Keflavík Airport (KEF), operated by state-owned entity Isavia, officially opened expansive duty-free stores on Wednesday as Germany’s Gebr. Heinemann was formally welcomed to the gateway as its new retail partner.

Prior to this, the duty-free offer was run by Isavia through the subsidiary, Fríhöfnin, which ceased operations last year. In its last full year of trading, the company generated ISK15,162 million (USD126 million) for Isavia.

Isavia’s decision to outsource its most high-profile commercial activity—duty-free shopping—was made pre-pandemic and global travel retail Gebr. Heinemann was selected following a competitive tender process to become the first private duty-free operator in Iceland.

The timeline goes back to November 2024, when Heinemann was awarded the concession at KEF. Then in 2025, there was a May handover of the Isavia-run shops, as well as the launch of a new retail brand at KEF. Following this, construction work began for a completely new shopping experience for passengers.

That process came together with the official opening and ribbon-cutting on Wednesday. Under the brand Ísland Duty Free (Ísland means Iceland in Icelandic), Heinemann operates a departures store of approximately 1,600 square meters at KEF, an arrivals shop of about 2,000 square meters, and a gate shop, all serving primarily leisure/personal travelers who make up around 90% of passengers. The Hamburg-based retailer’s footprint covers a total area of around 4,000 square meters.

Max Heinemann, Co-CEO of Gebr. Heinemann, said: “With Ísland Duty Free, we are opening a new chapter for travel retail at Keflavík Airport. We are grateful for Isavia’s trust and proud to bring our international expertise to Iceland.”

The size of the arrivals store reflects historic high spending on liquor by Icelandic nationals when coming home. Shopping duty-free on arrival is considered a ‘must’ for many returning Icelanders because of the high tax rates applied to liquor products in the country—much like other Nordic markets in mainland Europe such as Norway and Sweden.

Local Brands Loom Large

A key aspect of the duty-free showcase is that local brands, across all categories, make up 30% of the offer, higher than at any other Heinemann airport store globally. The new shops even beat Italy, famous for its food and wine, where the local brand share can reach 24% at Heinemann airport locations, according to the retailer’s Chief Commercial Officer Inken Callsen.

This local offer may well set KEF apart from other airports and give it an edge. As KEF has a role as a connecting hub for Icelandair—and until recently for low‑cost carrier Play until it ceased operations in September 2025—the retail experience is one element that might persuade travelers to transfer through the airport rather than elsewhere. Last year, the top three foreign-market visitors came from the U.S. (29%), the U.K. (10.3%), and Germany (6.6%).

Sveinbjörn Indriðason, CEO of Isavia, points out duty-free’s role is “much more than retail.” He says: “We serve millions of passengers every year and Keflavík is an important connection between Iceland and the world. The experiences passengers have here shape not only their perceptions of the airport, but also of Iceland. When we examined the future of duty-free at the airport we weren’t simply looking for an operator, but a long-term partner that could combine international expertise with a genuine appreciation for Iceland, its peoples, its products, and its culture.”

Using Retail to Enhance KEF’s Attraction

As a state-owned entity, Isavia want to strengthen ‘brand Iceland’ as a whole and the new Heinemann shops deliver on that, not just through the scale of the local offer but also the design elements that include blue floors reminiscent of the famous Blue Lagoon and a ceiling installation evoking geothermal steam.

Indriðason adds: “Keflavík competes with airports across the world and a strong retail proposition contributes to the competitiveness and commercial strength of the airport, helping us to invest in facilities and services.”

The Isavia CEO also highlighted sustainability which is a priority for KEF, and it has been integrated into the retail concept. The regional fixtures are produced using 3D robotics from Spain’s Nagami and made from recycled plastic. The stores use recycled materials such as Omexco Minerals wall coverings made from recycled paper and fine mica.

A 2022 update of a masterplan for KEF has set out a path to 2045 including “clear and measurable” sustainability goals to reduce the cost and impact of constructions on the environment. The first phase of the plans—until 2035—caps development based on the capacity of the airport’s two current runways at up to 12.9 million passengers a year.

In 2025, KEF handled 8.16 million passengers down on 2024’s 8.33 million due to Play’s collapse, and still below 2018’s high of 9.81 million. This phase also includes the expansion of the terminal to enhance its role as a connecting hub between North America and Europe. The second phase to 2045 includes the construction of a third runway and further terminal expansion and infrastructure to serve the new runway and up to 15.1 million passengers.