Icelandic low-cost airline Play recently announced sweeping changes in its business strategy due to unexpected market conditions and increased competition in transatlantic air travel. This announcement marks a crucial turning point in the company's development as Play strives to secure long-term profitability and avoid the mistakes of its once failed predecessor WOW Air.
Since its founding in 2019, Play has focused primarily on hub-and-spoke operations, where passengers transfer between Europe and North America via Iceland. This strategy initially proved promising, but in 2024 the company came under pressure as major airlines increased their capacity on popular transatlantic routes. In particular, airlines such as Icelandair and international competitors such as Delta and United Airlines expanded their offerings on routes between North America and Europe. This led to a significant decline in revenues for Play as competition for passengers became more intense.
Play is responding to these developments with a clear reorientation: in the future, the airline will focus more on so-called point-to-point leisure routes between Iceland and southern Europe. According to company forecasts, this sector shows promising growth potential. In 2024, the airline expanded its route network to include popular holiday destinations such as Madeira, Faro, Valencia and Marrakesh. Play is also planning further route expansions in 2025, including flights to Turkey, especially Antalya.
Temporary outsourcing of transatlantic flights
While Play increases its commitment to the southern European leisure sector, the airline will scale back its activities in the transatlantic market for the time being. The routes to North America, which currently serve destinations such as Boston, New York-Stewart and Toronto, will be taken over by the Miami-based airline GlobalX from November 1, 2024 to March 31, 2025. This measure is intended to relieve Play and allow the company to focus on more profitable routes.
This decision shows that Play has learned from the mistakes of WOW Air, which had to file for bankruptcy in 2019 after relying too heavily on the unprofitable transatlantic business. Play's CEO, Einar Örn Ólafsson, stressed that the company does not want to take any financial risks and that this restructuring is necessary to ensure the stability of the company.
Expansion to Southern Europe and Malta
As part of this reorientation, Play plans not only to expand its route network to Southern Europe, but also to geographically diversify its fleet. For the first time, Play will base aircraft outside Iceland to benefit from a more favourable tax and regulatory environment. To this end, the airline has applied for a Maltese Air Operator Certificate (AOC), which is expected to be approved by spring 2025. This certificate will enable Play to base aircraft in Malta and serve new markets from there.
As part of this strategy, Play will station an aircraft on the Spanish holiday island of Tenerife from 2025, from where it will fly to Iceland, among other places. This geographic expansion is a further step towards improved profitability and flexibility in its operations.
Financial stability despite decline in profits
Despite the pressure to adapt, Play says it remains financially stable. Earnings before interest and taxes (EBIT) for 2024 will be lower than last year, but CEO Ólafsson stressed that there are no plans for a capital increase. The financial reserves are sufficient to meet the challenges ahead. This confidence shows that Play sees itself as well positioned in the long term despite the necessary restructuring.
Play has currently expanded its fleet to ten aircraft, of which six to seven remain under the Icelandic Aviation Certificate, while three to four aircraft are operated under the new Maltese AOC. In addition, one aircraft is temporarily leased in Miami, providing the company with an additional source of income.
Flexible adjustments as the key to success
Play's announcements show that the airline is willing to adapt its strategy flexibly in order to survive in the highly competitive aviation market. While the withdrawal from the transatlantic market and the focus on leisure routes represents a response to immediate challenges, the expansion into Southern Europe and Malta points to a long-term growth strategy.
For travelers, this means that Play will continue to be an attractive option for cheap flights to southern Europe and within Iceland. It remains to be seen whether the planned changes will bring the desired long-term success, but the current strategy promises stabilization and possible expansion into new markets.
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