New Icelandic Airline Plans June Start After Two-Year Hiatus

(Bloomberg) -- Iceland will get a new airline next month as startup Play Air seeks to capitalize on the island’s recovery from the coronavirus crisis and inclusion on the U.K.’s green list for quarantine-free travel.

The launch of flights to seven European cities from June 24 comes almost two years after Play was first conceived as a successor to Wow Air Hf, with several of its top executives having worked at the defunct discounter. The new venture is planning a rapid listing to raise as much as $20 million to fund U.S. routes.

Play Air will launch with a single Airbus SE A321neo narrow-body followed by a further two before the end of July, leased from Dublin-based AerCap Holdings NV and previously operated by Mexico’s bankrupt Interjet. Three more jets will arrive next year to serve American cities and provide a one-stop link between the U.S. and Europe, Chief Executive Officer Birgir Jonsson said in an interview.

“People learned a lot from the mistakes that were made at Wow,” said Jonsson, a former chief operating officer and deputy CEO at the failed carrier. “The idea is to utilize the experience the team gained there and mix it with new business and management experience to do things differently.”

Sales have been brisk since tickets became available a week ago, he said, with strong bookings from locals to the Spanish sunspots of Tenerife and Alicante, as well as unexpectedly high demand from inbound tourists. Reservations stretch as far as Christmas and next Easter.

Play Air’s debut flight will be to London Stansted, taking advantage of Iceland’s inclusion among a handful of nations from which Britain is allowing quarantine-free travel. That reflects the North Atlantic island’s success in managing the pandemic, with the infection rate consistently among Europe’s lowest.

New Backers

The carrier secured $50 million in new funds in April from Icelandic financial institutions. Its biggest backer remains investment group Fea, led by Elias Skúli Skúlason, whose Airport Associates provides ground-handling services at the nation’s main Keflavik airport.

Play Air is planning an initial public offering at the end of next month on the Nasdaq First North Iceland market, according to Jonsson, seeking to raise between $10 million and $20 million.

The CEO, who took over last month with the backing of the new investors, said there’s room for a further airline serving the country of just 350,000 people, despite competition from flag-carrier Icelandair and foreign operators including Wizz Air Holdings Plc and U.S. giant Delta Air Lines Inc., which commenced services after Iceland opened up to vaccinated Americans.

Jonsson points to startups in Norway, where Norse Atlantic Airways, founded by executives with ties to Norwegian Air Shuttle ASA, aims to offer trans-Atlantic flights, and another new venture, Flyr AS, is targeting short-haul routes.

Wow made a mistake in expanding beyond its original low-cost model to add long-haul services with an Airbus A330 wide-body jet, he said in separate comments at the virtual Future Travel Experience conference Tuesday.

Linking secondary cities in Europe and the U.S. that have no direct flights -- making a change of plane a necessity rather than an unwelcome diversion -- will be a key element of Play Air’s strategy once demand revives, he said.

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