Passengers board an Airbus passenger jet operated by Icelandic low-fare provider Play.
Play
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 most recent low-fare airline to try to make closely discounted service throughout the Atlantic work.
Play’s instant 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 identical destiny in 2018. Low-cost Norway-based competitor Norwegian, in the meantime, deserted long-haul intercontinental operations in January 2021 with a purpose to deal with 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 Might 11 utilizing narrow-body Airbus A320neo and A321neo planes. The provider 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 begin an airline amid a pandemic and the way Play plans to succeed the place others have failed.
(Editor’s notice: This interview has been condensed and edited for readability.)
Kenneth Kiesnoski: Sustaining a low-fare service throughout the Atlantic has confirmed difficult, 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, in truth, Wow was an amazing 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 mainly doing the long-haul [and] low-cost factor — which is a hill that many good troopers have fallen on many instances.
Birgir Jonsson, CEO of Reykjavik, Iceland-based low-fare airline Play.
Play
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 rationale I feel Play will work out higher than Wow is solely that the corporate’s higher funded, [whereas] Wow was owned by one man. And, it was means too massive, grew too quick and the inspiration was simply too weak. We’re a listed firm. All of the governance issues round that form of enterprise are fully completely different, extra disciplined, extra targeted. Additionally we now know the pitfalls. We’re simply going to deal with the confirmed idea, the market that we all know that exists.
KK: The pandemic hit journey laborious, however most likely enterprise journey hardest, as work and conferences migrated on-line. Because you’re low-cost, are you concentrating on leisure solely or will you additionally court docket enterprise flyers?
BJ: In a pure advertising sense, we’re concentrating on the VFR [visiting friends and relatives] and leisure markets. Having mentioned that, I all the time have a reasonably troublesome time defining what enterprise journey is as a result of when somebody says “enterprise journey,” most individuals consider somebody flying enterprise class, consuming champagne — some premium service.
However there are lots of people touring for causes apart from happening vacation or visiting buddies. Going to conferences [or] coaching, for instance — these sorts of issues. It isn’t solely high-powered CEOs going to Davos, you realize. 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 superb ticket worth and secure, well timed service, we’re the appropriate selection.
KK: Would you say Play is ultra-low-cost, like Ryanair, Frontier or Spirit? How do you differ from flag provider Icelandair aside from 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 house 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 might say that we’re some sort of low-cost.
In case you examine us to Icelandair, I might say the product is almost an identical. Okay, we do not have a enterprise class as such. However by way of the overall expertise onboard, on each airways you must pay on your meals, drinks and baggage and all that stuff. Legacy airways are reworking themselves right into a low-cost merchandise anyway. If I made an inventory of 10 issues that might justify that, the primary 5 on that checklist are “worth.”
KK: How did Covid have an effect on your launch plans? I do know round 10 new carriers debuted final yr throughout the pandemic. Did you gradual issues down and use the chance to fine-tune or one thing?
BJ: We began operations with the overall view Covid would finish within the subsequent 12 to 18 months, and that appears to be taking place. With a view to begin an airline, particularly a transatlantic one, you want runway. You’ll want to rent crew, that you must prepare them. You’ll want to place your self in the marketplace.
We might all the time have wanted some form of a ramp-up interval. So we now have 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 all the pieces working and mainly be ready for when the entire enterprise mannequin is realized, which shall be in spring once we launch the U.S. [flights].
Would I’ve favored Covid to finish sooner, or would I’ve favored extra passengers? After all. However we managed to get a 53% load issue and 100,000 passengers — in a rustic of 400,000 folks, in the midst of Covid. We’re extraordinarily comfortable about that. We might have favored to have 80%, in fact, sure. However this was acceptable.
Icelandic airways have lengthy supplied transatlantic passengers free stopovers on the worldwide hub at Keflavik, Iceland, to advertise tourism to locations just like the Landmannalaugar Valley.
Anastasiia Shavshyna | E+ | Getty Photos
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 among the best markets on this planet. Our place is to win passengers with low fares. And you may supply low fares [only] in case you have low prices. Stewart presents that, for positive. It is a lean airport to make use of. You can’t be low-fare in case you have the identical value base as everybody else; then you definately’re subsidizing tickets. And that is mainly what occurred in Wow’s case.
The opposite facet is that there is additionally little or no competitors out of upstate New York; there are not any worldwide flights in the mean time. [But] there are loads of sights 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 identical story, as a result of in Europe we do not speak about Baltimore. We would say, “Washington.” BWI is a good means out of the town however there is a buyer there in Maryland.
KK: Like Icelandair, Play presents 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 convention that has been constructed over many years and we, for positive, supply that. By way of Icelandic tourism, it is fascinating. It is turning into one of many largest industries in Iceland, aside from fisheries. Now we have a lot nature and a lot to see. However guests have a tendency to collect across the identical 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 superb factor — should you can name a pandemic a superb factor. In the future, all the pieces simply stopped. And you do not actually know what you may have till you lose it.