Icelandic airline PLAY has ceased all operations effective immediately, resulting in the cancellation of all its flights. The sudden shutdown affects passengers who had booked the seasonal service between Liverpool John Lennon Airport and Reykjavik, which was scheduled to resume this week.
The company's closure leaves approximately 400 employees without jobs and thousands of travellers with disrupted plans. PLAY directed affected customers to seek refunds through their credit card providers or travel agents.
Key Takeaways
- Icelandic airline PLAY has ceased all operations as of September 29, 2025.
- All flights, including the seasonal Liverpool to Reykjavik service, have been cancelled.
- The Liverpool route was scheduled to restart on October 3 for a limited winter season.
- Around 400 employees are affected by the airline's immediate closure.
- The company cited poor financial performance and a sharp decline in ticket sales as reasons for the shutdown.
Immediate Shutdown and Passenger Advice
The low-cost Icelandic carrier, PLAY, announced the immediate termination of its services on Monday morning. The airline, which had been in operation for just over four years, confirmed the news in a brief statement published on its website.
In the announcement, the company advised passengers with existing bookings. "Fly PLAY hf. has ceased operations, and all flights have been cancelled," the statement read. It further guided customers to contact other airlines for alternative travel arrangements, noting that some carriers might offer special "rescue fares" under the circumstances.
For passengers seeking refunds, the advice was clear. Those who booked directly using a credit card were instructed to contact their card issuer to inquire about a potential chargeback. Customers whose flights were part of a larger package holiday were told to get in touch with their travel agent for assistance.
Liverpool Route Grounded Before Relaunch
The collapse of PLAY directly impacts Liverpool John Lennon Airport, where the airline operated a seasonal route to Reykjavik's Keflavík International Airport. The winter-only service was first introduced in 2022 and was scheduled to recommence for a short season later this week.
Flights were set to run from October 3 until November 29, 2025. The cancellation means the route will not operate this year, leaving a gap in the airport's winter schedule for direct flights to Iceland. The airline had already announced in June 2025 that it planned to scrap the Liverpool route permanently from November as part of a business restructure, but the immediate shutdown has brought that decision forward abruptly.
A Short History of PLAY
PLAY was established in July 2019 and began its flight operations in June 2021, aiming to capture a share of the low-cost transatlantic market via its hub in Iceland. The airline operated a fleet of Airbus A320neo family aircraft, connecting various European cities, including Liverpool and London, with North American destinations through Reykjavik.
When the Liverpool service was initially launched, the airline expressed high hopes for its success. The CEO at the time, Birgir Jónsson, highlighted the mutual benefits for tourism in both regions.
"Iceland’s extraordinary scenery, rich wildlife and bustling beer scene makes for an epic weekend away and we can’t wait for those in the North West region of the UK to come and experience it. We hope that football mad Icelanders will be welcomed much the same as they travel to Liverpool in search of the famed atmosphere of Anfield and Goodison Park."
The inaugural flight was welcomed at Liverpool John Lennon Airport with a traditional water arch salute from the airport's firefighters, marking a hopeful start for a route that has now been permanently cancelled.
Reasons for the Airline's Collapse
In a detailed statement, PLAY's board of directors outlined the factors that led to the decision to cease operations. The primary causes were persistent financial difficulties and a recent, sharp downturn in customer bookings.
The board stated that the company's financial performance had consistently fallen short of expectations. This situation was made worse by a recent decline in ticket sales, which they attributed in part to negative media coverage surrounding the airline's stability.
Airline Industry Pressures
The aviation industry is known for its high operational costs and thin profit margins. Factors such as fuel price volatility, intense competition from established carriers, and economic downturns can quickly impact an airline's financial health. New and smaller airlines, like PLAY, are often more vulnerable to these market pressures.
Internal issues were also cited as a contributing factor. The board mentioned "internal disagreements among some employees regarding strategic changes" had created additional strain on the company as it tried to navigate its financial challenges.
Failed Business Model Changes
According to the board's statement, the airline had attempted a significant strategic shift last autumn. This new business model was introduced with "significant optimism" and was intended to reverse the company's fortunes.
However, the measures did not produce the required results quickly enough to salvage the business. "Unfortunately, it has now become clear that these changes cannot deliver the results needed to overcome the airline’s deep-seated financial troubles," the board explained. They also conceded that, in hindsight, these strategic changes should have been implemented much earlier.
The failure of this last-ditch effort left the board with no viable alternative but to terminate operations, leading to the immediate grounding of its entire fleet and the cancellation of all future flights.