Foundation and early years

In the early 20th century the Vatnsmýri area, where the airport is situated today, was mostly uninhabited and the most ideal flat landing site for aircraft in the vicinity of Reykjavík. The small city was barely developed and the Vatnsmýri area was mostly unusable for normal construction due to its marshy conditions.

The first flight from the airport area in Vatnsmýri was on 3 September 1919, with the takeoff of an Avro 504, the first aeroplane in Iceland. Until 1937, there were experiments with airline operations in Vatnsmýri. Throughout the 1930s seaplane flights were predominant in Reykjavík. Flugfélag Akureyrar (now Icelandair) was founded in Akureyri in 1938 and operated seaplane flights to Reykjavík. Seaplane flights were operated in the vicinity of Vatnsmýri in Skerjafjörður and Vatnagarðar. In March 1940, Flugfélag Akureyrar moved its hub to Reykjavík, moving its operations to fixed-wing scheduled flights from the Vatnsmýri area, and changing its name to Flugfélag Íslands.

There were formal plans in the 1930s for an airport in the Vatnsmýri area, but those did not come to fruition before the Second World War. In 1930 and 1931, the Graf Zeppelin airship visited Reykjavík Airport.

Construction during WWII

In World War II, after Iceland had been occupied by the British Army, the construction of an airport was pertinent for military operations. The Vatnsmýri site was requisitioned and built up as an airport by the British Army. Construction began in October 1940, initially operating with a grass surface. The Black Watch regiment along with a contingent of local Icelandic labourers built the first runway over sunken oil barrels. Part of the Skerjafjörður neighbourhood had to be demolished for the construction of the 13/31 runway. This became RAF Reykjavík.

The current runway layout was established during the British-led construction of the airport. Multiple aircraft hangars and Nissen huts were constructed by the British Army, many of which continue to be used into the 21st century.

During the occupation, domestic and international civilian air traffic was very restricted. The British Royal Air Force operated from the airport during the war, then named Reykjavík Field, or RAF Reykjavik, which was mostly fully operational from March 1941.

Post-war Icelandic administration

After the end of the occupation of Iceland, on 6 July 1946 the British handed the airport operation over to the Icelandic government and the airport has since been operated by Isavia. Flugfélag Íslands (Icelandair), inherited the ownership in 1947 of a small building constructed by the British Army on the west side of the airport. Since 1947, the building has been gradually expanded but is still in use by Icelandair as a domestic terminal in 2024. By the 1950s, Flugélag Íslands operated flights to Britain and Northern Europe, as well as domestic flights.

Loftleiðir (Icelandic Airlines) commenced flights in 1947 from a small hut on the east side of the airport, initially flying domestic routes. In the 1950s the airline began operating discounted transatlantic flights with a stopover at Reykjavík Airport.

Until the early 1960s, Reykjavík Airport was the main gateway for international flights to and from and Iceland. Both Flugfélag Íslands and Loftleiðir had their hubs at Reykjavík. As passenger volumes increased, Loftleiðir began planning a new large terminal building on the east side of the airport in 1962. The building would include new company offices, a hotel and passenger terminal facilities. In conjunction, the Icelandic government constructed a new airport control tower.

Jet-age and relocation of international flights

Loftleiðir took delivery of its first Canadair CL-44 aircraft in 1964 and Flugfélag Íslands took delivery of a Boeing 727 as Iceland's first jet aircraft in 1967. These new aircraft were considered too large for regular operation on the shorter runway at Reykjavík Airport. Both airlines began operations of their larger aircraft from the longer runway at Keflavík Airport, but was considered undesirable on account of restricted civilian access arrangements due to its role as a US Military Base, as well as the longer distance to the city.

Discussions arose on the future of Reykjavík Airport in the early 1960s. Both Loftleiðir and Flúgfélag Íslands were of the position that Reykjavík Airport should continue to be the international airport of Iceland and be expanded, or a new airport be constructed in the vicinity of Reykjavík. The government appointed a committee to make a decision on Reykjavík Airport's future. One option was to construct a new airport on the Álftanes peninsula, located approximately 15 km by road from central Reykjavík, which was relatively undeveloped at the time. The other option was to continue to use Keflavík as the international airport and Reykjavík Airport for domestic services. A decision was made to maintain the arrangements at the time, leaving Keflavík Airport for international services and Reykjavík Airport for domestic services.