Budget airline axes all flights to US as airspace restrictions bite

The low-cost airline has plans to pull out of the US market by October 2025

Budget airline Play is set to stop its flights to three major US cities this year (Getty/iStock)

An Icelandic-based airline has announced it plans to axe all its flights to the US, stopping trips to major cities like Washington D.C. and New York by the autumn.

Low-cost airline Play operates flights between Iceland and destinations in the US and Europe, offering budget tickets on Airbus aircraft to and from its main hub, Keflavík International Airport.

Play flies in and out of Iceland to European countries such as Denmark, France, Germany, and the United Kingdom. As well as Europe, the airline also directly links Iceland to Baltimore, Boston, and New York City.

The airline operates on a hub-and-spoke model, meaning it uses one central airport, Keflavík, to connect to other airports around the world.

Play launched its transatlantic flights in the spring of 2022, and has been flying to the US for just over three years.

Play’s hub-and-spoke routes have since financially underperformed, and an over-saturation in the transatlantic market has meant a growth in competition between airlines, Aviation Week reported.

Play will suspend its flights to New York Stewart on 1 September, followed by Boston Logan on 15 September, then finally Baltimore/Washington on 24 October, pending a restructuring that is still to be approved.

Its routes in Northern Europe are also expected to be scaled back due to Play dropping the hub-and-spoke strategy in these areas.

The strategy has seen a loss of $20 million (£14.7 million) in 2024 in comparison to profits made in point-to-point European leisure markets.

The restructuring will come as part of a proposed executive takeover by Play’s CEO Einar Örn Ólafsson and Vice Chairman Elías Skúli Skúlason.

In a notification to the Central Bank of Iceland, the executives said they plan to submit a voluntary offer for all outstanding shares in the airline via a new holding entity, Aviation Week reported.

“Due to airspace restrictions, several European airlines have redeployed capacity across the Atlantic, leading to overcapacity in the transatlantic market,” the offer document seen by Aviation Week says.

“Many carriers have suspended or terminated East Asia routes, facing a competitive disadvantage against Asian airlines still able to overfly Russia.

“This has increased pressure on transatlantic yields.”

If the proposal is approved, Play’s revised strategy hopes to target the leisure and VFR (visiting friends and relatives) market.

The airline wants to target “underserved sun destinations” with flights to and from Iceland, and has recently announced new flights to Antalya, Faro and Agadir.

“We’re focusing on the profitable aspects of the business—sun destination flights—and discontinuing those that have not yielded results,” Mr Ólafsson said.

The airline will also offer wet-lease services, which provide short-term aircraft and crew to help other airlines fill gaps in schedules.

In a statement to The Independent, Play says that if the proposal is approved, the takeover group “intends to continue promoting competition in the Icelandic aviation market for the benefit of consumers under the Play brand by offering affordable airfares for Icelanders and tourists.”

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