Thousands of People Affected by Closure of Icelandic Airline Fly PLAY

Icelandic airline Fly PLAY hf. has ceased operations and cancelled all scheduled flights as of 29 September 2025. The company reported persistent financial difficulties, a decline in ticket sales, and internal disagreements over its future direction. PLAY, which had operated routes between Iceland, Europe, and North America, has therefore ended its services abruptly. The suspension leaves thousands of passengers affected and raises wider questions about stability in the low-cost aviation market.

Passengers holding PLAY tickets are instructed to seek refunds through their original payment method. Passengers who paid with credit cards are advised to reach out to their card providers to file a claim. Travellers who booked package holidays within the European Economic Area are advised to approach their travel agencies for assistance. If bankruptcy proceedings follow, compensation requests must be directed to the administrator handling the case, a process that is usually slow and often complex.

The shutdown forces passengers to make alternative travel arrangements, in many cases at short notice. Other airlines may introduce temporary reduced "rescue fares," although such offers are usually limited in scope and availability. A sharp rise in demand for last-minute flights is anticipated, which will probably push ticket prices higher on the impacted routes. Travelers are encouraged to carefully track available options to minimize extra expenses and arrange substitute flights to reach their destinations.

The departure of PLAY from the market affects route competition, particularly on flights between Iceland and Europe. With fewer available flights, budget choices could become scarcer, reducing flexibility for passengers and likely pushing average ticket prices upward. While European Union regulations provide certain passenger protections, their application is complicated when an airline has ceased trading. Claims and compensation are less certain in insolvency cases, leaving many customers uncertain about financial recovery.

The collapse of PLAY underscores ongoing difficulties in the aviation industry, particularly for smaller airlines. Rising operational expenses, variable customer demand, and financial pressures persist as significant challenges to the viability of budget airlines. This scenario highlights for travelers the importance of understanding their rights, keeping a close eye on their reservations, and preparing for sudden travel disruptions. Airline bankruptcies cause major disruptions, and passengers impacted often face lengthy processes to get refunds or make alternative travel arrangements.