BREAKING .NEWS: WOW Air ahut-down, all flights cancelled. The low-cost carrier (LCC) offered famously low fares starting at $69 across the North Atlantic from their base on Iceland and started the fare wars with a growing fleet of planes including Airbus A330 for long-haul routes to the US and even India. After the failed take-over by Iceland Air, cutting routes and selling planes, now the latest negotiations with Indigo, owner of other Low Cost Carriers and renewed negotiations with Iceland Air have also fallen through. WOW Air is the latest casualty of the fierce competition and has left passengers stranded.
BREAKING NEWS: Just hours after this post was published, WOW Air abruptly stopped selling tickets and announced the cancellation of all flights and shut down of operations. I’ll update this later with the fallout and tips for anybody holding a now useless WOW Air ticket!
WOW Air took their strategically located base in Iceland to offer cheap flights between North America and Europe, initially with single-aisle planes. They kicked off a fare war with one-way fares as low as $69, grew rapidly and even entered the long-haul market with Airbus A350 planes and routes to the West Coast of the US and India!
But larger LCC Norwegian and the established carriers fought back, drastically reducing fares across the Atlantic. And the long-haul market is very tricky for LCC, with none of them having yet succeeded in making it profitable.
With financial troubles growing, Iceland Air attempted to acquire WOW Air, but it fell through. Indigo, a large US investor with shares in LCCs like Frontier (US), Volaris (Mexico) and Wizz Air (Europe), stepped in to negotiate an investment.
All of Indigo’s investments are pure short-haul plays and it looks like that the financial problems and pressure from Indigo to focus on a more profitable business have contributed to this corporate restructuring: WOW Air will reduce their fleet from 20 to only 11 planes and is attempting to return planes to the lessors, including all Airbus A330. They are also selling 4 Airbus A321 for a cash injection into the business.
This will leave them unable to serve long-haul routes, including the just announced routes to India, focusing them again on short-haul low-cost services. It will make their operations easier, but might make it harder to find alternative route in Winter when the popular stop-overs in Iceland are a lot less enticing!
With the fleet reduction come layoffs of 110 staff and elimination of contract and short-term staff , reducing the work force to 1,000 employees. That seems like a rather tame reduction considering how much the business will shrink, so I’d be expecting another shoe to drop eventually…
Update March 2019: Now, Indigo has backed out of the negotiations and walked away from a possible investment. Iceland Air announced renewed interest, but also walked away within days. It’s unclear if there are any other potential investors, but given that these companies with industry experience have tried and walked away doesn’t give a lot of hope for WOW Air. This uncertainty is not helping, even though the traditionally busy summer season is almost here and could make WOW Air’s survival a little easier.
What should you do?
If you are considering to purchase a WOW Air ticket, I’d hold off until it becomes clearer what happens with the airline. If WOW Air runs out of money, they might have to stop operations suddenly, potentially stranding passengers abroad without any recourse.
If you hold WOW Air tickets already, check with your credit card company for possible refund options in case of bankruptcy. I’d also check for alternative ways to come home should they fold after your outbound flight. If it is an important business or personal trip, I’d look at alternatives now.
After my experience with failing airberlin, I would not recommend buying new tickets at this time – the cost of buying replacement tickets on short notice can far exceed the savings you might hope for. It cost me hundreds of dollars and lots of miles to replace my cancelled airberlin ticket!
Bottomline: The airline industry has seen a volatile year, with several European LCC going out of business. I’d expect the consolidation to continue and airlines operating at the margin carry additional risk. Buying travel from small providers and airlines in financial difficulties can prove to be more expensive than expected…
You can find the latest WOW Air Announcement here.
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