It is not normal or accepted business practice to subsidize foreign air carriers in any country.
Are you sure? There are examples of airports and/or Government organizations offering "route development funds" and/or other assistance to prospective airlines, including those not from the "home country".
Airlines such as (for example) Continental, Emirates and Air France (amongst others) have benefitted from these programs - are these programs illegal?
It is strange that an air carrier is able to get financing in a country that cannot find the pension money lost by that countries banks.
It would be truly cosmic if the lost European police pension funds that were "Lost" in the Icelandic banks, were funding the expansion of their airline.
Interesting - would you have some more info on this? Or are you just speculating and trying to throw some mud at a competitor to AC?
But Icelandair will get you to E'rope so no problem right? Enjoy that jetlagged middle of the night connection in KEF people!
As far as I know the AC flight is also overnight, so I'm afraid travelling by AC is no guarantee of avoiding jetlag. Some people may even find KEF a more user-friendly experience than for flight connections, and Iceland itself is of course a destination that will be of interest to some travellers (as is London).
How dare YEG promote their new service via KEF!