Europe (Parliament Politics Magazine) – Icelandic low-cost carrier PLAY Airlines has ceased all operations effective immediately, cancelling all flights and leaving around 400 employees jobless. The shutdown follows prolonged financial struggles, poor ticket sales, and an unsuccessful turnaround plan, impacting thousands of passengers and the wider aviation sector.
PLAY Airlines Halts Operations Abruptly
As reported by Clement Charpentreau of AeroTime, PLAY Airlines, Iceland’s low-cost carrier that launched in 2021, has announced it will cease all operations with immediate effect, cancelling every flight and grounding its fleet. The sudden decision has left thousands of passengers stranded and forced urgent travel rearrangements.
The Fly PLAY Board cited ongoing financial underperformance, disappointing ticket sales in recent weeks, and internal unrest among staff following strategic changes as reasons behind the halt.
Unsuccessful Turnaround Plan
Following disappointing results in 2024, PLAY implemented a revised business model aiming to stabilise the airline and return it to profitability. This involved scaling back original ambitions of developing a transatlantic hub-and-spoke operation from Reykjavik Keflavik International Airport (KEF) similar to Icelandair, instead focusing on selective European destinations and reducing the U.S. network to just New York Stewart, Boston Logan, and Baltimore-Washington airports.
Additionally, PLAY surrendered its Icelandic Air Operator Certificate (AOC) and moved key back-office functions to subsidiaries based in Malta and Lithuania. Despite these efforts, the board acknowledged that the “deep-rooted challenges” proved insurmountable and that the turnaround should have been implemented earlier in hindsight.
Impact on Employees and Passengers
The closure affects around 400 employees who now face job losses, while estimated thousands of passengers booked on PLAY flights must find alternative travel options at short notice. The airline’s abrupt shutdown has also led to a ripple effect impacting business partners and suppliers financially.
Gjon Helason, spokesperson for Keflavik Airport, indicated that on the day of closure roughly 1,750 passengers were affected, with flights to Baltimore, Barcelona, Lisbon, and from major European cities such as Paris, London, and Copenhagen being cancelled unexpectedly.
Financial Decline and Market Pressures
PLAY Airlines’ financial struggles have been mounting for several years. The carrier reported a loss of $31 million last year, attributing it to adverse factors such as unfavourable currency exchange rates, decreased demand, and prolonged aircraft downtime due to technical issues. Despite optimism expressed by CEO Einar Orn Olafsson earlier in the year about new strategies focusing on holiday destinations, the situation did not improve sufficiently.
In the financial markets, Fly Play shares plunged by 55% in 2025 leading up to the cessation announcement, reflecting investor concerns over the airline’s viability and performance.
Passenger Rights and Next Steps
Passengers affected by the cancellation are advised to seek flights with other carriers. Some airlines may offer discounted “rescue fares,” and travellers who purchased tickets via credit card or within flown packages should contact their card providers or travel agencies for refunds or assistance.
The Icelandic Transport Authority has published guidance to ensure passengers know their rights and the procedures to follow during this disruption.
Historical Context
PLAY was founded to fill the void left by WOW Air’s bankruptcy in 2019. It quickly expanded to operate a fleet of 10 aircraft flying to 42 destinations across Europe and North America. Approximately 40% of its passengers used PLAY as a connection point for further travel beyond Iceland.
The Icelandic airline industry has seen repeated challenges for low-cost carriers attempting to secure long-term stability amid rising competition and operational costs.