Air Iceland is a market-driven service company responsible for scheduled domestic flights and for routes from Iceland to the Faeroe Islands and Greenland.

Air Iceland was formed in 1997 when Icelandair Domestic was merged with Flugfélag Norðurlands, but the airline traces its roots back to 1937. The Managing Director of Air Iceland is Árni Gunnarsson.

About 90% of the company's passenger traffic is on the routes between Reykjavík, Akureyri, Ísafjördur and Egilsstadir. The company has six Fokker 50 aircraft in operation and operates two DASH 8-100 aircraft. In addition the company operates smaller aircraft, namely Twin Otter.