PLAY CEO Birgir Jonsson at CAPA’s Airlines in Transition 2022 summit
Birgir Jonsson, CEO of Icelandic start-up PLAY, witnessed the pressures of running an airline during his time at WOWair. Now, taking the positives from that operation and learning from the mistakes he believes PLAY will prove more successful serving Europe and North America from Iceland as well as bringing a low-fare option into the trans-Atlantic market through its mid-Atlantic home. The executive spoke to CAPA TV on the sidelines of the CAPA Airline Leader Summit - 'Airlines in Transition 2022’ about latest industry trends, the start-up of the carrier, the operational efficiencies of the A320neo and A321neo in the markets being served, using Iceland’s location to its advantage, how low-fares are key to its strategy, the need for additional peak capacity at airline’s Keflavik International airport hub, digital transformation in the industry and keeping control of the consumer, and the growing importance of sustainability.
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Transcript
Birgir Jonsson:If I have to be brutally honest, the COVID pandemic was actually a blessing for PLAY. We were able to obviously secure the right aircraft, make very good deals with suppliers, and there was a lot of, let's say, free capacity on many levels in the industry. We were able to get the right people. We didn't have to headhunt them from various companies or overpay them. Everyone was really eager and thankful to get the opportunity to be employed again. So for us, we saw a huge opportunity in the pandemic and are coming quite strong out of it. Extremely important because we are going into a proven business model and we decided to list on a stock exchange. And we did that very successfully. We raised about $100 million last year. The main thing for that is because it brings discipline into the management. It brings a demand for a clear vision of a future strategy and basically the way you do things. And of course, when you go through life, you make mistakes and you learn from them and you get better. Yeah. And so we believe, and obviously our investors believe, that This is a business that you can be successful in if you do it correctly, and we believe that as a listed company, we have to be that open and we have to report our situation and our state of things so clearly that people feel secure of being involved. It's a really efficient aircraft, especially in these times, fuel efficient. It's a technically reliable aircraft. The maintenance costs, especially if you have a new one like we do, it's just a very proven, secure, and reliable aircraft. You mentioned our location. That's not a key element, that's the only element. Because as a startup airline, we would have nothing to offer if we would have a hub in Europe and trying to fly between European cities. We are— our only kind of reason for being alive is that we are using these geographical locations, and we have to also then find city pairs in the US and Europe that are underserved from like the more direct routes of where there's more competition, more capacity, and maybe obviously stronger and more kind of Established airlines. When you go into a competitive market doing that with a lower cost base, and we can also obviously do that because there are other companies running this precise business model, and then it simply becomes a question of can we offer the same product to the customers at a better price? And if the answer is yes, then we are good. We are really focused on utilizing our aircraft within the 24-hour loop so that, so that we are, we are in the afternoons, we're doing a run to Europe, no, to the US, back in Iceland in the morning, and then a return trip to Europe. So we have to— this is a really great utilization for our crew and for our aircraft. So we don't want to break that model. We want to add our destinations on the East Coast of the US and then find other destinations in Europe. You mentioned Liverpool. That's a great example of it because we have— there's a point-to-point traffic there. A lot of people from Iceland are going to Liverpool to see the football. A lot of people from England are going to Iceland as a tourist. And then we also can offer good connections to the US from Liverpool. For example, Florida, we're flying to Orlando using an A321LR. So we basically have a few market segments behind each destination. And if you can find those kind of destinations, they don't always have to be the most exciting cities in the world and the most metropolitan and cosmopolitan cultural hubs, but there are people everywhere and people need to travel and want to travel. And we see ourselves as a transport company, not a tour operator or a travel agency, so we're just moving people from point A to B. Yeah, that's a huge concern. Thankfully, not only for us, also for other airlines, and something that the Icelandic authorities must be looking at and in fact are investing a lot in. We are building a new terminal and there's a lot of things, but there's a physical constraint of simply how many aircraft you can simply turn around in the morning or in the afternoon when at peak hours. And this is why we don't have any aspiration of being the biggest airline in the world or something. We just want to be really focused on having a profitable and flexible route network. That's not a transformation, it's like the question of if you want to live or die. I mean, everyone has the same hardware and everyone is more or less operating from the same airport. So it's how you manage your companies, how you manage your costs, and increasingly how you sell your products. Because I'm afraid that the aviation industry will lose control of the market. To bigger companies, for example, like Google or others that are better at placing the products in front of the customer, and airlines will simply become a subcontractor for someone that actually owns the customer. Because if you own the data, you own the customer. And this is a huge thing, and it's really good to see that the aviation industry is really waking up to the fact that it's not only about the aircraft. Sustainability is so much more than only the fuel burn. Because that's only one part of it. It's also how you deal with culture, how you are a responsible citizen in society. And we see that younger generation of people, they are making this factor in, you know, when they decide to fly. I have offered people a job, you know, digital kind of techy people, and they say, no, we don't want to work for an airline. So this is becoming a real business issue. I mean, investors, funds, they have increasingly ESG targets. So this is becoming much more than a kind of a nice thing to talk about, obviously outside of the fact that we as a species need to do something about it. But this is becoming a real business issue, and that's also a really positive thing. Thank you.
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