精东影业

PLAY Airlines CEO on building a low-cost聽link between Europe and the US

If there精东影业 one country that punches above its weight in the aviation world, then it is undoubtedly Iceland. 

This sparsely populated island nation, with a population of just 375,000 living in an area the size of Colorado, has traditionally used its geographical position to its advantage. Located in the Atlantic Ocean精东影业 far north and roughly halfway between Europe and North America, it has become an intercontinental transit point and developed a sizable homegrown airline industry. 

Iceland has long had an established flag carrier. However, a country that is so focused on air travel could not ignore the low-cost airline boom. 

Earlier attempts at developing an Icelandic low-cost carrier have not ended in success. The most recent case being that of WOW Airlines, which closed in 2019 after making a number of questionable strategic choices.  

However, a seed was planted, with some of those involved in those earlier projects recognizing the potential of developing a transatlantic low-cost alternative to connect Europe with the United States via Iceland.  

This resulted in PLAY Airlines, launched in 2021, a young low-cost airline spreading its wings in Europe and North America. 

In the latest instalment of our Executive Spotlight series, 精东影业 spoke to PLAY CEO Birgir J贸nsson, an experienced executive whose career spans several industries, to find out more about the young carrier – which is immediately recognizable owing to its bright red aircraft – and learn more about its most recent achievements and plans for future growth. 

Previously, J贸nsson has held leadership roles at two other Icelandic airlines, Iceland Express and WOW, as well as a recent stint as Head of Iceland精东影业 Post Office before joining PLAY. 

PLAY Airlines

As of January 2024, PLAY connects some 40 destinations across Europe with five airports in the US and Canada, offering a classic no-frills low-cost product by way of its base in Keflav铆k (KEF), Iceland精东影业 main international airport. 

A proven model

But is there enough of a market for a new airline to use the Icelandic stopover model to capture a share of the North Atlantic market? 

鈥淲ell, history just shows there’s a strong demand for it,鈥 J贸nsson explained. 鈥淭here’s a lot of different connection opportunities. It’s not only London and New York that we’re connecting, but all kinds of secondary cities, smaller markets.鈥 

鈥淏ut what made us think that we could do this,鈥 he continued. 鈥淚s the knowledge that the market is focused on price. That’s the only thing that we think we can do a lot better than the other airlines. If we can offer lower fares, we will have demand and that has proven to be correct. If you look at the US destinations, last year most of them were well over 90% load factor, so there’s a market for it.鈥  

鈥淎 family, let’s say, traveling to Europe from the US, can save quite a few hundreds of dollars and that matters in our market,鈥 he added. 鈥淭he prices are dynamic, but you can fly return for, let’s say, $300, something like that. If you book in advance, you can get a very good deal.鈥  

J贸nsson admitted that average fares are possibly higher, but still typically lower than direct competitors. 

Although PLAY models itself after major European low-cost carriers (LCCs), such as Ryanair and easyJet, J贸nsson said he has no qualms about using the ultra-low-cost carrier (ULCC) label.  

鈥淚n American terms we are an ultra-low-cost airline,鈥 he said. 鈥淚t’s interesting that when you speak to people and the media in the US, they have a different understanding of what a low-cost airline is and they differentiate a lot between low-cost and ultra-low-cost, which, for me, is the same.鈥  

PLAY airlines aircraft taking off from an airport
The Global Guy / Shutterstock.com

So, what type of experience does PLAY offer onboard its aircraft?  

鈥淚t’s an all-economy product. You pay for a basic fare and then you build whatever product you want to use,鈥 J贸nsson explained. 鈥淚f you want to book a seat or take luggage or eat something on board or whatever, you can do it for a fee. People basically create their own price.鈥 

He continued: 鈥淲e have three seat pitches and now, in the winter, we also have something that you call a 鈥榮pace seat鈥 on the first few rows on our A320s. We put a seat blocker between you and other passengers, so you can sit on your own and have a little bit of space in the middle seat. Basically, we reduce the seat count on the aircraft when it’s the low demand season.鈥  

As expected from an airline with this market positioning, PLAY relies strongly on ancillaries, which, J贸nsson explained, represent around 30% of its revenue (about $60 per passenger).   

A low-cost North Atlantic hub

One area where PLAY deviates from the traditional low-cost airline playbook is in its attitude towards connecting flights.  

Unlike other budget carriers, PLAY operates a hub-and-spoke network, and it sells itineraries involving two or more flights with a stopover in Keflav铆k. 

But how much of a drag is this when you are attempting to keep costs as low as possible? 

鈥淚t adds cost and complexity,鈥 J贸nsson said. 鈥淏ut then again, this is the model that has been done here in Iceland for decades [Iceland精东影业 other airline, Icelandair, has a similar transatlantic hub model, although offering a full-service offering – ed. note]. So, we have a lot of knowledge of how to do it and the operational teams are very good.鈥 

鈥淏ut of course, on a snowy and windy day we can have problems if we run into delays,鈥 he added. 鈥淏ut this is the business model.鈥 

He continued: 鈥淗owever, when it comes to other parts of the network, let’s say, people going from Iceland to Barcelona, for example, then our product and operations are similar to the other low-cost carriers. Otherwise, without offering connectivity, we would not have seen an opportunity to start a new low-cost airline in Europe.鈥 

Splitting its network between two continents allows the airline to play with different time zones and squeeze some high utilization rates out of its aircraft.  

鈥淟et’s say, an aircraft goes in the morning to London and returns to Iceland around two o’clock in the afternoon,鈥 J贸nsson said. 鈥淭hen the same aircraft would go to, maybe, Boston at three o’clock and return to Iceland at about four or five in the morning. Our aircraft are, in general, flying maybe 12-13 hours per day.鈥 

PLAY also counts on the charms of Iceland精东影业 stunning natural beauty to boost its value proposition.   

While a stopover is usually considered an encumbrance, the possibility of enjoying the island精东影业 unique, rugged volcanic landscapes between flights can be a rather appealing proposition. This is why, in January 2024, the airline launched a stopover product to make it easier for people flying between Europe and America to set some days aside to explore the country. 

Unlike its main competitor, Icelandair, which has run a similar stopover program for years, PLAY won鈥檛 be directly offering accommodation or activities on the ground in Iceland. Instead, this will be left to travelers to arrange. However, the carrier will offer advantageous prices and conditions to customers who wish to space out their flights so that they can spend a few days in Iceland.  

PLAY Airlines

To put things into context, J贸nsson explained that around 40% of the more than 1.5 million passengers carried by PLAY in 2023 were in transit. The rest were divided in nearly equal proportions between Icelanders traveling abroad and Europeans traveling to Iceland. 

Seasonality remains an issue, though – something airlines that rely strongly on North Atlantic routes know well.  

However, according to J贸nsson, things are getting better on this front. This is not just because more people are traveling to Iceland during winter, but also because more Icelandic people are flying south during the coldest months of the year. He explained how PLAY has managed to capture a substantial share of the Icelandic outbound leisure travel market. J贸nsson also pointed out that 45% of all Icelandic people that traveled abroad in 2023 flew with PLAY. Routes to sea and sun destinations, such as Tenerife (TFS) or Alicante (ALC), performed particularly well. In J贸nsson精东影业 opinion, this proves there truly was a need for a low-cost carrier in Iceland.  

According to J贸nsson, PLAY outshines the competition on leisure routes.  

鈥淭his is also where the business model is working correctly,鈥 he said, 鈥渂ecause they are all economy and our CASK [Cost per Average Seat Kilometer – ed. note] is much lower than the competition, so we can make profit at a lower price point than our competition.鈥 

鈥淭his is a very good example of how a low-cost airline should function,鈥 he added, while dismissing concerns about European LCCs contesting those markets and pointing out that there are already around 30 foreign airlines flying into Iceland. 

Being new to the market can be a challenge for any company with the aim of selling directly to consumers. This was indeed the case for PLAY, particularly in those markets where it enjoyed little to no brand awareness, such as North America. To counter that, PLAY doesn鈥檛 shy away from selling through intermediaries. 

鈥淥ur website accounts for 65 to 70% of all bookings,鈥 J贸nsson said. 鈥淎nd, obviously, here in Iceland where we are very well known, we probably have 95% of direct bookings. But in the US, we have to use other means of being known.  

鈥淲e use online travel agencies (OTAs), meta-search engines, Google Flights and stuff like that and we have invested a lot of expertise in general internet advertisement, basically finding people that are showing some kind of an interest.鈥 

鈥淲e don’t do traditional advertising,鈥 he added. 鈥淏ut we make sure that if you are, for example, in New York or Boston and Google 鈥楩lights to Berlin鈥, we will find you and you will begin to see advertisements from us. People often see these, and they go into these OTAs or go directly to the airline website.鈥  

PLAY also uses the Dohop software platform to feed its network through other low-cost airlines, such as Ryanair in Europe and Spirit Airlines in the US. This piece of technology makes it possible for independent airlines that, unlike most full-service carriers, are not part of a formal alliance to sell combined itineraries. For example, someone can book a single itinerary to fly from Krakow (KRK) to London-Stansted (STN) on Ryanair and then connect to Iceland with PLAY and maybe continue on to North America from there. 

鈥淲hat this system does is that it secures the connection,鈥 J贸nsson said. 鈥淪o, you pay a premium, but if you miss your flight, you are guaranteed to get onto another one.  

鈥淚t精东影业 working well for us, although it’s not game-changing yet. For me, it will be game-changing when it will be possible to also interline luggage at the airports,鈥 he added, referring to the fact that passengers currently using this type of connection need to collect luggage and check it in again at the intermediate points. 

J贸nsson clarified that check-in luggage is only an issue when connecting with another airline, because PLAY already does luggage handling for connecting passengers within its own network.  

鈥淚t’s important to note that if you do that in Iceland with PLAY, the luggage goes through,鈥 he said. 鈥淵ou know that then you [can] just go to the transit area and have a beer or whatever. You don’t have to check your luggage again.鈥  

While in Europe PLAY flies mostly to major airports, such as Paris- Charles de Gaulle (CDG), Amsterdam Schiphol (AMS) or Frankfurt (FRA), it has opted for out-of-town, secondary gateways in the US and Canada. For example, for PLAY New York means Stewart International (SWF), some 60 miles up the Hudson Valley from Manhattan, and Toronto means John C. Munro Hamilton International Airport (YHM), 50 miles south from downtown.  

鈥淲e have now been flying for nearly two years [to Stewart] and it’s been going great. We have one of the highest load factors on the US side there,鈥 J贸nsson explained, before going on to highlight the differences between PLAY and other Nordic long-haul low-cost airlines, such as Norwegian and Norse Atlantic, which abandoned plans to make Stewart their New York gateway in recent years.  

Network choices

He explained how the combination of easier-to-fill narrowbody aircraft and network connectivity are doing the trick for PLAY.   

鈥淲e are connecting Stewart with maybe 15 European cities,鈥 he said. 鈥淭here are people that want to go to New York, but there are also millions living around that area in the Hudson Valley. This is where the connecting network is really functioning. Price is simply a factor. If you’re flying from, let’s say, Copenhagen to Stewart, it’s about the same amount of time to get into Manhattan than if you’d fly to JFK, because of the waiting time for passport control, then waiting for your baggage and so on. 

鈥淪tewart is like a country airport. You’re just in and out. It’s a different product. And it is also a cheaper product. If we want to offer a lower airfare, we cannot fly to the same airports. We have to get a cheaper airport and some discounts and some incentives and stuff like that. And I think that’s a great example of how we are the low-cost people.鈥 

J贸nsson also noted how, at Stewart, the airline can be a big fish in a small pond. 

鈥淟ike with all airports, when you have a new route, a new airline comes with a new destination, everyone wants to do something to help with PR, with marketing. The local community, the local tourist authority. Whereas if a new, small low-cost airline from Iceland comes to JFK, no one would care. So, it’s a different approach,鈥 he explained.  

As of January 2024, PLAY has 10 aircraft in its fleet, comprising of six A320neo and four A321neo, all leases. 

J贸nsson expressed his satisfaction with the speed at which PLAY has been able to build a state-of-the-art fleet that is well into double digits, seemingly unaffected by the capacity constraints that have plagued other operators. 

鈥淲e were really lucky, [we] started operations during COVID, so there were lots of very good aircraft available,鈥 he said, adding that in January 2024 PLAY received the ch-aviation Europe麓s youngest Aircraft Fleet Award for the second year in a row. 

Also, we have CFM engines. So, we have not been affected by the price of any other issues. So far, everything has gone like clockwork,鈥 he added proudly.  

J贸nsson also stated that PLAY may increase its geographical footprint with the addition of longer range A321LR and even XLR aircraft, though not yet.  

鈥淚 think that in the next couple of years we will add [A321] LRs to the fleet. It fits beautifully in terms of commonality,鈥 he explained. 鈥淎nd I think that will open up completely new and very exciting markets for us.鈥 

He continued: 鈥淲e are in discussions with lessors about both those types. You could go to LA with an XLR, while an LR would open up Seattle, Orlando, those kinds of places. So that’s very important, very interesting for us. On the other side you could go to Dubai, for example, on the XLR. That would be a very long flight, but we have seen that if the price is right, people take the flight.鈥  

PLAY Airlines

Talking sustainability

But what about sustainability? It’s a topic that is becoming increasingly central to airlines. 

鈥淭his is really a cultural thing within the company. We are very focused on company culture and doing a lot of initiatives within PLAY to make this both a great place to work and make sure that the right values are around us,鈥 J贸nsson said. 鈥淚’m one of the oldest employees here. There’s a lot of young people that work here and, for them, this is not a new thing. This is just the way they live their life and the way they decide how to spend their money or what they consume.鈥   

Asked about specific initiatives in this field, J贸nsson mentioned that PLAY makes use of fuel-efficient Airbus neo aircraft as well as the airline精东影业 plans to start using sustainable aviation fuel (SAF) before 2025.  

But the project that he really likes to highlight is the airline精东影业 pioneering aluminum recycling program, since this a project in which, he claimed, PLAY has taken a leading role in convincing authorities of the need to recycle cans used onboard aircraft, not just on land.  

鈥淲e became the first airline to recycle and collect the cans that are used onboard [our flights],鈥 he explained. 鈥淯sually cans are not recycled, they’re thrown away. But we got special permission from the environmental agency in Iceland to take those cans and send them for recycling. We pay for this ourselves; this is not a money-making thing for us.鈥  

鈥淏ecause it’s strange, here in Iceland, if I buy a Coke or something in a can, I can take it to recycling and I get money back, but if you buy the same can on an aircraft, it then gets thrown away. So, we are collecting a hell of a lot of aluminum and putting it into the recycling process. And this is just a small example of what a small airline can do in a small country, fighting the environmental agencies and authorities to have the permission to do it.  

鈥淭his is an example of how legislation can be counter to environmental goals. This was just a kind of a bureaucratic, idiotic thing, so this is a thing that we were able to do here and our staff and our passengers really, really like this.鈥澛

What精东影业 next for PLAY?聽聽

J贸nsson said his priority is consolidating what the airline has achieved in the last two and a half years of operations and setting up the basis for further growth in the longer term. 

鈥淲e have announced everything we want to do this year,鈥 he said. 鈥淭here might be one or two new destinations, but not on the US side. We’ve just announced Split (SPU) in Croatia. There are always some changes in the network, but there will be no kind of drastic changes until we get new aircraft in.鈥  

鈥淲e have completed the first full 12 months of operations with our full complement of 10 aircraft. If we had 1.5 million passengers last year, this year it精东影业 going to be 1.8-2 million. We haven’t disclosed the actual numbers, but it’s clear that there will be growth,鈥 he added.  

What精东影业 clear is that profitability is going to be the focus for PLAY, which ended 2023 with a total revenue of around $280 million. 

J贸nsson also mentioned that PLAY expected to break-even in 2023, but a worse than expected fourth quarter prevented this from happening. He attributed the results to the volcanic eruption that took place in Iceland in December 2023, and to the effects of war and geopolitical tensions on travel demand.  

鈥淲e’re now selling our fourth summer season, entering the third operational year, and what we’ve seen is that revenue is growing a lot, ancillary revenue is growing a lot, and we have been able to keep our costs very competitive, quite low,鈥 he said. 鈥淪o, we’re seeing our operational losses decreasing quite rapidly and we need to keep that trend ongoing, and we will do that by being responsible in our business and in our decisions.鈥  

Overall, J贸nsson seems optimistic about the future.  

鈥淲e will be adding aircraft and destinations in the next, I would say, three to five years,鈥 he concluded. 鈥淭here is going to be a lot of growth.鈥  

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