Icelandic low-cost carrier Fly PLAY hf. has announced the suspension of all operations and the cancellation of all flights with immediate effect, the company said on Monday morning (29 September 2025). In a statement filed to the stock exchange, the board cited prolonged weak performance, declining ticket sales in recent weeks following negative media coverage, and internal dissatisfaction over strategic changes.
“Thousands of passengers will need to reorganize their return journeys, and around 400 employees will lose their jobs,” the statement read, adding that the carrier will work with authorities and staff to ensure an orderly wind-down. The board further noted that management had “made every effort to find an alternative solution” but ultimately concluded that “all other options have been exhausted.”
Passengers who purchased tickets with credit cards are advised to seek refunds from their card issuers, while those who booked through travel agencies within the European Economic Area should contact their intermediaries. Certain entitlements also arise from European passenger rights regulations, and all further claims will be directed to the appointed bankruptcy administrator.
The collapse of PLAY has sent shockwaves through the Icelandic market. Shares of Icelandair, the main rival carrier, surged by 20% immediately after the announcement, as the airline is expected to absorb a significant portion of demand on routes to Europe and North America.
Founded in 2019, PLAY aimed to establish itself as a low-cost challenger to Icelandair. Before ceasing operations, it flew a fleet of Airbus A320neo and A321neo aircraft, connecting Iceland with European destinations and, until recently, also serving North America.
The shutdown of PLAY once again underscores the challenges of sustaining a viable business model in Iceland’s highly seasonal and transfer-dependent market, leaving passengers forced to turn to alternative carriers to complete their journeys.
