Iceland’s Play slashing hub-and-spoke activity as it shifts to new model

Icelandic budget carrier Play expects to slash the proportion of hub-and-spoke operations in its activity from 75% to just 30% as it adopts a new business model. Leisure travel will account for 35% – up from the current 25% – while charter and wet-lease services will account for the remaining 35%. Play expects to make the transition to the new model over the next 12-18 months. It opted for the strategic change to focus on its profitable point-to-point leisure operations, and reduce its loss-making hub-and-spoke activity. “This [hub-and-spoke] part of [our] network is unlikely to become adequately profitable in the near future with the current operational structure,” says CE Einar Orn Olafsson. Play operates to five North American destinations but will cut back to serving two or three destinations daily in summer, reducing operations further in winter. Olafsson says the stable margins of its leisure operation, in contrast to hub-and-spoke, show “no signs of tapering off”. But the leisure operation cannot accommodate Play’s entire fleet, currently 10 Airbus jets, so the change of model will include applying for a Maltese air operator’s certificate – which Play expects to have in spring – in order to place fleet capacity in other locations.<br/>