Icelandic startup Play has chosen its first U.S. destinations: Baltimore-Washington and Boston with flights set to launch on April 20 and May 11, respectively. The carrier, which got its U.S. Transportation Department permit in October, expects to reveal a third North American destination early next year, although it has not determined if that will be in Canada or the U.S.
“Covid is a huge opportunity for startups,” Play CEO Birgir Jonsson said in an interview with Airline Weekly in advance of the launch. “In fact, I think it’s a perfect opportunity for this business model,” he added. The carrier plans to focus squarely on the price-sensitive leisure market and keep its fleet to narrowbodies, namely the Airbus A320neo and A321neo. Jonsson sees huge potential in low-cost demand to Europe, especially next summer after two years of lockdowns and travel restrictions.
This marks a change from now-defunct Icelandic low-cost carrier, Wow, where many of Play’s executives — including Jonsson — worked. Wow branched out into Airbus A330s and started flying to the U.S. West Coast, Israel, and India. This is not in Play’s plans, Jonsson said. “Wow grew too big,” he said. “When you have that kind of size, you are pressed into flying to destinations to feed other parts of your hub-and-spoke system, and then you have drop prices and fly below costs.”
Other low-cost, long-haul carriers, like French Bee and its fleet of Airbus A350s and Norse Atlantic‘s planned North America flights on Boeing 787s, may struggle to fill their aircraft. Widebodies limit the destinations a startup can serve profitably, Jonsson said. “That’s a tough market, I would say,” he said.
Play now flies three A321neos on routes around Europe, and by next spring will add three A320neos. The A321neos will then be pressed into transatlantic service. By the end of 2025, Jonsson said Play will have a fleet of 15 aircraft: nine A320neos and six A321neos. The additional A321neos will allow Play to open further East Coast and Canadian destinations, although Jonsson declined to offer details on what cities are in the airline’s sights.
Reykjavik will function as a hub for Play, with passengers from Baltimore and Boston funneled through the airport to flights to up to 22 European destinations. The carrier’s route network is a mix of European point-to-point flights, with the U.S. flights expected to be a blend of connecting passengers and passengers who originate or end their journeys in Iceland. “We do not have to rely on any one source [of passengers],” Jonsson said. “The flexibility of the business model is perfect for this type of uncertainty.”
Jonsson is not concerned about the masses of new capacity airlines are planning to add to the North Atlantic market next summer. Play’s value proposition are low fares and easy connections to Europe. And he believes there is a niche for that around the margins of the larger carriers’ capacity. “It doesn’t matter how big Play or even Icelandair get,” he said. “We will only ever be tiny players in the market.”
Play assumes a large proportion of inbound U.S. passengers will end their journeys in Iceland. Before the pandemic, the country of 400,000 people saw 2.5 million tourists annually. Although overtourism is a concern, Jonsson said there hasn’t yet been the kind of backlash seen in other popular European destinations, like Venice. “Iceland as a destination is still in its infancy,” he said. “There is so much potential for growth, and our investors are betting on this.”
“Fifteen years ago, you would have been considered a weirdo for opening a hotel in Iceland,” Jonsson noted. “Tourism now is the second or third largest source of revenue for Iceland, and we have to realize we are a destination; that’s our business.”