Iceland is getting another new airline

Airlines may be struggling to survive the industry’s worst-ever downturn, but investors in Iceland reckon the time is ripe to launch a brand new carrier.

Play Air aims to commence flights this fall with a plan borrowed from Wow Air Hf, which collapsed in 2019. Like Wow, it will seek to exploit Iceland’s position in the North Atlantic to provide low-cost, one-stop routes between Europe and North America.

While founding an airline might seem a tall order when others are offloading thousands of workers and borrowing billions, Chief Executive Officer Arnar Magnusson says the situation presents opportunities for a company free from the debt burden of carriers laid low by the coronavirus. As a startup, neither will it be encumbered by a fleet and payroll too big for times of lower demand.

“Mistakes were made within Wow Air which cost them, but the company did very well for a time,” Magnusson, who worked as a pilot with Wow and became its operations director, said in a interview. “We have been looking a lot at its setup in 2015 and 2016, when the fleet and the operation was simple.”

Play Air’s website lists a further 10 executives who were employed at Wow, which was founded in 2011 by former tech-sector entrepreneur Skuli Mogensen. They include the new carrier’s finance chief, its co-founder with Magnusson, and the heads of network planning, flight safety and revenue management.

The airline plans to operate a fleet of new or nearly new Airbus SE A320-series jets, as did Wow, initially serving European destinations such as London, Paris, Berlin and Copenhagen first before adding U.S. cities like New York and Boston.

Play Air will steer clear of operating wide-body planes, something which Wow began to do, pushing up costs, according to Magnusson. It will also have the flexibility to commence flights at the optimum moment as the pandemic retreats, he said.

Backing for the project comes from Icelandic investment group Fea, led by Elias Skúli Skúlason, whose Airport Associates provides ground-handling services at the island-nation’s main Keflavik airport.

With Iceland served by more than 20 airlines in addition to flag carrier Icelandair before Covid-19, Play Air is likely to encounter competition.

Discounter Wizz Air Holdings Plc is already operating flights, as are Deutsche Lufthansa AG and Scandinavia’s SAS AB. EasyJet Plc served Iceland up to the pandemic and is beginning to restore its network. The big three U.S. carriers and Air Canada, though, have said they won’t serve Iceland this summer, according to a spokesman for airport operator Isavia

Magnusson said he’s in no doubt that air travel will bounce back.

“If we look toward other shocks such as 9/11, demand has always picked up and continued to grow,” he said. “The market will come back and we will be ready when that happens.”