LCC PLAY emerges as Icelandair undergoes a resurgence

Before COVID-19, Iceland had been one of Europe’s most dynamic markets, characterised until 2018 by strong growth.

The national airline Icelandair grew at double digit rates, with a North Atlantic connecting strategy via its Reykjavik hub. WOW air entered in 2012 with a similar approach at low cost and grew even more rapidly. The point-to-point market also attracted other European LCCs.

However, fierce competition weighed on both Icelandic operators, who fell into losses before WOW air’s overexpansion led to its bankruptcy in Mar-2019. Icelandair started restructuring, but then the COVID crisis struck.