Icelandic Airline PLAY Shuts Down After Four Years of Operation
Icelandic airline PLAY officially stopped all operations on September 29, 2025, ending its litigation in the air after only four years of service. The airline offered low-cost transatlantic and European flights, but many of their last customers, over 120,000, were flying to and from London Stansted and Reykjavík. As a result of the closure, customers were left without flights and stranded in other cities.
As low-cost travel in the Icelandic airline sector has its fair share of turbulence, this incident only highlights the growing problem.
The September 29 SpiceJet incident in India involved the airline temporarily left more than 650 passengers stranded and in the secured area of the airport
The airline, officially registered and publicly listed in Iceland as Fly PLAY hf, in September 2025 became the first Icelandic airline to take this step after years of failing to resolve their financial problems. Attempts to revise the airline’s route and offer a more viable and profitable schedule to the remaining flights in the airline’s schedule as well as their last scheduled flight to London Stamed and profitable British destinations.
In an official statement on the official website, PLAY updated the customers:
“All flights have been cancelled and operations have ceased.”
Travelers were instructed to claim refunds through their payment methods and travel agencies. They were also pointed to EU Passenger Rights as claims might be available to them. Passengers might also be compensated through EU Regulation 261/2004 which depends on the fare and the way the ticket was booked.
A Brief History of Icelandic Airline PLAY
PLAY was started in July 2019, by former WOW Air executives. WOW Air was another Icelandic Airline which was in the news for shutting down operations in 2019. WOW Air’s low-cost flights to Europe and North America also created a gap which PLAY was looking to fill. It started to operate scheduled flights in July 2021 and set Iceland as a stopping point to operate low-cost flights vertically between Europe and North America.
In the Icelandic airline’s four year history it also services North Africa, Europe, and Asia. To extend services, the airline used Spirit Airlines and easyJet for Virtual interlining agreements to cut costs associated with traditional codeshare agreements for the rest of the world.
Just like other airlines that started operating during or just before the pandemic, the Icelandic airline experienced issues with cash flow, supply chain issues, and fluctuating fuel prices. Moreover, the airline never became profitable, particularly because the airline industry, recovering from the COVID-19 pandemic, had a poorly sequenced recovery, and remained pandemic disproportionate in recovery.
The Fallout: What happens to the customers of PLAY?
Customers were left with no answers as operations were stopped. Many customers had travel plans with the airline and, were left to find out on social media or news alerts, that their flights had been canceled.
The UK Civil Aviation Authority (CAA) said:
“It’s always unfortunate when an airline ceases operations. And we understand that Play Airlines’ decision will be unsettling for its employees and customers.”
The CAA, as well as other aviation authorities, now tell passengers to:
Look for rescue fares from other airlines (easyJet, Icelandair)
Request refunds from their credit card companies
Travel with a tour operator to get help
Stuck travelers should receive “rescue fares” of around £50 from Icelandair and a few other airlines.
Impact on the Icelandic Airline Industry
The closure of PLAY raises important questions regarding the sustainability of Icelandic low-cost carriers. Iceland is positioned perfectly to take advantage of the unique transatlantic opportunities, but challenges remain, including adverse weather, seasonality, and high operational costs.
Iceland has seen the collapse of two low-cost carriers within six years, the most recent being PLAY. Despite the collapse of these budget airlines, Icelandair has weathered the storm, albeit with more traditional service standards. It may be necessary for the Icelandic airline market to undergo some systemic changes if new entrants are to be attracted and retained.
Financial Losses and Post-Pandemic Struggles
The global aviation industry has been one of the sectors the world continues to recover from post-Covid. Larger airlines were able to recover through government bailouts and deferred loans, but smaller and newer airlines, like PLAY, were not so lucky.
While the Icelandic airline experienced a booking boom in mid-2025, the airline was still dealing with the ramifications of high debt, poor cash flow management, and obligations to lease the aircraft. Analysts point to aggressive expansion plans along with PLAY’s participation in the pricing wars on the transatlantic routes as a major catalyst of the airline’s demise.
Impact on Employees and the Economy
The shutdown of PLAY has resulted in the elimination of more than 400 jobs in Iceland. This issue is not limited to the employees themselves; it also has a ripple effect on the airport services, catering, and tourism and transportation sectors.
The global downturn has already harmed Iceland’s tourism industry, and the loss of PLAY will only add to the challenges. PLAY was the most economical airline for accessing Iceland for many travelers, and the airline’s absence will most likely deter tourists with limited budgets.
What Is the Next Step for Those Impacted?
PLAY has instructed travelers to check their email and go to the airline’s site for additional information. For those who purchased plane tickets with a credit card, charging it back is usually the easiest way to get your money back.
For passengers on travel packages, especially those in the European Economic Area (EEA), it is easiest to reach out to the tour operator. The airline’s bankruptcy will determine the extent to which EU air passenger rights will apply, and most likely, the airline will determine whether a refund is available.
Final Flight of PLAY: The End of an Era
The last flight of Icelandic airline PLAY, from Reykjavík to London, was poignant. The plane landed safely, putting a period to an ambitious, albeit brief, airline venture. For numerous travelers and aviation advocates, PLAY symbolized the possibility of affordable and quality airline travel.
Regrettably, the airline was unable to cope with the aftermath of the global pandemic.
Conclusion
The collapse of Icelandic airline PLAY epitomizes the delicate nature of the budget airline industry, particularly within smaller markets. As affected travelers search for alternative means of travel and pursue refunds, the aviation industry continues to monitor the air travel economy of Iceland.
The skies are quieter now that PLAY has ceased its operations, but the need for answers and questions has increased tenfold. Will the market for low-cost carriers airfare change, and will the failure of PLAY be one of the many influences that guide the history of aviation in Iceland?
Table of Contents
Reference Website : https://travelradar.aero/icelandic-airline-play-ceases-operations-with-immediate-effect/
Read More : https://neonreport.com/
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