Icelandair (FI, Reykjavik Keflavik) wants to see both international and domestic flights take place at a single new airport instead of them being divided between the current Reykjavik Keflavik International, which is located 50 kilometers southwest of the Icelandic capital, and the smaller, city-centre Reykjavik Domestic Airport, Iceland's Túristi has reported.

Icelandair Group argues in a report issued in December that it is not feasible to shift domestic flights to congested Keflavík, but a second airport could be constructed in the southwest corner of the country, at Hvassahraun, allowing Reykjavík Domestic to be closed.

Currently, a passenger transferring to or from a domestic flight must travel between the two airports, reclaiming and later checking in again any luggage, a process that takes no less than two hours. Icelandair, by far the biggest carrier at Keflavík, also operates the biggest domestic airline, Air Iceland Connect (Reykjavik Domestic).

A new international airport at Hvassahraun would take about a decade to build, at a cost of ISK300 billion krónur (USD2.43 billion), the group's report suggests.

In early December, the city of Reykjavík and the Icelandic government signed a contract launching an investigation to study weather and flight conditions in Hvassahraun over the next two years, according to the Icelandic broadcaster RÚV. Each party will invest ISK100 million (USD811,000) in the project.

"We have seen that Keflavik Airport, with its structure, has been able to handle 19 million passengers. But if we aim for 30 to 35 million passengers in 30 to 40 years, then maybe within ten years we need to decide what happens. Then Hvassahraun would come in handy," Transport Minister Sigurdur Ingi Jóhannsson commented at the time.