Iceland's cruise sector is bracing for a significant downturn, with Cruise Iceland reporting a projected 14% drop in nationwide cruise bookings for 2026 and a steeper 30% decline anticipated for 2027, BB.IS reported. At the heart of the issue is the recently implemented infrastructure fee of USD 18 per cruise passenger for every 24-hour period spent in the country.

Revealed during a briefing held last week, Cruise Iceland’s analysis warns that the fee could result in a net fiscal loss to the national treasury, rather than the intended revenue boost. If cruise traffic contracts by 20%, the net loss is projected at about USD 3.6 million annually. With a 30% contraction, losses could rise to 12.5 million.

Itinerary adjustments are already being observed, with cruise lines reportedly reducing their time in Icelandic waters in favor of nearby destinations like the Faroe Islands. Ports in more remote regions, such as the Westfjords, are particularly at risk of being dropped from future routes.

Cruise Iceland, which represents a coalition of Icelandic ports, tourism operators, and shipping agents, has clarified that it does not oppose the concept of an infrastructure fee. However, the association emphasizes the importance of structured implementation. “The introduction of such fees must be accompanied by adequate lead time so cruise lines can adjust their pricing and scheduling,” the organization stated. They advocate for a tiered fee system based on port calls rather than time spent, to encourage continued engagement with Icelandic destinations.

The fee also raises broader questions of taxation parity between cruise ship passengers and those arriving by air. In 2023, cruise passengers accounted for 309,890 of the country's 2.4 million visitors—roughly 13% of total arrivals.