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Icelandic Start-Up PLAY Reports Strong May Performance
In a press release this past Wednesday, Icelandic carrier PLAY announced record passenger numbers and a high load factor to complement during its May operation. The four-year-old carrier was founded in 2019 and flew its first flight two years ago. After surviving the pandemic, the airline is now in a strong position, surpassing double the number of passengers compared to May 2022.
May Load Factor
The Reykjavik-based carrier announced in the release that the load factor for May was a whopping 85%. This was a significant positive change from the previous year as the airline’s load factor was only 69.6%. Load factor is a term used in the airline industry to measure the effectiveness of operations by comparing the available seats to how many were sold. A load factor of 85% is high for airlines, meaning that the company profits during that period.
In an article published by Forbes in 2020, the load factor required for a United States carrier to break even ranged between 72.5% and 78.9%. Even though PLAY is a European carrier and break-even points do vary between airlines, a load factor of 85% across the operation is a highly positive metric for the young airline. While the load factor isn’t the sole determining factor on if an airline is profitable or not, it is a very important one.
The high load factor from May correlates with other positive news that the airline released. May was also a record month in terms of passengers carried for the Icelandic airline. Carrying 128,894 passengers, PLAY flew more than double the number of people compared to May of 2022, 56,601.
This significant increase contributed to the higher load factor, however, there were also a higher number of seats available for sale. Since May of last year, the carrier has added four Airbus A320neos and one Airbus A321neo. These new aircraft have doubled the carrier’s fleet from five aircraft to ten. The increase in aircraft has allowed the carrier to expand the number of destinations served from 17 in May of last year to 26 the past May.
Marketing to the budget conscience customer, the low-cost carrier has fit well into the transatlantic market, also bringing increased tourism to Iceland. The airline reported that in May, 52% of passengers either began or ended their journey in Iceland, with the remaining 48% of passengers connecting through Reykjavik to either North America or Europe.
As PLAY is a low-cost carrier, the airline charges for extras such as seat assignments and bags. With the significant increase in load factor, the airline also announced a substantial increase in ancillary revenue. Ancillary revenue is revenue that is obtained by PLAY outside of the air transportation service which they provide. Essentially, this is revenue that the airline has made by charging for seat assignments and baggage fees. The ancillary revenue for the Icelandic carrier increased by 28% in May from last May, which is significant for the profitability of the airline.
Birgir Jonsson, PLAY’s CEO, is very optimistic for the young carrier’s future stating “The second quarter is looking promising with April’s financial results being better than anticipated. The strong demand and revenue growth we are experiencing bode well for the upcoming summer season and the year in general.” At the time of writing, PLAY anticipates operating its June schedule with a load factor 15% higher than last June, a promising statistic for the Reykjavik-based carrier during the busy summer travel season.
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