Play shifts strategy from hub-and-spoke model
Icelandic budget carrier Play has announced a shift from its traditional hub-and-spoke model to a focus on point-to-point flights, redirecting resources to Iceland’s profitable leisure routes and away from transatlantic connections.
The change comes as Play scales back North American operations due to lower-than-expected yields from its connecting flights between Europe and the U.S. in 2024.
The North American market has become more competitive, and oversupply has put downward pressure on fares, affecting Play’s financial performance, the carrier said.
Consequently, the airline plans to reduce its North Atlantic routes and prioritise direct services from Iceland to popular Southern European holiday destinations.
This adjustment also includes an application for an Air Operating License (AOC) in Malta, allowing Play to base part of its fleet outside of Iceland. The first project under this license is a winter partnership with U.S.-based GlobalX, operating flights from Miami. Play expects the Malta AOC to be granted by spring 2025, with one aircraft set to operate from Tenerife, connecting Keflavík, Akureyri, and additional destinations.
Despite these changes, Play maintains a stable financial position, with no immediate plans for a capital raise, it said. However, the airline now anticipates its 2024 earnings (EBIT) will fall below last year’s levels, a shift from earlier projections due to greater-than-expected pressures on transatlantic routes.
“Since Play’s inception, we’ve observed shifts in the market, and it is our view that the via-route network is no longer as profitable as it once was,” said Einar Örn Ólafsson, Play’s CEO.
“As a result, we have decided to adjust our business model, which will take effect around mid-2025. Play remains the airline of choice for Icelanders, and we aim to increase our share in the local market. In short, we will focus on the aspects of our business that have proven both successful and profitable—namely, transporting passengers between Southern Europe and Iceland.
“Play currently operates a fleet of 10 aircraft, but with these changes, about six to seven will remain under the Icelandic AOC, while three to four will be allocated to other projects.
“One aircraft will be temporarily leased to Miami, and we are exploring a year-round project that we hope to announce soon. I am confident that these adjustments to our business model will allow us to grow, ensuring Play remains a top choice for travellers.”
