Icelandic low-cost carrier PLAY Airlines has announced it is ceasing operations effective immediately, canceling all flights and leaving thousands of passengers stranded.
In a statement issued on September 29, 2025, the Board of Fly Play announced that the decision was made following prolonged financial underperformance, poor ticket sales in recent weeks, and internal discontent among staff following changes to the company’s strategy.
Failed turnaround plan
The airline introduced a revised business model in the fall of 2024, which management hoped would stabilize operations and return the carrier to growth. At the time, executives described the changes as a source of optimism for the company’s future.
In practice, this shift meant moving away from PLAY’s initial transatlantic ambitions, which sought to replicate Icelandair’s hub-and-spoke model out of Reykjavik Keflavik International Airport (KEF). Instead, the carrier refocused on European and Canary Islands routes, while scaling back its US network to just three cities: 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), moving operations to its Maltese subsidiary and shifting back-office functions to Malta and Lithuania.
Despite these measures, the Board admitted the turnaround plan was unable to overcome “deep-rooted challenges that have built up over time.” In hindsight, it said, the new strategy should have been implemented earlier.
Impact on passengers and staff
The collapse means thousands of travelers will need to reorganize their return journeys, while around 400 employees will lose their jobs. PLAY also acknowledged the broader impact on its business partners, who face financial losses as a result of the shutdown.
“The Board and management of PLAY emphasize that every effort was made to reach a different outcome,” the company said. “This decision is the most painful one imaginable in this situation and has only been taken because all other options were deemed exhausted. The Board sincerely apologizes to everyone negatively affected by this outcome.”
An abrupt end
PLAY launched in 2021 as an Iceland-based successor to WOW Air, connecting Europe and North America through Reykjavik Keflavik International Airport (KEF). The airline grew rapidly on transatlantic and European routes but struggled to achieve sustained profitability amid rising competition and high operating costs.
The carrier’s grounding adds PLAY to the list of Icelandic low-cost ventures that have failed to secure long-term stability in a challenging market environment.
