Birgir Jonsson, CEO of Icelandic carrier PLAY, intends his airline to be a long-term operator across the Atlantic.
PLAY Airlines is set to enter the US market and offer transatlantic passenger connections through its base in Iceland. Its move follows the efforts of WOW which ceased operations in 2019. But PLAY’s CEO, Birgir Jonsson, who was part of the WOW team for a while, believes that his new company can avoid the pitfalls experienced by that airline, as he explained to CONNECT delegates.
“We are simply positioning ourselves as a hub and spoke carrier connecting Europe to the US with a short stop in Iceland, mixed with point-to-point (P2P) traffic to and from Iceland. But we believe that by having a lower cost base and a better financial foundation, we will be successful,” Jonsson remarked.
The CEO identified the key reason why WOW didn’t work out and which PLAY plans to avoid. “It was the old story of many new companies, it grew too fast. The company structure did not sustain the growth. It was owned by one individual, so the financing backbone was weak. And they went into widebody operation with the A330, breaking the business model. The complexity factor was way too much and the cost base control was lost. We’re not going to do that,” he emphasised. “Also, we are not planning codeshares or any cooperation with other airlines either.”
PLAY has to plan its timetables carefully, just as its competitor, Icelandair, has done with its specific banks of flights. In adding the new services to North America, it must create a balance between satisfying European customers, American customers or transfer passengers. “We are about three hours from any point in Europe and at least five to six hours from the east coast in the US. So it’s not low-cost, but it’s not quite long-haul either. The strength of the geographical location creates this unique approach,” he commented.
PLAY will be using new Airbus A320/A321neos and has accessed prices that would barely have been imaginable before the pandemic hit. Its financial strategy has also helped considerably.
“We took the unusual step of listing on the stock exchange at the same time as we had our inaugural flight. That means that when we speak to, for example, lessors, they have full clarity and visibility of our business. Our risk profile is lower than many other start-ups and we are quite cash strong. That’s a lesson we learned from WOW,” Jonsson noted.
Returning to operational matters, Jonsson explained the two phase Take Off Plan into the transatlantic market. “We started last June with flight operations, focused on P2P into Europe, while using that time to invest in our digital strategy, presenting in all the digital channels where people are buying tickets.
In going across the Atlantic, PLAY analysed the market and found New York Stewart Airport. “Tt’s some distance from Manhattan, but it’s small, so you’re very quickly through it, because you don’t stand long in immigration or waiting for luggage. Also, it has a huge catchment area. Many passengers live around the airport, they know the airport, so we don’t have to market it to them,” the CEO reported.
“Our target market in Europe wants to go to New York at the lowest possible price. It’s not necessarily the business traveller or those wanting a romantic weekend. It’s basically the family of four or five people coming to the US at the lowest possible price. They don’t mind an extra half hour getting into the city, if they shave perhaps $1,000 off family travel. In fact, our slogan is ‘Pay less and PLAY more’,” Jonsson emphasised.