PLAY Airlines in Iceland Shuts Down Operations and Cancels All Flights

PLAY Airlines, an Icelandic low-cost airline, has made the sudden decision to halt operations with immediate effect, resulting in the cancellation of all flights and leaving numerous passengers in a difficult situation.

On September 29, 2025, the Board of Fly Play released a statement explaining that the move was due to ongoing financial struggles, disappointing ticket sales in recent weeks, and staff unrest following changes in the company’s strategic direction.

Challenges with Turnaround Strategy

The airline rolled out a new business model in fall 2024, hoping it would stabilize operations and foster growth. At that time, executives expressed optimism about the future trajectory of the airline.

This strategic shift involved pivoting from PLAY’s original transatlantic goals, which aimed to mirror Icelandair’s hub-and-spoke system from Reykjavik Keflavik International Airport (KEF). Instead, the airline redirected its focus to European and Canary Islands routes, maintaining only three U.S. destinations: New York Stewart (SWF), Boston Logan (BOS), and Baltimore-Washington (BWI).

As part of the restructuring, PLAY also returned its Icelandic Air Operator Certificate (AOC), transferring operations to its Maltese subsidiary and adjusting its back-office functions to Malta and Lithuania.

Despite these adjustments, the Board acknowledged that the turnaround plan failed to resolve the “deep-rooted challenges that have built up over time.” In retrospect, they conceded that the new strategy should have been initiated sooner.

Consequences for Passengers and Staff

This collapse means that countless travelers will have to rearrange their return trips, while around 400 employees will lose their jobs. PLAY also recognized the wider impact on its business partners, who are likely to incur financial losses due to the shutdown.

“The Board and management of PLAY stress that every possible effort was made to achieve a different result,” the company stated. “This decision is extremely painful and was only taken after all other options were exhausted. We sincerely apologize to everyone affected by this outcome.”

An Unforeseen Conclusion

Established in 2021 as a successor to WOW Air, PLAY aimed to connect Europe and North America via Reykjavik Keflavik International Airport (KEF). Although the airline saw rapid growth in transatlantic and European markets, it struggled to reach consistent profitability amid rising competition and increasing operating expenses.

With its grounding, PLAY joins the ranks of Icelandic low-cost airlines that have faced challenges in achieving long-term stability in a demanding market.