For Icelandic LCC startup PLAY Airlines CEO Birgir Jónsson, launching an airline in the middle of a global pandemic was part of the strategy.
The low-cost carrier, which began operations in the last week of June 2021, was able to secure attractive lease rates for its all Airbus A320/321neo fleet, good access to experienced staff were available.
“You can start with the best possible structure, then time flies and you become a legacy carrier yourself,” Jónsson told me recently in a wide-ranging conversation about launching an airline in the middle of a global pandemic.
PLAY´s total equity was $77 million at the end of September. “This demonstrates that investors see the industry at its bottom line and will increase now. Starting without debt, and with the cost savings on new aircraft, the company was able to start lean, without government subsidies,” he said.
Jónsson added that the Keflavik-based LCC is quickly reaching a nearly 100% on-time performance after launching in late June.
“We could need a better load factor, yes, but I think this is also COVID-19 driven,”
PLAY CEO Birgir Jónsson
The Paris market, for example, has not been as strong as he had expected. “But sunny destinations, like Tenerife, reached 45% to 50% market share from Iceland,” Jónsson said.
Think Outside Iceland
Iceland is a high-cost nation, especially in terms of salaries. PLAY´s crew, like the airline and its AOC, are expensive. Establishing an office in Vilnius, Lithuania, should help reduce costs and Jónsson sees this as a logical move.
“If all our people, including marketing, are only in Iceland, the focus becomes very Iceland-centered and then you forget that the real business is not in Iceland,”
PLAY CEO Birgir Jónsson
Building Network between Europe and the U.S.
The main plan, however, is to build a link between Europe and the U.S. as Icelandair has done with flights planned to begin in April 2022. “We will ramp up operations in March and April before the high season starts,” he said. 12 aircraft should be in service in 2024 and 15 aircraft in 2025. “Not growing too fast, not getting too big and maintaining flexibility” are Jónsson’s key aims.
“I wish I could find a market that no one has ever heard of, but unfortunately this is not the case. We are focusing on the [U.S.] east coast and there will be definitely an overlap [with Icelandair],” he acknowledged.
Born in the Cloud
“We were born in the cloud. We can start with the best solutions now,” he said. “You don’t know what will happen in the next two months or so. So you have to make sure that you have enough cash and we are ready for the growth ahead.” he said