14 Pilots Exit Play for Icelandair Amid Global Talent Scramble

iceland budget airline play

Fourteen pilots from budget airline Play have resigned to join competitor Icelandair amid a global pilot shortage and rising wages. While acknowledging the challenge of retaining pilots, Play insists that the departures won’t impact operations and emphasizes its ongoing efforts to offer competitive salaries and benefits.

Hiring and retaining pilots a challenge

Fourteen pilots from budget airline Play have tendered their resignations after receiving job offers from industry competitor Icelandair, according to a press release from Play this morning, Vísir reports. The airline highlights a global shortage and fierce competition for qualified pilots, acknowledging that this has inflated salaries and complicated recruitment efforts.

‘Earlier this summer, it became apparent that rising wages due to competition would make it challenging to hire and retain pilots. As a result, we initiated an internal review of our pilot salaries and working conditions,” the press release noted.

Yesterday, news broke that Icelandair approached Play’s pilots with swift job offers, compelling them to make immediate decisions. “PLAY was not privy to the details of the offers due to the customary confidentiality between parties, but we received 14 resignations from pilots yesterday. While it’s always painful to lose valued team members, these departures will not significantly impact our operations or flight schedules,” the press release added.

Vísir reported yesterday that 18 pilots from Play were directly approached by Icelandair. In response, Play convened a meeting with these pilots on Wednesday evening.

According to Turisti.is, Play pilots earn a base salary of ISK 590,000 ($4,500 / €4,200), significantly lower than Icelandair’s ISK 860,000 ($6,500 / €6,000); Play subsequently offered their pilots a substantial salary increase yesterday, Vísir reports.

Complex factors in wage dynamics

In its press release, Play emphasised that pilot compensation is multifaceted and not easily comparable to other professions. “Recent reports, which are baseless, suggest this will dramatically affect our cost structure … but the impact on unit costs is negligible,” the press release clarified.

Play also took the opportunity to underscore its consistent efforts to improve employee compensation and conditions, extending beyond pilots to include flight attendants and other staff. “We would not have been able to retain our workforce if our packages were egregiously uncompetitive, as is sometimes insinuated,” the release noted.

The airline touted its role in generating approximately 550 new jobs in Iceland’s labour market within just over two years, and its contribution to reviving tourism and reducing travel costs. “Moving forward, Play is committed to offering competitive conditions to attract and retain top-tier talent as we build a company of which we can all be proud,” the statement concluded.

PLAY Reports ISK 1.5 Billion Loss in Q1, Maintains ‘Strong Balance Sheet and Healthy Cash Position’

iceland budget airline play

Iceland’s newest discount airline, PLAY, reported a loss of ISK 1.5 billion [$11.5 million; €10.78 million] in the first quarter of 2022. Per the Interim Report (January – March 2022) issued by the company this week, this comes as no real surprise, and can largely be credited to global factors, namely, “[t]he Omicron variant impacted revenue during the quarter, and the war in Ukraine resulted in higher fuel price towards the end of the quarter.”

The negative EBIT (Earnings Before Interest and Taxes) was “expected,” writes CEO Birgir Jónsson, who remains optimistic about the airline’s prospects. Travellers are showing an increasing willingness to fly, and the airline’s “financial position…continues to be strong, with a strong balance sheet and healthy cash position.” PLAY’s equity ratio stands at 22% ($56.5 million; €52.7 million; ISK 7.3 billion) and it is maintaining a cash position of ISK 5.4 billion [$43 million; €39.2]. Currency risk is a factor in the airline’s operations, “…since a large part of its cash position is in the ISK, while PLAY’s operating currency is in USD. PLAY is therefore exposed to the fluctuation of the two currencies against each other.”

Rapid network expansion

Between January and March 2022, PLAY carried 57,500 passengers, with a 20% jump in passenger numbers from February to March. The airline hired 45 pilots and over 100 new cabin crew members in Q1.

PLAY is steadily expanding its network and plans to continue to do so in Q2. Service to Baltimore/Washington, D.C. began in April; service to Prague, Boston, Lisbon, Gothenburg, and Brussels began in May, with destinations Stavanger, Malaga, and Trondheim on the horizon before the end of the month. In early June, service to Palma de Mallorca and Bologna will commence, as will daily flights to New York in the US. Indeed, PLAY will be the first airline to operate international flights from New York Stewart International Airport (located about 75 mi; 120 km outside of New York City) post-pandemic.

‘Strong booking momentum’

As part of its strategy to counter rising fuel prices that have resulted from the war in Ukraine, however, PLAY is adjusting its summer fleet plan and will not be offering three weekly flights to and from Orlando, Florida this fall as planned. Additional measures to counter rising fuel prices include a fuel hedging strategy, a fuel surcharge, and ongoing schedule adjustments “to eliminate unprofitable flying.”

Passenger hesitation in the wake of the Omicron variant and global unrest appears to be waning, and bookings are on the upswing. “In February, [there were] 59% more sold seats compared to January, despite the war in Ukraine. This improvement in booking inflow has continued into the second quarter of 2022, with more than fourfold increase in sold seats in April compared to January. Because of this strong booking momentum,” concludes the report, “PLAY expects to report improved utilization in the coming months.”

Seaman’s Association: Government’s Stalled Negotiations with Coast Guard Pilots “Unacceptable and Disgraceful”

TF-GRÓ Icelandic Coast Guard Helicopter

The Icelandic Seaman’s Association has issued a strongly worded statement in support of Iceland’s Coast Guard pilots, calling the government’s delay in negotiations “unacceptable and disgraceful,” Mbl.is reports. The Coast Guard pilots have been without a contract since December 31, 2019.

‘A hopeless position’

As Iceland’s Coast Guard pilots have police powers, they are legally prohibited from going on strike, which puts them in “a hopeless position” when it comes to contract bargaining, says Sonja Bjarnadóttir Backman, a lawyer with the Icelandic Airline Pilots’ Association (FÍA). Per a statement issued by FÍA in April, Coast Guard pilots’ “labour agreements have historically been linked to CLAs of comparable professions, for the longest time through a statutory link, or until 2006.”

That arrangement is now under “vigorou[s] attack” by the Ministry of Finance, however, which FÍA says is pushing “a clear demand for a new, original wage agreement without links to comparable professions. This will not only affect pilot benefits but will also greatly increase staff turnover among the Coast Guard’s pilots.”

With “hundreds of millions of ISK” spent on training each pilot, high turnover amongst the Coast Guard’s pilots is clearly costly to the state monetarily, but also has the associated cost of lost experience and knowledge among the highly trained professionals who oversee rescue operations at sea. “Increased staff turnover is therefore quick to more than offset the disconnection of wages from comparable professions,” continues the FÍA statement.

The FÍA also takes issue with the Ministry of Finance’s desire to abolish the pilot’s seniority list, which it says is “one of the cornerstones of safety culture in aviation around the world.”

“This arrangement has proved successful, as such lists ensure transparency, professionalism, and that pilots can report incidents without fear of punishment. The Ministry has presented no objective arguments to support its position, and in fact the pilots’ negotiation committee has perceived a lack of professional knowledge and understanding of the unique position of the aviation industry in the negotiations.”

(Read the FÍA’s full “Resolution from the Pilots of the Icelandic Coast Guard here, in English.)

See Also: Coast Guard Helicopter Unmanned Due to Pilot Shortage

“It’s happened that there’s no helicopter available when needed,” continues to the statement issued by the Seaman’s Association. Indeed, due to staff illness, there was no helicopter available when a serious traffic accident occurred in South Iceland this week. Since it was not possible to man the helicopter crew, the injured person had to be transported by ambulance – making the trip one and a half hours longer than it would have been by helicopter.

According to Ásgeir Erlendsson, communications officer of the Icelandic Coast Guard, for two thirds of the year, the Coast Guard has two crews on call, but for one third of the year, there is just a single crew on duty. In the past, illness or other staffing challenges have been solved by calling in staff who were off duty. That was, however, not possible on the day of the accident in question.

This staffing shortage was denounced by the Minister of Justice, who wants to increase the number of helicopter pilots. But despite the Seaman’s Association’s later claims, this incident was said to be unrelated to the pilots’ ongoing wage dispute.

‘Ambulances of the sea’

The Seaman’s Association statement, which was cosigned by the Association of Ship Captains, the Association of Engineers and Metalworkers, and the Grindavík Seaman and Engineer Association, also drew particular attention to the fact that with only one helicopter on duty, it is not possible to rescue distressed sailors who are more than 20 nautical miles from land.

“If ships are outside the 20 nautical mile-mark,” reads the statement, “they have to sail to meet a helicopter with their injured or ill. Minutes matter in these cases—let alone hours.”

The Seaman’s Association presses the government to ensure that there are always two helicopters, or “ambulances of the sea” available, and concluded by saying that having only one helicopter on duty could have grave consequences for Icelandic and foreign fishermen alike.

Icelandair Signs Five-Year Contract with Pilots Association

Icelandair has signed a contract with the Icelandic Pilots Association (FÍA), RÚV reports. The contract will be in effect until September 30, 2025.

Representatives from both parties issued statements about the contract, with Icelandair CEO Bogi Nils Bogason saying that it would ensure more working hours for pilots and “give the company more flexibility to develop Icelandair’s route system.” Chair of FÍA Jón Þór Þorvaldsson stated that the “pilots are proud of having achieved the goals that were set out, which will further increase Icelandair’s competitiveness. The agreement ensures that the company is well-positioned to expand into any market long into the future and take advantage of the opportunities that will undoubtedly arise.”

Icelandair has yet to reach an agreement with cabin crew workers who unanimously rejected Icelandair’s offer earlier this week. The Icelandic Cabin Crew Association’s board said all members were “completely opposed to outright overturning the current wage agreement and sacrificing the terms and rights that have taken decades to build up.” The group’s chairperson, Guðlaug Líney Jóhannsdóttir, noted that cabin crew last received a wage increase in 2018, and the proposed contract did not account for one until 2023 – effectively a five-year wage freeze. The wage hike in 2023 would also be dependent on whether Icelandair makes a profit. Cabin crew would receive a one-time payment of ISK 202,000 ($1,380/€1,270), but this would also depend on the success of Icelandair’s planned public stock offering.

Bogi Nils has come under fire from labour unions VR and ASÍ regarding the current wage dispute. The CEO has baulked at this criticism, saying “We need to be able to control labour costs and this can’t be higher for us than it is for our competitors.”

Icelandair Lays Off Record 2,000 Employees

icelandair757

Icelandair laid off over 2,000 employees yesterday, representing the vast majority of their staff. RÚV reports that nearly 900 of the airline’s 940 flight attendants have been let go, as well as 421 pilots, with only 26 pilots remaining in the company’s ranks. It is the biggest mass layoff in Icelandic history, exceeding the number of layoffs resulting from WOW air’s bankruptcy last year (both direct and indirect).

At the beginning of March, Icelandair had 3,400 employees. The airline laid off 240 at the end of March. The company’s remaining staff is either subject to a reduced employment ratio or salary cuts.

Minimal operations continue

The Icelandic government made a short-term contract with Icelandair to sponsor a number of flights to London, Stockholm, and Boston, which ends May 5. The airline also recently signed a contract to operate 45 cargo flights from Shanghai, China to Germany and the US.

Opposition MPs have criticised the government for not doing more to support the airline, which many consider to provide an essential service. Government ministers have pointed to the airline and its shareholders as responsible for the company.

Icelandair CEO hopes to rehire staff in future

Icelandair CEO Bogi Nils Bogason expressed his hope that the company would be able to rehire the staff soon. “Of course we hope so, these are all great employees and when the country starts to rise again and markets open, then we will be ready to jump in […] and we hope it will happen sooner rather than later, but at this point in time we cannot make any promises when and how that will happen.”

More Women Graduating from Flight School

Nearly a third of the recent graduates from the Icelandic Flight Academy, or 16 out of 55 students, were women, RÚV reports. There has never been a higher proportion of women to graduate from the academy’s commercial aviation program.

This is the second year in a row that the number of women aviation graduates has topped previous totals. Last year, the Keilir Aviation Academy (which recently bought the Icelandic Flight Academy) reported that women made up roughly a fifth of their commercial aviation students, i.e. 37 women enrolled in fall 2018. The academy chalked this development up to young women increasingly pursuing careers that have traditionally been reserved for men.

“The lack of women pilots in commercial aviation makes it so that young women think there’s something that will keep them from [following this career path]. I want to change that,” remarked Telma Rút Frímannsdóttir, who graduated from Keilir a couple years ago. “I’m proud to be a commercial pilot and I want to encourage young women to become commercial pilots as well.”

As of 2018, only about 5% of commercial pilots worldwide were women. The percentage at the same time was somewhat higher in Iceland. Of the 807 pilots and captains working for airlines in Iceland last year, 57 (about 7%) were women.