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Here is an interesting read about possible mass transit lines in Reykjavík with a focus on using such lines as a catalyst for urban regeneration. It seems like everybody that looks at it, bot officials and independent analysts, seem to gravitate towards the same basic layout for an west/east axis in Reykjavík that would make for a sensible light rail line.
This is an extremely interesting booklet. And I agree, I think the ideal is a west-east line, for starters.
 

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Any news on the Keflavík-Reykjavík rail line? Haven't seen any articles for a while
This is the latest I could find:

Investors hope to set plans of a high-speed rail link between Reykjavík and Keflavík Airport into motion in 2018

A group of investors hopes to set plans of a high-speed rail link between Reykjavík and Keflavík Airport into motion within the next three years. Fréttablaðið newspaper reports that a high-speed rail link would cost 105 billion ISK (37.5 million Euros) to construct. In addition to private investors, Reykjavík, Kópavogur, Hafnarfjörður, Reykjanesbær and Garðarbær municipalities will partake and contribute to the challenging project.

[...]

“We are confident that we will be able to provide funds to launch the project in February [2016]. The next three years will devoted to assess the impact a rain link will have on the environment and to prepare preliminary designs and plans. Our hopes are that construction can begin in 2018,” Runólfur said.



Source: http://icelandmag.visir.is/article/...l-link-between-reykjavik-and-keflavik-airport
 
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