Iceland’s Cruise Sector Struggles: Navigating Challenges Amid New Fee Policies

Iceland’s cruise industry is bracing for a significant downturn due to a newly implemented infrastructure fee. The Cruise Iceland association, which represents the interests of ports, tourism stakeholders, and shipping agents, anticipates a 14% decline in national cruise bookings for 2026, with a potential 30% drop predicted for 2027. This sharp contraction follows the introduction of an $18 per passenger fee for each 24-hour period spent in Iceland.

At a recent briefing, Cruise Iceland presented findings indicating that this fee might result in a net financial loss for the government. Should cruise arrivals drop by 20%, the projected loss to the treasury would be around $3.6 million annually. A 30% decrease as estimated for 2027 could escalate losses to $12.5 million.

Operators are already responding to these changes by altering their itineraries, with reports of some cruise lines reducing their stays in Icelandic ports and opting for destinations like the Faroe Islands instead. This trend raises alarm for smaller, more remote ports, especially in the Westfjords, which may face exclusion from future cruise routes.

Cruise Iceland has expressed that while it does not oppose the idea of an infrastructure fee, it advocates for a phased, structured approach to its implementation. They emphasize the importance of giving cruise lines adequate time to adjust their pricing models and schedules. The association proposes a tiered fee structure based on port calls rather than the duration of stay, which it believes would foster better engagement with Icelandic destinations.

Additionally, this fee brings forth concerns about tax equity between cruise passengers and those arriving by air. In 2023, cruise visitors accounted for about 13% of Iceland’s total tourist arrivals, with 309,890 people from a total of 2.4 million travelers.

The policy change invites further examination of how various visitor segments impact national tourism revenues and associated infrastructure costs.

Iceland’s primary port is Reykjavik.

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