Icelandic Airline PLAY Ceases Operations Amidst Financial Turmoil
Icelandic budget airline PLAY (Fly PLAY hf.) officially ceased all operations and declared bankruptcy on Monday, September 29, 2025, following a period of sustained financial underperformance and mounting debts. The abrupt collapse left approximately 400 to 500 employees jobless and thousands of passengers stranded across its network. The airline, which began operations in 2021, cited poor ticket sales, negative media coverage, and internal disagreements over strategy as key factors leading to its downfall.
Massive Carbon Bill Looms Post-Collapse
Adding to the airline's financial liabilities, PLAY faced a substantial carbon emissions bill estimated at over 1.6 billion Icelandic Krónur (ISK), which was due just one day after its operations ceased. This significant payment is tied to the EU-wide Emissions Trading System (ETS), a mechanism requiring airlines operating in Europe to purchase carbon credits to offset their greenhouse gas emissions.
Details of the Emissions Debt
According to the Environment Agency of Iceland, PLAY produced approximately 165,000 tonnes of carbon dioxide in 2024. With each carbon unit valued at just over €70 (approximately ISK 9,900), the gross value of these emissions amounted to around ISK 1.6 billion, prior to accounting for any free allowances or existing credits. While PLAY was allocated 44,184 free allowances for 2024 and 28,000 for 2025, the airline still faced a considerable payment. Missing the payment deadline incurs a penalty of €100 per tonne on top of the standard carbon cost, a sanction described as 'quite harsh' by Einar Halldórsson, team leader for air quality at the Environment and Energy Agency.
Broader Financial Strain
The carbon bill is not the only outstanding debt for the now-defunct airline. PLAY also owed Isavia, the operator of Keflavik International Airport, around half a billion ISK in landing fees for the months of August and September. The airline's accounts for 2024 showed it spent USD 6.1 million (about ISK 740 million) on emissions allowances, a decrease from USD 10.9 million (ISK 1.3 billion) in 2023. The uncertainty surrounding whether these final, substantial bills will ever be settled remains a key question following the airline's abrupt cessation of services.
5 Comments
Muchacha
This just punishes the wrong people, not the environment.
Bella Ciao
It's crucial for airlines to account for their environmental impact, but this huge debt post-collapse just adds to the chaos for employees and creditors. Perhaps mechanisms are needed to prevent such liabilities from accumulating to this extent.
Karamba
The EU ETS is a vital tool for reducing emissions, yet the timing of this bill on a defunct airline seems more symbolic than practical. We need effective carbon pricing without completely crippling companies already struggling.
Bella Ciao
While carbon pricing is essential for climate goals, it's unclear how a bankrupt entity can settle such a massive bill. This highlights a flaw in enforcement when businesses fail.
Muchacha
On one hand, the environmental debt must be addressed to encourage sustainability, but on the other, this amount will likely never be collected, leaving taxpayers or other creditors to bear the brunt indirectly. The system needs to ensure payment before full collapse.