Icelandic budget airline PLAY collapses and cancels all flights

Ana Ives

ByAna Ives

October 1, 2025
Icelandic budget airline PLAY has ceased operations and cancelled all flights after filing for bankruptcy, leaving passengers stranded across Europe and North America.

Icelandic budget airline PLAY has ceased operations and cancelled all flights after filing for bankruptcy, leaving passengers stranded across Europe and North America.

The carrier’s board of directors submitted a petition to Reykjavik District Court on Monday (29 September) to place the airline into bankruptcy proceedings, with a ruling expected from the court on Tuesday.

Advice to passengers

A statement on PLAY’s website said: “We kindly advise you to check flights with other airlines. Some carriers may offer special ‘rescue fares’ considering the circumstances. We are deeply sorry for the disruption this causes and thank you for your understanding.”

The airline has told customers that refunds will need to be sought through card issuers if tickets were purchased directly with a payment card. Those who booked flights as part of a package through a travel agency in the European Economic Area (EEA) should contact their travel agent.

PLAY added that some rights may apply under EU air passenger regulations, but in the event of bankruptcy, claims must be directed to the court-appointed administrator.

Founded in 2019, PLAY emerged following the collapse of fellow Icelandic low-cost airline Wow Air, with ambitions to expand transatlantic services from Reykjavik. After building a network linking Iceland with major destinations in Europe and North America, the airline faced mounting financial difficulties.

In June 2025, the carrier announced plans to end all North American routes and scale back its European network, following a takeover bid from its two largest shareholders. Despite the restructuring, PLAY was unable to stabilise operations in the face of weak demand, competition, and high operating costs.

The collapse of PLAY highlights the continued fragility of budget airlines in smaller aviation markets. While larger low-cost operators such as Ryanair, easyJet and Wizz Air have returned to profitability after the Covid-19 pandemic, smaller carriers remain vulnerable to volatile fuel prices, competitive pressure and shifts in passenger demand.

PLAY’s demise marks another chapter in the turbulent history of Iceland’s low-cost aviation sector, echoing the downfall of Wow Air in 2019.

Ana Ives

ByAna Ives

Ana is a senior reporter at Travelling for Business covering travel news and features.