PLAY has launched boldly into the face of the pandemic, betting on a low-cost, high-value strategy to lure passengers to the new brand. CEO Birgir Jonsson believes that, despite all the odds, now is the ideal time to launch an airline. Is PLAY setting itself up for the perfect post-pandemic era?
The perfect time to launch an airline
Kicking off an airline in the midst of a pandemic is bold. But with the right business model, and the right growth plan, the current situation presents a unique opportunity for those bold enough. CEO of new Icelandic airline PLAY, Birgir Jonsson, explained to Simple Flying,
“I actually think this is the perfect time to start an airline and I think that people would see that if they stop and look at the situation. We all see what the public is doing now, there is a huge pent up appetite for travel. Investors have also seen that there's a big demand coming.”
Indeed, PLAY’s IPO debuted to an astounding reception from investors. The airline was floated on a growth market in Iceland to coincide with its first flight, and it received an eight-fold oversubscription for its shares. That investor confidence has bolstered the airline’s sunny outlook, but so have a bunch of other unusual circumstances, as the CEO detailed,
“Competition is weak, you have access to capital because of the demand, you can actually enter the market on the same level playing field as the incumbents. You don't have to have a six month run up to the first flight because no one has future bookings. There's a lot of good and desirable aircraft available with absolutely unbelievable terms. Over the last few decades, I don't think there’s even been a point which is as promising to launch an airline, if you're crazy enough to do it.”
Some would say that entering the aviation market in a pandemic is crazy. But given all the benefits that the current environment has brought, launching a new airline right now could actually be a gold-plated opportunity.
Post pandemic flying will all be low-cost
As an airline looking beyond the current restrictions that are hampering its load factor, PLAY has set itself up well to be an ideal post-pandemic competitor. Jonsson firmly believes that low-cost will be the way forward, and actually says that every airline will be operating on a low-cost basis. He commented,
“I think that if you're operating in this market, in aviation, and you kid yourself that you're not in low cost, you're just being delusional. Because for the passengers, the vast majority of them, the price is the controlling factor … The passenger just wants the lowest price, so you have to be low cost. It's not this kind of separate business. It's the way the future market demands.”
As we come out of COVID, much of the world will be in a tough place economically. It’s a pain point that we are yet to feel to its full extent, and is likely to make passengers even more price-sensitive going forward. Jonsson believes that the old format of free baggage and free food is completely out of date, noting,
“If I were a shareholder in that company, and I was looking at that approach, I would say, listen, everyone else is charging for baggage. And you're proud that you're letting go of that revenue stream, and you're giving people food that they don't want to eat.? Why don't you just let people buy the food that they actually want to eat when they’re hungry? This is a completely outdated and old model. Now, it's always about the price and the cost.”
While PLAY has set itself up as ‘no-frills,’ the CEO has been clear that this doesn’t mean poor service. His goal is to create an airline that is not only affordable to fly, but also runs like clockwork with exemplary customer service and happy passengers on every trip. That sounds like the magic ingredients for a perfect post-pandemic airline.