Icelandic Airline to Discontinue US Flights by Autumn, Restructuring Underway

Budget airline Play, based in Iceland, has recently announced plans to discontinue all flights to the United States by the fall season. This includes popular destinations like Washington D. C. and New York.

Play offers affordable airfare on Airbus aircraft between Iceland and various destinations in Europe, including Denmark, France, Germany, and the United Kingdom. In addition, the airline also operates flights between Iceland and Baltimore, Boston, and New York City.

The airline uses a hub-and-spoke model, with Keflavík International Airport as its central hub connecting to other airports around the world. Play launched its transatlantic flights in the spring of 2022 and has been operating for just over three years.

However, the hub-and-spoke strategy has proven to be financially underperforming, and an oversaturated transatlantic market has led to increased competition among airlines, according to Aviation Week. As a result, Play will suspend flights to New York Stewart on September 1st, followed by Boston Logan on September 15th, and Baltimore/Washington on October 24th. A restructuring plan is currently pending approval.

The airline also plans to scale back its routes in Northern Europe as they shift away from the hub-and-spoke strategy in these areas. This strategy has resulted in a $20 million loss in 2024, compared to profits made in point-to-point European leisure markets.

The proposed restructuring will be led by Play’s CEO Einar Örn Ólafsson and Vice Chairman Elías Skúli Skúlason. In a notification to the Central Bank of Iceland, the executives stated their intention to submit a voluntary offer for all outstanding shares in the airline through a new holding entity.

According to the offer document seen by Aviation Week, many European airlines have faced airspace restrictions, leading them to redeploy capacity across the Atlantic. This has resulted in overcapacity in the transatlantic market and increased pressure on yields.

If approved, Play’s new strategy will focus on targeting the leisure and VFR (visiting friends and relatives) market. The airline plans to offer flights to and from Iceland to “underserved sun destinations” and has recently announced new flights to Antalya, Faro, and Agadir.

“We’re focusing on the profitable aspects of the business- sun destination flights- and discontinuing those that have not yielded results,” said Mr.Ólafsson. The airline will also offer wet-lease services, providing short-term aircraft and crew to help other airlines fill gaps in their schedules.

Play has stated that, if the proposal is approved, the takeover group plans to continue promoting competition in the Icelandic aviation market under the Play brand by offering affordable airfare for both locals and tourists.

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