keflavik International Airport, the airline funnels passengers through a single connecting point, maximizing passenger volume per flight and reducing operating overhead compared to point-to-point carriers. Additionally, its basic economy ticket classes exclude ancillary perks like checked bags and onboard meals, allowing budget-conscious travelers to purchase bare-bones fares while optional add-ons generate supplementary ancillary revenue streams for the airline.