The Icelandic low-cost airline company, Play Airlines, abruptly ceased operations on Monday, leaving thousands of passengers stranded and 400 workers unemployed. The airline had planned to restructure itself as a charter and leisure provider, but this plan is now uncertain due to low ticket sales.
Founded in 2021, Play Airlines was intended to be a successor to the failed airline, Wow Air. Initially, the company focused on transatlantic flights between Europe and North America, with Reykjavik as its hub. However, this model did not succeed.
In 2024, Play Airlines changed its business model, reducing transatlantic flights and focusing on European routes and flights to the Canary Islands. It also operated in the US, serving only three airports: New York Stewart (SWF), Boston Logan (BOS), and Baltimore-Washington (BWI).
As part of this restructuring, Play Airlines transferred its Air Operator Certificate (AOC) and operational functions to its subsidiary in Malta, while back-office functions were transferred to Malta and Lithuania.
According to Airdata News, the sudden suspension of flights by Play Airlines has left thousands of travelers stranded. The Icelandic Authority of Consumer Protection has issued recommendations for affected customers to claim their rights under the EU Regulation for Air Passenger Rights.
Play Airlines offered affordable prices for flights from North America to Europe, with Reykjavik as its hub. Since its launch in 2021, the company had increased its fleet to 10 aircraft from the A320neo family.
The airline strategically included the Greek market in its network for leisure travel to Southern Europe. In 2023, it launched direct regular flights between Reykjavik and Athens, making it easier for passengers from American cities such as Boston and Baltimore to travel to the Greek capital with one stop in Iceland. The Athens route was part of Play Airlines’ “fly connect” strategy, which also allowed for easy access to popular Greek destinations such as Santorini, Mykonos, Crete, and Rhodes. The route proved to be popular, leading to an extension of flights until January 2024.
Despite its success in the Greek market, Play Airlines’ failure was not unexpected. The company followed the same business model as its predecessor, Wow Air, with extremely low fares and Reykjavik as its transatlantic hub.
1. Low revenues and high costs: Despite high load factors, the revenue per passenger was too low to cover the high operational costs, especially with rising fuel prices.
2. Delayed strategic decisions: Play Airlines experienced significant operational losses in 2023, reaching $35. 2 million. While the management recognized the need to focus on profitable point-to-point European routes, they admitted that these changes should have been implemented earlier.
3. Internal instability: The decrease in sales in the last few months, along with disagreements among employees regarding strategic changes, exacerbated the situation.