In a dramatic overnight collapse, Iceland’s low-cost carrier FlyPLAY (also known simply as PLAY) has filed for bankruptcy and suspended all operations effective immediately. The Reykjavik-based budget airline announced on September 29, 2025, that all flights are canceled and the company is entering insolvency proceedings. The sudden shutdown has left thousands of passengers stranded across Europe and North America, while about 400 employees face job losses as the airline winds down.

TL;DR – FlyPLAY Collapse

  • Filed for bankruptcy Sept 29, 2025; all flights canceled
  • Thousands stranded at Keflavík and abroad
  • Passengers urged to rebook, seek credit card refunds
  • Airline never turned a profit in 4 years
  • Collapse mirrors WOW Air’s failure in 2019

Jump to: Travel Chaos • Refunds & Alternatives • Turnaround Efforts • Wow Air 2.0 • FAQ

Passenger using credit card to request refund after FlyPLAY collapse
Passenger using credit card to request refund after FlyPLAY collapse

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Sudden Collapse Triggers Travel Chaos

FlyPLAY’s abrupt closure is already causing travel chaos. At Keflavík International Airport in Iceland, at least 12 PLAY flights were canceled on Monday, affecting around 1,750 passengers in a single day. Stranded travelers received text and email alerts overnight informing them their flights were canceled with immediate effect. Many holidaymakers and commuters are now scrambling to rebook journeys on alternate airlines or find last-minute travel arrangements after the low-cost airline’s collapse.

The airline cited serious financial distress as the reason for its collapse. In an official statement, PLAY’s board explained that the company’s performance had “long been weaker than expected,” with ticket sales plunging in recent months after negative media coverage.

Internal disagreements over strategic changes further exacerbated the situation. “Great hopes had been pinned on a revised business model introduced last fall… but it has now become clear that these changes cannot deliver results sufficient to overcome the company’s deep-rooted challenges,” the board noted, acknowledging that the turnaround plan came too late. Ultimately, the leadership concluded that all other options were exhausted, and opting to cease operations was a last resort.

Passengers Advised to Seek Refunds and Alternatives

The immediate advice for anyone holding a FlyPLAY ticket is to seek refunds and alternative transportation without delay. The airline’s website has published guidance for affected customers , and travel authorities are urging passengers to take the following steps:

  • Do not go to the airport for PLAY flights: All PLAY flights are cancelled effective immediately—travelers should not expect any scheduled flight to operate.

  • Arrange alternative travel: Travelers must rebook with other airlines or find other modes of transport. Some carriers may offer special “rescue fares” in light of the disruption. (For example, rival Icelandair announced it will add extra seats on overlapping routes, though it is not offering discounted fares specifically for PLAY’s stranded passengers.)

  • Request refunds: Customers who purchased tickets by credit card are advised to contact their card issuer for a refund or chargeback. Those who booked PLAY flights as part of a package holiday in the European Economic Area should contact their tour operator or travel agency, which is responsible for arranging refunds or alternate travel.

  • Know your passenger rights: Under normal circumstances, EU regulations entitle passengers to compensation and care for cancellations or disruptions. However, because PLAY is entering bankruptcy, any pending EU261 compensation claims will likely not be honored. Passengers may need to rely on travel insurance or protections offered by premium credit cards to recoup expenses.

  • Monitor official updates: Travelers should keep an eye on PLAY’s official website and communications for any further instructions on how to claim refunds or retrieve baggage, as well as notices from airports or regulators.

Industry groups are also stepping in to assist. European consumer rights agencies are expected to publish guidelines for PLAY’s customers, and competing airlines in key markets (such as London, Paris, Boston and Baltimore where PLAY operated) have been alerted to possibly accommodate extra passengers.

Some airlines like easyJet and Wizz Air have in the past offered rescue fares when a competitor failed, so similar measures may emerge in the coming days. Iceland’s transport authority has reminded travelers that passenger rights laws ensure package holiday customers are protected and that credit-card bookings may be reimbursed through banks, even if the airline itself cannot provide refunds.

Financial Woes and Failed Turnaround Efforts

PLAY’s collapse comes after months of financial turbulence. The budget airline — which was founded in 2019 and began flights in 2021 — never turned a profit in its four-year history. High operating costs and Iceland’s relatively small home market made profitability elusive, especially amid fierce competition on transatlantic and European routes. The company faced growing losses year after year, forcing it to rethink its strategy.

In late 2024, management attempted a major strategic shift to save the airline. PLAY cut back its ambitious transatlantic expansion plans and refocused on shorter routes to Europe and leisure destinations, scaling down U.S. flights to just a few cities. The airline even relocated some operations to a Maltese subsidiary to reduce costs and improve efficiency.

Initially, these changes gave “considerable optimism” that the carrier could stabilize. Unfortunately, the hoped-for turnaround did not materialize. By 2025, ticket sales dropped sharply, especially after a wave of bad press and customer complaints hit the airline’s reputation. Morale within the company also suffered, as some employees grew disgruntled over the policy shifts and cost-cutting measures.

Facing mounting losses, PLAY’s leadership ultimately concluded it could not secure the additional funding or positive cash flow needed to continue. On September 29, 2025, the board of directors filed a petition in the Reykjavík District Court to place the company into official bankruptcy proceedings.

Operations were halted immediately as this legal process began. “Every effort was made to reach a different outcome,” the board emphasized in its farewell statement, calling the decision to shut down “the most painful one imaginable” after all alternatives were exhausted.

End of the Line for Wow Air 2.0

The demise of FlyPLAY marks the end of an ambitious attempt to fill the void left by WOW Air, another Icelandic budget airline that went bankrupt in 2019. PLAY was often dubbed “Wow Air 2.0” because it was launched by former WOW Air executives and aimed to replicate that low-cost, long-haul model.

PLAY’s bright red Airbus fleet connected Keflavík hub to cities like London, Paris, Boston, Baltimore and more, offering ultra-low fares with minimal frills. At its peak, PLAY operated a fleet of 10 Airbus A320neo-family jets and carried over 180,000 passengers in a summer season.

Despite early optimism, PLAY struggled against the same headwinds that felled its predecessor. Larger airlines emerged from the pandemic with rock-bottom economy fares and more robust networks, undercutting PLAY’s value proposition. Competing carriers such as Icelandair, easyJet, and Wizz Air fought fiercely on key routes, while PLAY’s limited capital and Iceland’s volatile travel market made growth difficult.

By mid-2025, PLAY had already announced plans to terminate all U.S. flights and retreat to a purely European network , a move that now appears to have been too late to save the airline.

PLAY’s abrupt end underscores the challenges faced by niche low-cost airlines, especially those based in smaller markets. It now joins WOW Air and Primera Air on the list of Icelandic budget carriers that collapsed after only a few years of operation.

Travel analysts predict that Icelandair – the country’s flagship airline – will absorb much of PLAY’s former market. In fact, with PLAY gone, Icelandair has already indicated it will increase capacity on routes that the budget airline used to serve. However, the loss of a dedicated low-cost competitor could mean reduced choices and higher fares for travelers flying to and from Iceland until other airlines step in to fill the gap.

For now, thousands of affected passengers are focused on getting to their destinations and securing refunds for their unusable PLAY tickets. Iceland’s government has not announced any bailout, so the shutdown appears to be final. As the reality sinks in, many are lamenting the end of PLAY’s red planes in the skies. “The Board sincerely apologizes to everyone negatively affected by this outcome,” the airline’s management said in its parting message to customers and staff.

Unfortunately for those passengers left stranded, that apology may be cold comfort as they navigate the fallout of yet another airline bankruptcy in Europe’s aviation sector.

FAQ

When did FlyPLAY shut down?

The airline filed for bankruptcy and ceased operations on September 29, 2025.

Which flights were canceled?

All FlyPLAY flights, including routes between Iceland, Europe, and North America, are suspended.

How can passengers get refunds?

Customers should request chargebacks through credit cards or contact tour operators for package holidays.

Why did FlyPLAY collapse?

The airline never turned a profit, faced falling ticket sales, and could not secure new funding.

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