Icelandic startup PLAY has its first flights well under its belt, with London and Tenerife already ticked off, and Berlin being added tomorrow. But what makes this startup suppose it can succeed where WOW Air failed? Its CEO, Birgir Jonsson, believes that slow and steady is what wins the race, and that the rapid growth of WOW was what inevitably killed it off.
Flying under the shadow of WOW
For a bold startup like PLAY, the constant comparison between itself and its failed predecessor WOW Air could be seen as a tiresome evaluation. But the airline’s lively CEO, Birgir Jonsson, doesn’t mind being challenged on the similarities between the airlines. Speaking exclusively to Simple Flying at our recent webinar, Jonsson said,
“I think it's absolutely natural and understandable that people compare us to WOW. The DNA of PLAY comes very prominently from WOW. I, myself, was a Deputy CEO at WOW and lots of my management team were key executives of WOW, so I think that's a very fair comparison.”
But being compared to a failed airline is not hugely encouraging for a startup that is only a week into operating its flights. With so many similarities on the table, the real question is, what will PLAY do differently to avoid the same fate? Jonsson began by explaining where he believes WOW went wrong, saying,
“Startups like WOW Air, are launched by very charismatic, enthusiastic, colourful founders, in this case someone who is my personal friend and I have a huge respect for. But what happens in that case is that the company just grows too fast. The pressure of being too big was basically what killed them in the end.”
Jonsson noted that he could name other Icelandic airlines, perhaps three or four, that suffered a similar fate. Pressure from board members, from the public and from the founders' own ego can force these businesses to make decisions that are not in the best interests commercially.
A case in point – WOW experienced its first annual loss in 2017 following two profitable years. Despite all signals pointing to overexpansion, the airline continued on its growth trajectory, reaching a high of 36 destinations in 2018. Despite frantic pulling of numerous financial levers, the company wound up in early 2019.
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What will PLAY do differently?
Although its DNA is rooted in WOW, PLAY has an opportunity to do things rather differently. Part of this will be engineered through learning from previous mistakes, but more unusually, the pandemic has given it a unique position to grow more slowly and deliberately. Jonsson explained,
“We actually do think that if we take the know-how, and the business model, and we pair that with this great number of strong shareholders in a listed company, that is so well funded, we actually have a mix that will work.
“We are in no hurry to drive things too fast. I could technically start the US operation this autumn. I have the aircraft, and I have demand from the US now because Iceland is on the green list for the US, but we have the luxury of keeping our focus on the infrastructure of the company, on the sales process and all the framing issues so that when we take the big step, we are completely prepared.”
Widely recognized as a contributing factor to WOW Air’s failure was its dalliance with widebody aircraft. More expensive to operate for a start, these large aircraft suddenly thrust WOW into a market where it was competing with some large and very strong airlines. That’s a mistake that Jonsson is keen to avoid with a laser focus on staying small and staying profitable. He explained,
“We come to the game very focused. We have very clear strategy. We have very deep pockets … I don't care if we have ten aircraft or 100. I just want to have a profitable company that that has happy passengers … we want to have the flexibility to be able to find a way to eat around the big alligators.”
Jonsson noted that PLAY’s long-term business plan never requires more than 15 aircraft. They have no ambition to become the next Ryanair and will steer well clear of widebody aircraft. While the airline might have been born from the ashes of WOW, it’s abundantly clear that it intends to do things really quite differently.