Just about a decade after completing a critical refurbishment and extension of the runway as well as building a new passenger terminal and services building, and renovating its control tower, Vagar Airport is undergoing a new round of extensions that will possibly include a major terminal upgrade.
According to CEO Regin I. Jakobsen, significant increase in air traffic means Vagar Airport will have to dramatically expand its existing terminal capacity within the next few years.
With several airlines signing on to join national carrier Atlantic Airways in using the airport on a regular basis—Scandinavian Airlines, Widerøe, Icelandair, and new FarCargo—it will become an increasingly more demanding task to manage air traffic at the Faroe Islands’ sole airport.
Vagar Airport has thus initiated investments valued at 400 to 500 million dkk (54 to 67 mln. eur) to upgrade luggage handling, add new aircraft parking space, and build a large car parking facility, with extensive earthworks alone representing substantial amounts. A third gate is also being added to the existing terminal building to make more room for non-Schengen-related traffic.
“With these investments we’re addressing some but not all of the issues at hand,” Mr. Jakobsen noted.
“Passenger throughput this year has exceeded the pre-Covid peak of 2019 and will plausibly total some 440,000 by December 31st. That in itself is normally manageable with our existing terminal capacity, even though the terminal was designed for a different time when aircraft were half the size of the ones in use today. In cases of weather disruptions, for instance, we really come under pressure to process four planes full of passengers at the same time. In reality we hit maximum capacity already in 2019 but it just so happened at that point that we got a break because of the Covid-related restrictions that were implemented. However we’ve crossed that high point by now and according to estimates the passenger throughput will double within the next decade. In 2038—that is, in 15 years—that number will have reached one million, which is by far in excess of what can be passed through our terminal at today’s capacity.”
The situation, according to Mr. Jakobsen, calls for a commitment by the owner of the airport, the Faroe Islands’ national government.
“Beyond our ongoing investments we’re looking at an investment of 600 to 700 mln. dkk (80 to 94 mln. eur), which of course is too much for a company our size,” he said. “So we’re talking about expanding the terminal building to increase its capacity three-fold, all of which is urgent to stabilize the situation for the next couple of decades. Bear in mind, we’re already undertaking substantial investments independently to upgrade our luggage hall, for example, plus building a new multi-storey parking facility. Also we’re making groundwork to provide space for a new aircraft hangar.”
All things considered, including the size of the Faroe Islands, the commercial basis for any airport here is somewhat limited.
“Our remit is to provide critical aviation infrastructure for the nation rather than to run a profit-maximizing enterprise,” Mr. Jakobsen said.
“At the same time, just like any other business, we must return a sufficient result to remain open. Yet this company was never capitalized to undertake investments of the size we’re now being faced with to meet the demand from increasing air traffic.”
Vagar Airport was founded after the fact that an airfield had been built by the British during World War Two and subsequently run as an entity under the Danish Civil Aviation and Railway Authority. In 2007, the airport came under the control of the Faroese after which it was incorporated as a limited company owned by the Government of the Faroe Islands. Financed with means originating from a Marshall Plan fund, a series of investments completed in 2011 and 2014 saw the runway extended by 50 percent from 1,250 to 1,799 meters alongside a general upgrade of critical airport facilities.
As per Mr. Jakobsen, the airport is now once again at a junction where some government-controlled funds should be put to appropriate use.
“These developments in air traffic are in a way beyond our control—of course we can influence them, which indeed we do; but we’re under pressure to accommodate the ongoing and coming growth. Air traffic connectivity is an inherent demand nowadays, which means airport development is an ongoing business everywhere. So, as it turns out—and it really shouldn’t come as a surprise to anyone—the investments required now are sizeable and will need to be funded by the government.”