Until the late 1960s, Flugfélag concentrated mostly on domestic flights, where it initially faced fierce competition from Loftleiðir, another airline which had been founded in 1944.
Ata foinais dos anos 60, Flugfélag centrouse principalmente nos voos domésticos, onde inicialmente atopou unha dura competencia de Loftleiðir, outra aeroliña que se fundara en 1944.