by Hugh Morris, The Telegraph, March 25, 2019
Asked whether the airline had gone bust, the person in charge of Wow Air’s Twitter account said “the current situation is that WOW Air is still working”. “Current” is the operative word for an airline which, after struggling for months, appears closer than ever to failure.
The future of the Icelandic carrier was in the balance on Monday as it looked to restructure and shed its debts after talks with Icelandair over a possible takeover collapsed.
The cancellation of an early morning service from Gatwick to Reykjavik sparked concerns that more flights might follow (several to other destinations were also grounded), but the airline said operational reasons (“delay of an incoming flight”) had forced it to combine its two London departures.
Of the two due to depart Gatwick later on Monday, one remains “scheduled” on the airport's departure board, but of the other, passengers are told to “enquire [with the] airline”. WOW planes are still departing Reykjavik, though inbound services to the UK are delayed until later this evening.
What is WOW?
The young, trendy airline, conspicuous in its bold, pink colour scheme, started life in 2012, and before long was selling headline-grabbing fares between the UK and North America - think £99 from London to New York, one way.
It quickly grew, launching new routes every few months and positioning itself at the centre of the low-cost, long-haul revolution taking place between Europe and the Americas.
“The conventional wisdom is that low-cost, long-haul doesn’t work,” the airline’s founder and CEO, Skuli Mogensen, told Telegraph Travel in 2015. “We think it has never been applied properly. And we think the timing is now perfect.”
WOW used its Icelandic base to run transatlantic services, meaning two legs for most European travellers. Flying via the increasingly popular tourist destination of Reykjavik, WOW could use the city’s Keflavik airport as both a hub and end point, helping ensure its comparatively small single-aisle Airbus A321 planes were always full. It also tried to place a focus on customer service, with Mogensen keen to found a budget brand with a smile.
But despite hefty additional charges for baggage and other add-ons, the airline wasn’t making money.
What went wrong with WOW?
At its peak, WOW was looking to rival Norwegian in terms of expansion. Then came the cuts. Last year, the carrier dropped routes to Pittsburgh, St Louis, Cleveland and Cincinnati, and put Los Angeles on hold. Since then Chicago, Dallas and San Francisco have fallen by the wayside too, as has New York JFK (WOW still flies to Newark, however).
The airline’s route to Delhi, the first budget foray into India, was over before it began after WOW returned its Airbus A330s to the lessor, leaving the carrier without an aircraft to run the service. At its time of launching, WOW described the route as “the first step in the carrier’s next phase of cross-continental expansion”.
Airline failures per year since 2005
Before halting its Los Angeles service, the lack of long-haul planes meant passengers were forced to stop for refuelling in Edmonton, Canada, after already pausing in Reykjavik. All in all, things were not going great.
WOW is still selling tickets six North American destinations - Boston, Detroit, Montreal, New York, Toronto (due to launch in June) and Washington. According to Air Fleets, WOW’s 11-strong fleet today consists of 10 A321 and one A320, with all three of its long-haul aircraft in storage.
From the end of March, the airline is due to move its base from Gatwick to Stansted, consolidating its twice daily flights from London to Iceland into one.
The latest statement from airline reads: “A majority of WOW Air bond holders and other creditors of WOW Air are in advance discussions with the aim of reaching an agreement on a voluntary restructuring including an agreement of converting current debt into equity and fund the company towards long term sustainability.”
WOW air | Dropped North American routes
Why did WOW struggle?
“It simply costs more than $99 to fly between continents,” said Kristjan Sigurjonsson, editor of Icelandic news site Turisti, of WOW’s transatlantic struggles.
History has shown how difficult it is to make a success of low-cost, long-haul. While Norwegian grew too fast and is now heavily laden with debt, it offered a slightly more attractive product than WOW, flying direct and in its new 787 Dreamliner planes. Like Nowegian, which sought to raise $350 million this year, WOW was after a buyer.
Takeover talks with Icelandair failed first in November and again last week, with the Icelandic flag carrier now saying its “possible involvement in WOW air’s operations will not materialise”. This month, an investment proposal with private equity firm Indigo Partners also fell through.
The airline's financial troubles appear to have had an impact on its ability to pay delay compensation as governed by EU laws. One passenger, who was bumped from a flight from Gatwick to Reykjavik in August last year was still waiting for €442 (£379) compensation. Documents seen by Telegraph Travel show a claims agent from WOW air explaining that "disruptions within the company in the last couple of months... have been slowing things down".
Should I book a flight with WOW?
Given the route closures and takeover talks, as well as the failure of low-cost, long-haul upstart Primera last year and the financial difficulties faced by Norwegian, travellers could be forgiven for thinking twice about booking with WOW.
Those who had bought a flight on one of WOW’s cancelled routes were offered refunds, of course. But travellers who book a flight that isn’t part of a package holiday are not covered in the event of their airline going bust. For added peace of mind, some travel insurance policies offer cover for the failure of an airline. This is often referred to as Scheduled Airline Failure Insurance (SAFI). The level of this protection varies, but Travel Plus (travelplusinsurance.co.uk) – offers cover up to £2,500, not only for loss on air tickets and the extra cost of replacing flights, but also for items such as a villa deposit, which you may lose if you can’t travel because of the airline’s failure. Check with your provider if it offers SAFI cover — it may be an optional extra. Alternatively, buy a policy from a specialist insurer like protectmyholiday.com that covers the flight alone.
This article was written by Hugh Morris from The Telegraph and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.
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