Iceland’s Low-Cost Play Airlines Goes Bust, Leaving Thousands of Passengers Stranded: What You Need to Know About Your Rights

Published on October 2, 2025

Iceland‘s low-cost Play Airlines has ceased operations as of October 1, 2025, leaving around 18,000 passengers stranded and approximately 400 staff members without jobs. The airline, which began operations in 2019, had grown in popularity for providing affordable flights between Keflavik International Airport (near Reykjavik) and several key destinations in Europe and the United States. In an abrupt announcement on its website, the carrier stated it had “ceased operations, and all flights have been cancelled,” leaving its customers scrambling for alternative travel arrangements.

Play’s sudden closure marks a significant development in the airline industry, particularly for passengers who have booked future flights or are currently stranded. In this article, we will break down what happens next for Play Airlines passengers, detailing their rights to compensation, how to secure refunds, and what assistance is available to travelers affected by this bankruptcy.

The collapse of the airline has prompted many travelers to turn to other airlines for help, with some carriers offering ‘rescue fares’ to those stranded by the sudden shutdown. This article will guide you through the steps you can take to resolve any issues regarding Play Airlines cancellations, refunds, and compensation, ensuring that your travel plans are not completely derailed by this unforeseen event.

Key Highlights:

• Play Airlines Closure: The low-cost Icelandic carrier ceased operations, leaving thousands stranded.
• Stranded Passengers: Approximately 18,000 travelers are affected by the airline’s sudden bankruptcy.
• Refund and Compensation Rights: A guide on how passengers can claim refunds and compensation from Play Airlines.
• Rescue Fares: Some airlines are offering special fares for stranded passengers to find alternative flights.
• Travel Insurance: How your travel insurance can assist in covering costs for cancellations and delays.

Play Airlines: A Brief Overview

Play Airlines, founded in 2019, rapidly grew in popularity due to its affordable flight options. The carrier offered budget-friendly services on routes between Reykjavik and several European cities, including London Stansted, Amsterdam, Paris CDG, Alicante, and Faro. In addition to European destinations, Play also flew to Baltimore-Washington International in the United States, offering passengers an affordable gateway to North America.

However, on October 1, 2025, Play Airlines shocked the industry by announcing the immediate cessation of all operations. The airline’s final flight was from Reykjavik to London Stansted, which landed just before the company’s collapse. This abrupt termination has left thousands of passengers stranded, with no immediate assistance from the airline.

What Should Passengers Do Now?

If you are a Play Airlines passenger, there are several steps you can take to resolve the situation:

1. Check Alternative Flights: Other airlines may offer ‘rescue fares’, which are discounted tickets for those who were booked on Play Airlines. Passengers are encouraged to check flights with other carriers, and in some cases, low-cost tickets may be available.
2. Contact the Airline for Refunds: Passengers who had upcoming flights with Play Airlines are entitled to refunds. The airline has advised that customers should contact their payment card issuer if the ticket was purchased with a credit card, or their travel agency if the booking was part of a package tour.
3. Travel Agency Support: Those who booked package tours (including flights, accommodations, and other services) should reach out to their travel agencies for assistance. The agencies are typically responsible for handling cancellations and facilitating refunds under European Union consumer protection laws.

Understanding Your Rights to Refund and Compensation

As a consumer, you are entitled to certain rights under both EU passenger protection regulations and standard industry practices. Here’s a breakdown of your options:

• Refund for Cancellations: If your flight is cancelled due to the bankruptcy of Play Airlines, you are entitled to a full refund. The Icelandic Transport Authority has confirmed that all passengers who paid with credit or debit cards should contact their card issuer for a refund.
• Rescue Fares: Alternative carriers may offer discounted tickets (known as ‘rescue fares’) to stranded passengers. However, you will need to show proof of your original booking to take advantage of these fares.
• Package Tours: If you booked a combined flight + accommodation package through a travel agency, you are eligible for assistance under the EU Package Travel Directive. Your travel agency should offer solutions for rebooking or arranging alternative transport.
• Travel Insurance: If you have travel insurance, you may be eligible for compensation. Scheduled Airline Failure (SAFI) cover, which is available through some travel insurance policies, may help you recover the cost of your flight if the airline goes bankrupt. It is important to check your insurance policy for specific details and to ensure that the policy covers airline bankruptcy.

What About Accommodation and Meals?

If you are stranded abroad, there are additional expenses you may incur, including accommodation and meal costs while waiting for alternative flights. If you have travel insurance, you may be eligible for reimbursement for these expenses, depending on your policy. Commonly covered costs include:

• Accommodation: If you are stuck overnight due to the airline’s bankruptcy, your insurance might cover additional hotel stays.
• Meals: Extra meal expenses during delays may also be covered by travel insurance.

It’s important to keep receipts and detailed records of any additional expenses incurred while waiting for your next flight. Contact your insurer immediately to determine your coverage.

What to Do if You Paid with Cash or Bank Transfer

If you paid for your flight with cash or via bank transfer, you will need to file a claim with Play’s bankruptcy estate. This is typically a more complex process, and passengers in this situation should be prepared for delays. It may be useful to seek legal advice if necessary to understand your specific rights and how to proceed with your claim.

Conclusion: Taking the Right Steps After Play Airlines’ Bankruptcy

The sudden bankruptcy of Play Airlines has disrupted the travel plans of thousands of passengers, leaving many stranded and confused about their next steps. However, by understanding your rights to compensation and refunds, reaching out to alternative carriers, and using travel insurance, affected passengers can navigate the challenges posed by the airline’s closure. If you’ve been impacted by this situation, it is crucial to act quickly, keep detailed records, and reach out to your card issuer, travel agency, or insurance provider for assistance.