Barely two months since it operated its first flight (to Europe), Iceland start-up Play has applied for a permit and exemption authority with the US Department of Transportation to launch services to the United States from summer 2022. Play applies for unrestricted routes to the US.

The application has been filed on August 20 and requests permission to operate scheduled and charter services from Iceland, via Iceland, and via intermediate points to any destination in the US and beyond. The request is based on the US-EU-Iceland-Norway Air Transport Agreement valid since June 2011. Play has shared its application with a number of US carriers, including American, United, Delta, JetBlue, UPS, Atlas, and FedEx, as well as with the FAA.

Play launched commercial operations on June 24 with the first service to London Stansted. This was followed by Tenerife on June 29 and Berlin on July 1. In its first full month, it carried 9.899 passengers with a 41.7 percent load factor. As travel restrictions have continued to change, some Icelandic travelers opted to alter their travel dates, which resulted in the transfer of income but no loss to the young airline.

Fly Play was officially established in June 2019. This March, it successfully concluded a private placement that raised $47 million. A share offering on June 25 was oversubscribed eight times and raised another $274 million, followed by a listing on the Nasdaq First North stock exchange on July 9.

After point-to-point follows hub-and-spoke

The management team led by CEO Birgir Jonsson includes many who previously have served with WOW, the former Icelandic low-cost airline that went bankrupt in March 2019. Jonsson has stated on various occasions that Play has learned from the demise of WOW, which grew too quickly. Play’s strategy is one of measured growth, initially with the serving point-to-point destinations in Europe. The network will be expanded to include Alicante, Barcelona, Gran Canaria, Copenhagen, Salzburg, and Paris.

The second phase will be a hub-and-spoke network out of Iceland Keflavik to Europe and North America. While this ‘via’ or transatlantic market has been severely disrupted by the Covid-crisis, Play expects it to recover post-pandemic as the roll-out of vaccines continues and restrictions are lifted. The carrier follows predictions by Airbus and Boeing that the transatlantic market will grow by 2.4 to 2.8 percent in the next twenty years. In 2019, the Europe-US market accounted for 76.1 million passengers, up from 41.2 million in 2011.

Play’s projected network includes New York and Washington in the US but is that really Moosonee in Canada on the map. (Fly Play)

Jonsson said earlier that Play planned to start North American operations preferably in March or April, but the application with the DoT confirms that ‘in Summer 2022’ is now the projected date. The document doesn’t include specific destinations, but a chart with the ‘illustrative network’ in an earlier document showed ‘major cities’ like New York and Washington but also Moosonee Airport in Ontario (Canada). Which likely is a mistake on the map.

A321neo- to be doubled next year

So Play has now applied for unrestricted routes to the US. To make it happen, the airline will need to at least double its from the current three Airbus A321neo’s to six or more. The business plan caters to the delivery of three more in 2022, which like the first three will most likely be sourced on a power-by-the-hour contract and on 10-year contracts from AerCap. Four more should arrive in 2023, three in 2024, and another three in 2025, which would bring Play’s to fifteen.

The DoT application says Play plans to operate the US services with a single layout. Its current is configured with 192 all-Economy seats. Jonsson has said that the configured for the US market could include seats with slightly more legroom but he wouldn’t call it a Premium Economy product. His airline is still looking at the in-service product.

As it said in its company description document that supported its public share offering in June, Play expects to conclude its first year of operations with a $15 million loss but should generate a $4 million profit in 2022, growing this to $43 million in 2025. Its revenues should grow from $25 million this year to $503 million in 2025 when it plans to operate a of fifteen A321neo’s.

The document also includes a number of risks, of which the outcome of the Covid-crisis is a major one but also mentions the highly competitive landscape. Its main rival at home is Icelandair, which itself plans to rebuild its hub-and-spoke network that was severely disrupted since March 2020. “Even though Play will aim to adapt and optimize scale and production to demand with a business model that is profitable on a lower scale of operation, there is no guarantee that the Company will be successful with such a strategy, which may have a material adverse effect on the Company’s business, financial condition, results of operation and prospects.”

The application document doesn’t say when the DoT will decide on the request.   

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