Analysis: Icelandic carrier Play was in the wrong game

Icelandic low-cost carrier Play ceased operating at the end of September, blaming “weaker-than-expected” demand following negative media coverage”.

 

Play had already announced plans to drop its transatlantic flying and focus on services to and from Iceland, cutting its fleet from 10 to four aircraft and ditching its Icelandic operating certificate to register in Malta.

 

But its board announced an end to operations on September 28, noting: “It has become clear these changes cannot deliver the results needed to overcome the airline’s deep-seated financial troubles.” It suggested “discontent among some employees” had contributed to the decision, confirming the loss of 400 jobs.

 

More: Icelandic airline Play ceases operations

 

Failure of Play Airlines will be ‘unsettling’, CAA declares

 

All flights were immediately cancelled. Play advised passengers to check other airlines as “some may offer ‘rescue fares’”, to contact their card issuer if they paid with a card and their travel agent if they had bought a package – highlighting once more the lack of provision for refunds when an airline goes bust.

 

The Civil Aviation Authority issued a statement advising passengers booked to fly with Play to or from Stansted to make alternative arrangements, describing the failure as “unsettling for customers”.

 

The carrier retained a licence to operate from Liverpool and had also flown from Glasgow during just over four years of operating.

 

Yet the airline’s long-term survival appeared unlikely from the outset, not least because it launched in the wake of the failure of another Icelandic carrier, Wow Air, with almost exactly the same business model.

 

Chronicle of a death foretold

Play was set up by two former Wow Air executives in 2019. Wow had collapsed in March the same year, having operated between Iceland, Europe and North America, as well launching flights to India.

 

Launched in 2012 by Icelandic technology and telecoms entrepreneur Skúli Mogensen, Wow Air aimed to offer low-cost flights between Reykjavik and major markets in Europe, then expand to North America making cut-price transatlantic flights available via Iceland.

 

It began flying to the US in 2015 and to Canada in 2016. By September 2017, Wow was operating to 15 destinations in North America and by the end of that year had carried more than 1.6 million passengers.

 

Yet the carrier barely ever appeared viable. Its losses only grew as it expanded and by 2019 it was seeking a buyer.

 

The Icelandair Group briefly appeared poised to acquire Wow in November 2019. But Iceland’s flag carrier, which pioneered the strategy of offering cheap transatlantic flights via Reykjavik, abandoned the takeover before the month was out.

 

Private equity investor Indigo Partners, a major shareholder in Wizz Air, then offered to buy Wow, which had slashed its workforce by two thirds. But Indigo also withdrew, in March 2020, as pandemic travel restrictions kicked in and Wow Air ceased flying.

 

Another Wow moment

That almost certainly should have been the end of the story. But within barely four months, two ex-Wow executives had announced plans for a new airline – initially called WAB for ‘We Are Back’ and subsequently christened Play.

 

The circumstances were not propitious. The Covid-19 pandemic inevitably delayed the carrier’s launch, so Play only began operating between Stansted and Keflavik airport in June 2021, before expanding as travel restrictions eased.

 

The airline added services to Liverpool and later Glasgow, launching flights to the US in 2022 and Canada in 2023, as well as services from Paris, Berlin, Brussels, Copenhagen, Dusseldorf, Hamburg and Stockholm.

 

Its founders insisted they had learned the lessons of Wow Air’s failure, but its model hardly differed. It offered one-way fares to New York from £139, selling mainly online but open to sales through the trade.

 

Chief executive Birgir Jonsson – former Wow deputy chief executive – told Travel Weekly in 2023 that Play would “avoid the pitfalls” of Wow.

 

He said: “We want to emulate the part of the model that worked and stay off ‘grandiose’ plans. We’re a listed company with better access to capital and our approach is more disciplined.”

 

However, Play struggled to turn a profit just as Wow had and Jonsson stood down in April 2024 to be replaced by Play’s largest shareholder and chair of its board, Einar Orn Olafsson.

 

When the carrier’s management proposed a buy-out just three months later, shareholders rejected it. They may now wish they had not.

 

In a statement announcing the airline’s demise, Play’s board noted: “The company’s performance has long fallen short of expectations, ticket sales have been poor following negative media coverage, and internal disagreements among some employees have further strained the situation.”

 

It said the proposed changes had “initially inspired optimism”, but added: “In hindsight, these measures needed to be implemented much earlier.”

 

In this case, foresight might have suggested not implementing the model in the first place.