The Icelandic Civil Aviation Administration was founded in 1945, when Parliament passed law nr. 24/1945 on „airports and landing strips for aircraft" The laws also required “a special management board for aviation” and the office of Director General of Aviation. These laws provided the basis for the “Civil Aviation Administration”, which was founded shortly after the laws were passed. The Administration office was opened at  Garðastræti 2 on 15 March 1945.  The engineer, Erling Ellingsen, was later appointed Director General from 1 July of the same year, which is the formal anniversary of the office.  Nine years later, in 1936, the pilot, Agnar Kofoed-Hansen was appointed aviation advisor to the government, which was his involvement with the sector in a civil capacity. In 1947 Agnar was appointed state airport director and chairman of the Aviation Board. He became Director General of Aviation in 1954, an office he held until his dying day in 1982. The lawyer, Pétur Einarsson was appointed Director General early in 1983 and held the office until 1992, when the engineer Þorgeir Pálsson was appointed.  Petur K. Maack was appointed Director General 1 Januar 2007.

The early years
In the spring of 1946 the offices of the Civil Aviation Administration were moved to Reykjavík Airport, to a Nissen hut at Öskjuhlíð. A little later, on 6 June 1946, the Icelanders took over control of the airport from the British Army. This was the country’s main airport until the nineteen sixties. The administration’s provision of services began with this move of location. In addition to running the airport, the services included providing flight information. These operations were run from the old air traffic control tower and provided services for air traffic over the country and over the surrounding seas. They were the basis for the international air traffic control services that were later initiated at the request of the International Air Traffic Control Authority.

The Civil Aviation Administration staff were fewer than 10 during the first year of operations. Their tasks mostly involved administration, licences, registration of aircraft and supervision of their airworthiness. Taking over Reykjavík Airport Operations meant a big increase of staff, when fire fighters, air traffic controllers and technicians joined the team.  Then there were carpenters, electricians, radio technicians and other tradesmen who were hired as the Administration’s services increased and as the airports grew in number. In the sixties there were more than 30 airports with scheduled flights and air traffic in the Icelandic air control sector had multiplied from the early years of the Administration. The air traffic control zone was considerably extended in 1956, and reached its current size in 1976, when the Icelandic Civil Aviation Administration took on the air control services for traffic at jet altitudes over Greenland on behalf of the Danish authorities. 

During the temporary absence of the American forces from Keflavík Airport, in October 1946, the Icelandic Civil Aviation Administration took over certain functions in the running of the airport, though an American company performed most tasks. The Administration mainly covered air traffic control at the airport, and the running of the airport terminal. This arrangement lasted until 1953, when all Icelandic operations at Keflavík Airport were moved to the Foreign Ministry.  Keflavík Airport Administration was founded to manage the tasks in airport operations described above.  Civil Aviation Administration staff numbered 110 in 1964 and had increased steadily in line with increased operations and increased flight activity.  In 1976 they were 149 and on the Administration’s sixtieth anniversary in early 2005, they were over 300, including staff at Flugfjarskipti ehf. (flight telecommunications company).

As of 1 January 2007 the Icelandic Civil Aviation Administration was divided into two separate organisations.  One whcih carries out civil aviation regulatory tasks and safety inspections, the other carries out functions as a service provider.
The names of the two organizations are The Icelandic Civil Aviation Administration (Flugmálastjórn Íslands) and Isavia (Flugstoðir).

The civil aviation regulatory tasks carried out so far by the Icelandic Civil Aviation Administration (ICAA) was entrusted to the new ICAA, on the basis of a new legislation adopted in June 2006 by the Icelandic Althingi,  The new ICAA combined the former Flight Safety Division and other official administrative functions which where carried out by other divisions of the former ICAA. 

A new organization ISAVIA was established to take over ICAA’s role as a service provider as of 1 January 2007.  ISAVIA operatee airports in Iceland except Keflavík Airport. It provides air navigation services and be responsible for ATC services to the Icelandic ATC area which accommodates about 30% of the international traffic crossing the North Atlantic Area.
Þorgeir Pálsson is the CEO of ISAVIA.