New Icelandic carrier makes a play in low-cost transatlantic market

Startup low-fare Icelandic airline Play introduced new transatlantic service out of a 3rd U.S. airport, Stewart Worldwide in New Windsor, New York, to start June 9. (Stewart lies about 65 miles north of New York Metropolis.)

Play, which launched final July with nonstops from Reykjavik, Iceland, to London’s Stansted Airport, is the newest low-fare airline to aim to make closely discounted service throughout the Atlantic work.

Play’s speedy Icelandic forebear, Wow Air, went bankrupt in 2019 after beginning long-haul companies to the U.S. West Coast and India. Denmark’s Primera Air confronted an analogous destiny in 2018. Low-cost Norway-based competitor Norwegian, in the meantime, deserted long-haul intercontinental operations in January 2021 in an effort to concentrate on European and Center Japanese routes.

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Now, Play will debut flights from the U.S. to Reykjavik — and onward from there to 22 different European cities — on April 20 with flights from Baltimore/Washington Worldwide Airport, adopted by Boston Logan beginning Could 11 utilizing narrow-body Airbus A320neo and A321neo planes. The service is selling the brand new connecting companies to Europe with fares as little as $109 one-way. CNBC.com affiliate editor Kenneth Kiesnoski spoke with Play CEO Birgir Jonsson — previously with Wow Air himself — on what it is like to start out an airline amid a pandemic and the way Play plans to succeed the place others have failed.

(Editor’s observe: This interview has been condensed and edited for readability.)

Kenneth Kiesnoski: Sustaining a low-fare service throughout the Atlantic has confirmed tough, because the failures of airways like Iceland’s personal Wow Air present. How will Play succeed the place others have stumbled?

Birgir Jonsson: Play and Wow are literally intently associated, so to talk. Many on our key administration group are ex-Wow workers, as are loads of our flight crew. I actually was Wow’s CEO for a interval.

So we all know that story fairly nicely. And, the truth is, Wow was a fantastic firm and was doing very well working the enterprise mannequin that we’re [now] working. It was solely when Wow began working wide-bodied jets like Airbus 330s and flying to the [U.S.] West Coast and principally doing the long-haul [and] low-cost factor — which is a hill that many good troopers have fallen on many instances.

KK: Not solely Wow however Primera Air and even Norwegian, which has ceased flying long-haul routes.

BJ: Proper. However [Play was] was based with, or managed to lift, round $90 million and proceeded to execute a enterprise mannequin of making a hub-and-spoke system connecting the U.S. to Europe with a cease in Iceland [mixed] with point-to-point visitors to and from Iceland. We launched the European facet of the network-in June and ran that for six months till we launched industrial gross sales to the U.S.

The explanation I believe Play will work out higher than Wow is just that the corporate’s higher funded, [whereas] Wow was owned by one man. And, it was manner too huge, grew too quick and the inspiration was simply too weak. We’re a listed firm. All of the governance issues round that type of enterprise are fully completely different, extra disciplined, extra targeted. Additionally we now know the pitfalls. We’re simply going to concentrate on the confirmed idea, the market that we all know that exists.

KK: The pandemic hit journey arduous, however most likely enterprise journey hardest, as work and conferences migrated on-line. Because you’re low-cost, are you focusing on leisure solely or will you additionally court docket enterprise flyers?

BJ: In a pure advertising and marketing sense, we’re focusing on the VFR [visiting friends and relatives] and leisure markets. Having mentioned that, I all the time have a fairly tough time defining what enterprise journey is as a result of when somebody says “enterprise journey,” most individuals consider somebody flying enterprise class, ingesting champagne — some premium service.

However there are lots of people touring for causes aside from happening vacation or visiting mates. Going to conferences [or] coaching, for instance — these sorts of issues. It is not solely high-powered CEOs going to Davos, you recognize. We simply wish to supply a no-frills, very economical product that is quite simple to make use of. We do not have a enterprise class; it is an all-economy product. However for anybody, be it an organization or particular person, that desires only a easy method, a very good ticket worth and secure, well timed service, we’re the suitable selection.

KK: Would you say Play is ultra-low-cost, like Ryanair, Frontier or Spirit? How do you differ from flag service Icelandair other than worth?

BJ: In Ryanair’s case, they fly comparatively shorter legs. If I will fly to New York, it takes 5 hours. You want to have the ability to recline your seat and to have the ability to have some leg area and such. So we’re not going hardcore like that. If there is a distinction between a low-cost and an ultra-low-cost product, I’d say that we’re some kind of low-cost.

If you happen to examine us to Icelandair, I’d say the product is sort of equivalent. Okay, we do not have a enterprise class as such. However by way of the final expertise onboard, on each airways it’s a must to pay to your meals, drinks and baggage and all that stuff. Legacy airways are remodeling themselves right into a low-cost merchandise anyway. If I made a listing of 10 issues that might justify that, the primary 5 on that record are “worth.”

KK: How did Covid have an effect on your launch plans? I do know round 10 new carriers debuted final 12 months in the course of the pandemic. Did you gradual issues down and use the chance to fine-tune or one thing?

BJ: We began operations with the final view Covid would finish within the subsequent 12 to 18 months, and that appears to be occurring. With a purpose to begin an airline, particularly a transatlantic one, you want runway. It’s worthwhile to rent crew, that you must prepare them. It’s worthwhile to place your self available on the market.

We’d all the time have wanted some type of a ramp-up interval. So we have now by no means been targeted on monetary efficiency within the first six to eight— and even 12 — months. The demand was extra to construct an airline, have every part working and principally be ready for when the entire enterprise mannequin is realized, which might be in spring after we launch the U.S. [flights].

Would I’ve preferred Covid to finish sooner, or would I’ve preferred extra passengers? After all. However we managed to get a 53% load issue and 100,000 passengers — in a rustic of 400,000 individuals, in the midst of Covid. We’re extraordinarily pleased about that. We’d have preferred to have 80%, in fact, sure. However this was acceptable.

KK: Low-cost carriers usually serve secondary city airports. However you are flying into BWI and Boston Logan, so why Stewart for the New York metro market?

BJ: New York is likely one of the best markets on the earth. Our place is to win passengers with low fares. And you’ll supply low fares [only] you probably have low prices. Stewart gives that, for certain. It is a lean airport to make use of. You can’t be low-fare you probably have the identical value base as everybody else; then you definately’re subsidizing tickets. And that is principally what occurred in Wow’s case.

The opposite facet is that there is additionally little or no competitors out of upstate New York; there aren’t any worldwide flights for the time being. [But] there are loads of points of interest and companies, and actual property costs have been rocketing. It is nearly a totally completely different market than New York Metropolis. I am fully in love with Stewart. Baltimore’s an analogous story, as a result of in Europe we do not speak about Baltimore. We would say, “Washington.” BWI is a good manner out of the town however there is a buyer there in Maryland.

KK: Like Icelandair, Play gives a free stopover keep in Reykjavik for passengers, which helps native tourism. However pre-Covid, there was pushback in lots of standard locations about over-tourism. What’s your take?

BJ: [The stopover] is a practice that has been constructed over many years and we, for certain, supply that. When it comes to Icelandic tourism, it is fascinating. It is changing into one of many greatest industries in Iceland, other than fisheries. We have now a lot nature and a lot to see. However guests have a tendency to assemble across the similar spots, whereas should you drove for 20 minutes you’d see the identical factor — however you are fully alone.

It is a dialogue that is happening in all standard locations. Locals cannot get a desk on the eating places and all that. However the reality is that we could not maintain these high-quality eating places, golf equipment and bars and such in Iceland if it weren’t for vacationers. In that sense, Covid was a very good factor — should you can name a pandemic a very good factor. In the future, every part simply stopped. And you do not actually know what you’ve till you lose it.