Why Airlines Fail: The WOW Air & PLAY Story

The fragility beneath growth

Airlines can fill aircraft and still fail. In this episode, Vishal Mehra speaks to Birgir Jónsson, the former CEO of PLAY Airlines and Iceland Express and a former deputy CEO of WOW Air, about three different businesses operating within Iceland’s seasonal travel market. The value of his comparison is that airline failure cannot be reduced to one ratio, one route or one executive decision. Fleet choices, customer mix, fuel exposure, financing and supplier confidence interact. Jónsson offers a first-hand account of the businesses during his own tenure, while distinguishing it from interpretations of events that occurred after he left.

Why the passenger mix matters

The familiar Icelandic model moves travellers between Europe and North America through Keflavík, but not every passenger contributes the same margin. Jónsson distinguishes Iceland-origin demand, visitors whose destination is Iceland, and transatlantic connecting passengers. In his assessment, the last group can help fill aircraft, but requires two flights to complete one customer journey and does not necessarily deliver the same commercial contribution. A successful connecting operation therefore needs to examine contribution per itinerary and network dependence, not only load factor or passenger growth. This is the economic backdrop to the temptation to keep adding routes.

Seasonality is a fleet decision

Jónsson remembers Iceland Express as a useful example of matching capacity to a volatile seasonal market. The flexibility of externally supplied aircraft allowed the airline to expand flying in peak summer and contract as winter demand softened. He describes it as the profitable exception among the Icelandic airlines where he worked; that comparison is his account, not an independently audited finding. The lesson is not that outsourcing aircraft always wins, but that fixed commitments can outlast the traffic assumptions behind them. In an industry with large capital commitments, the ability to shrink can be strategically valuable.

WOW Air: the risks of becoming a different airline

In the saved transcript, Jónsson dates his WOW deputy-CEO tenure to 2014–late 2015 and describes a transition from externally operated capacity towards WOW’s own air operator certificate and leased aircraft. He recalls favourable fuel prices, aircraft costs and demand. He says he had not heard widebody plans during his tenure and thinks their introduction came roughly two years later; that recollection does not establish the decision date or a precise entry-into-service chronology. His assessment that later widebodies added complexity as finances tightened is retrospective. WOW’s Delhi experiment similarly separates introductory-fare publicity from sustainable yields and capital needs; he criticises WOW’s readiness, not India’s underlying market, without claiming to have made the launch decision.

PLAY: shocks and a subsequent change of model

Jónsson distinguishes PLAY’s fuel and tourism-demand pressures from WOW’s history. Contemporary AeroTime reporting says PLAY announced the leadership change on 17 March 2024, that Jónsson would continue work until 2 April and remain an adviser for several months. That does not establish a single March date for the end of every role. PLAY’s July 2024 issuer release identifies Einar Örn Ólafsson as CEO. A June 2025 issuer release confirms two aircraft began SkyUp ACMI operations in May under the Maltese AOC, with two more planned for summer, alongside an Iceland leisure strategy. The company’s own notice confirms cessation on 29 September 2025. Jónsson’s view that favourable leases could support a pivot, but that the transition lacked time, is retrospective: partial ACMI operations had begun, and neither that fact nor his interpretation establishes the financial viability of the full plan. ACMI changes the commercial customer and allocation of obligations; it does not automatically remove every cash-flow or counterparty risk.

Liquidity also governs supplier confidence

Even a disciplined airline can be vulnerable if counterparties doubt that it can meet its commitments. Jónsson’s description of WOW’s last period suggests how a lessor’s withdrawal of support may worsen confidence among other stakeholders. That is an important mechanism to examine, but his account is not a transaction-by-transaction audit of creditors’ decisions. Cost per available seat kilometre remains necessary, yet it is insufficient without cash reserves, capital access and a credible way to resize the operation. The difference between making a network appear viable and financing it through the next shock is central to the conversation.

What the Iceland story says about India

WOW’s brief Delhi service provides an India-specific counterexample to the idea that a high-profile international launch is proof of durable demand. Jónsson’s criticism is directed at the airline’s readiness and business model, not at India’s underlying aviation potential. For Indian airlines exploring longer sectors, more complex fleet types and connecting-hub ambitions, the useful question is whether the plan can survive currency, fuel, seasonality and capital-market stress. The Iceland cases do not dictate an answer for India; they offer a disciplined framework for evaluating the risk before a carrier commits itself.