Icelandic airline WOW Air collapsed in March 2019, leaving passengers stranded and leaving Iceland with only one airline. This text appears again on the development of WOW Air over its eight-year operation and what led to its downfall.
Based in 2011
WOW Air was established in November 2011 by Icelandic entrepreneur Skúli Mogensen. He noticed a spot available in the market with low-cost operations to and from Iceland and a chance to market flights to each Europe and North America.
It might use the same technique to flag provider Icelandair, with the hub location of the nation. It might market flights each as single routes to and from Iceland in addition to routes between the US and Europe (and later Asia) with a connection in Reykjavík.
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Rising routes rapidly
The airline began small, serving Paris Charles de Gaulle first (from May 2012), however expanded rapidly. It quickly added flights to London Gatwick, Copenhagen Kastrup, and Berlin Schönefeld. As a part of this growth, it took over Iceland Express, a small airline based in 2002 that operated to a number of European and North American locations.
Passenger numbers grew rapidly. In 2013 it carried 400,000 passengers and elevated this to over 1,000,000 in 2014. Providers to america started in 2015, and to Canada in 2016. With these new routes, passenger numbers reached 3.5 million in 2018. And it launched flights to Delhi in November 2018 (as a part of a technique to develop to Asia). But it surely dropped this route (together with Chicago and Los Angeles) simply over a month later, as an early public signal of difficulties.
Dealing with monetary difficulties
Dropping these routes got here quickly after the airline began to point out monetary issues. Surging oil costs had been possible the primary trigger of those issues. Costs per gallon had risen from $0.93 in February 2016 to $1.85 in February 2018, and additional to $2.25 in September 2018. Such rises hit many airways arduous. However as a low-cost airline and nonetheless going by its preliminary growth, WOW Air was significantly affected. It had additionally simply acquired new plane (three Airbus A330-300s) as a part of an growth. This turned out to be horrible timing, given the rise in working prices.
The competitors was definitely an element too. The transatlantic market is extremely aggressive, with many full-service airways providing direct flights and having extra flexibility in pricing. Low-cost airline Norwegian was additionally providing extra direct routes utilizing environment friendly Boeing 787 plane.
Funding makes an attempt
In November 2018, it was introduced that Icelandair was trying on the full acquisition of WOW Air. With comparable methods and routes, this might have labored. However the proposed deal fell by on the final minute, with Icelandair claiming that WOW Air couldn’t fulfill sure circumstances of the acquisition.
There was curiosity too from Indigo Companions. With its investments in different low-cost airways resembling Frontier and Wizz, it could have been match for WOW Air, however funding did not proceed.
Collapse of the airline
With out funding, WOW Air’s issues mounted. It reduce employees, and returned 4 plane to lessors, and canceled additional plane orders. CEO Mogensen even injected an extra €5.5 million ($6.5 million) of his personal cash into the airline.
On March 28th, 2019, WOW Air introduced it was ceasing operations. Passengers had been left stranded abroad, however the collapse was not likely a shock. The airline had been canceling flights for days beforehand. And there had been in depth adverse press within the weeks and months main as much as it. This definitely didn’t assist because the airline tried to take care of funding gives and generate income.
On the time of its collapse, WOW Air’s fleet consisted of Airbus A321-200 and Airbus A321neo plane. These discovered new properties with Air Canada Rouge, Condor, Turkish low-cost airline Onur Air, and leasing corporations Bocomm and ALC.
The collapse additionally had a severe impression on the financial system of Iceland. Tourism types a significant a part of Iceland’s financial system, and WOW Air performed an enormous function on this with its low-cost flights. The continuing grounding of Icelandair’s 737 MAX plane didn’t assist both. Bloomberg predicted that the county’s financial system, beforehand on monitor to develop by 1.8% in 2019, would, in actual fact, contract by 0.4%.
Making a comeback?
There was loads of dialogue concerning the doable return of WOW Air. As early as September 2019, there have been reviews of a brand new service that might function to the US solely, with elevated consolation and repair ranges.
Then once more, in May 2020, there was speak of resuming service underneath a brand new ‘HonestFares’ model with low costs however extra inclusions than prior to now. The pandemic and slowdown in aviation in 2020 have undoubtedly affected this, and we must wait to see what, if any, service resumes. The wowair.com web site maintains that “WOW air is committed to making flying fun again!” and we’ll report as quickly because it broadcasts extra.
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