Passengers board an Airbus passenger jet operated by Icelandic low-fare service Play.
Play
Startup low-fare Icelandic airline Play introduced new transatlantic service out of a 3rd U.S. airport, Stewart International in New Windsor, New York, to start June 9. (Stewart lies about 65 miles north of New York City.)
Play, which launched final July with nonstops from Reykjavik, Iceland, to London’s Stansted Airport, is the most recent low-fare airline to aim 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 concentrate on European and Middle Eastern 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 International Airport, adopted by Boston Logan beginning May 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 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 personally was Wow’s CEO for a interval.
So we all know that story fairly effectively. And, the truth is, Wow was an excellent 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.
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: Right. But [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 site visitors to and from Iceland. We launched the European aspect of the network-in June and ran that for six months till we launched industrial gross sales to the U.S.
The motive I believe 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 manner too large, grew too quick and the muse was simply too weak. We are a listed firm. All the governance issues round that type of enterprise are utterly totally different, extra disciplined, extra centered. Also we now know the pitfalls. We are simply going to concentrate on the confirmed idea, the market that we all know that exists.
KK: The pandemic hit journey onerous, however most likely enterprise journey hardest, as work and conferences migrated on-line. Since you are low-cost, are you concentrating on leisure solely or will you additionally courtroom enterprise flyers?
BJ: In a pure advertising and marketing sense, we’re concentrating on the VFR [visiting friends and relatives] and leisure markets. Having stated that, I at all times 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.
But there are lots of people touring for causes aside from occurring vacation or visiting mates. Going to conferences [or] coaching, for instance — these sorts of issues. It’s not solely high-powered CEOs going to Davos, you understand. We simply wish to supply a no-frills, very economical product that is quite simple to make use of. We haven’t got a enterprise class; it is an all-economy product. But for anybody, be it an organization or particular person, that wishes only a easy strategy, a very good ticket value and secure, well timed service, we’re the proper alternative.
KK: Would you say Play is ultra-low-cost, like Ryanair, Frontier or Spirit? How do you differ from flag service Icelandair other than value?
BJ: In Ryanair’s case, they fly comparatively shorter legs. If I’m going to 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 sort of low-cost.
If you examine us to Icelandair, I’d say the product is sort of an identical. Okay, we do not have a enterprise class as such. But by way of the overall expertise onboard, on each airways it’s a must to pay in your meals, drinks and baggage and all that stuff. Legacy airways are remodeling themselves right into a low-cost merchandise anyway. If I made an inventory of 10 issues that may justify that, the primary 5 on that record are “value.”
KK: How did Covid have an effect on your launch plans? I do know round 10 new carriers debuted final yr through the pandemic. Did you sluggish 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 occurring. In order to begin an airline, particularly a transatlantic one, you want runway. You want to rent crew, that you must practice them. You must place your self in the marketplace.
We would at all times have wanted some type of a ramp-up interval. So now we have by no means been centered 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 principally 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 preferred Covid to finish sooner, or would I’ve preferred extra passengers? Of course. But 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 are extraordinarily comfortable about that. We would have preferred to have 80%, in fact, sure. But 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 Images
KK: Low-cost carriers typically serve secondary city airports. But you are flying into BWI and Boston Logan, so why Stewart for the New York metro market?
BJ: New York is without doubt one of the best markets on this planet. Our place is to win passengers with low fares. And you possibly can supply low fares [only] when you’ve got low prices. Stewart provides that, for positive. It’s a lean airport to make use of. You can’t be low-fare when you’ve got the identical value base as everybody else; then you definitely’re subsidizing tickets. And that is principally what occurred in Wow’s case.
The different aspect is that there is additionally little or no competitors out of upstate New York; there aren’t any worldwide flights in the meanwhile. [But] there are loads of sights and companies, and actual property costs have been rocketing. It’s nearly a totally totally different market than New York City. I’m utterly in love with Stewart. Baltimore’s an identical story, as a result of in Europe we do not speak about Baltimore. We’d say, “Washington.” BWI is a good manner out of the town however there is a buyer there in Maryland.
KK: Like Icelandair, Play provides a free stopover keep in Reykjavik for passengers, which helps native tourism. But pre-Covid, there was pushback in lots of well-liked locations about over-tourism. What’s your take?
BJ: [The stopover] is a practice that has been constructed over many years and we, for positive, supply that. In phrases of Icelandic tourism, it is attention-grabbing. It’s changing into one of many greatest industries in Iceland, other than fisheries. We have a lot nature and a lot to see. But guests have a tendency to collect across the identical spots, whereas in the event you drove for 20 minutes you’d see the identical factor — however you are utterly alone.
It’s a dialogue that is occurring in all well-liked locations. Locals cannot get a desk on the eating places and all that. But the actual fact 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 — in the event you can name a pandemic a very good factor. One day, all the pieces simply stopped. And you do not actually know what you will have till you lose it.