This week Icelandic discount carrier, WOW Air, folded. Passengers, aircraft, and employees were left stranded across destinations when the airline ceased operations. While WOW Air was part of the cheap Trans-Atlantic flight revolution, it won’t go away simply because they did.
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WOW Air Gave Plenty of Warning Signs
Sometimes the skeptics are right.
Plenty of naysayers expressed their doubts regarding the unthinkably cheap flights from WOW Air and their competitors like Norwegian Air Shuttle, Primera – two of the three now defunct. Iceland Air jumped in to examine the possibility of acquiring the carrier but decided against it. Then Indigo, parent company to Frontier, nearly bought the brand but pulled back in the end. That was personally disappointing, as the carrier had stakes in Wizz Air (Polish LCC), Volaris (Mexican LCC), Frontier and would have been able to bridge those markets with WOW.
Iceland Air has been disciplined through the challenge from WOW, avoiding the deep discounts but joining in on scalable expansion. If they didn’t want to buy their only direct competitor, and Indigo pulled out too – the books had to have been appalling.
Norwegian Air Shuttle Could Be Next
While we are on the topic of long-haul LCCs failing, Norwegian Air Shuttle has rebuffed investments from British Airways parent company, IAG. Their financial challenges have been more visible than WOW’s. Norwegian failing would not come as a surprise, they have pursued a number of angles including flying into New York JFK on any aircraft they could, Newark and Stewart-Newburgh.
Norwegian has been a little bit wiser in switching strategies from “growth to profitability.” That strategy shift has included shutting down some smaller airports like Stewart and Providence, Rhode Island and increasing prices though not to level of the trans-Atlantic market ten years ago.
Mainline Carriers Have Adjusted
The market has moved and mainline carriers have shifted their business model to compete with LCCs both at home and abroad. United and peers offer Basic Economy across the Atlantic to put up a fight instead of pulling out capacity from the market. Emirates and others are expanding their fifth-freedom flights to continue to feed the market with more capacity.
TAP Portugal, a Star Alliance carrier, is one of the most reliable one-way mainline carriers offering consistently affordable flights, especially in business class. Emirates flies Newark to Athens on a heavily contested fifth-freedom route as well as Milan to JFK, both of which they routinely offer $799 all-in fares for two people.
Mainline carriers will keep airplanes full rather than drastically return prices to pre-LCC days and ceding market share to competitors old and new.
Other Discounters Will Fill The Gaps
Before WOW Air there have been dozens of fallen business models for trans-Atlantic traffic. Business-only airlines and LCCs have come and gone bridging Europe and North America. Others have attempted to bridge Asia and Europe like the recently defunct Air Belgium or the otherwise very successful Air Asia who closed their long haul flights to Paris among others.
Advancements in fuel consumption and the extended range of new equipment like the 737 Max when it returns to service and the A321 LR will make it easier to start than in the past. WOW Air had just a handful of aircraft and at the time of closing serving few destinations. WOW symbolizes the long-haul LCC industry and their collapse is much more exaggerated than the true effect of a few planes coming off of very well beaten paths.
The question is who will fill the gap and how quickly?
What do you think? Is WOW’s closure the sign of a bigger problem? Is the affordable trans-Atlantic fare party over? Or is this just poor management in a very tough industry with a very tough model?
Round trip pricing has been pushed arguably too low, and you are right that even with the collapse of primera and wow prices are going to stay low, they don’t have the passenger numbers to causes a dent in the supply.
The big change that may or may not come is if One-Way pricing becomes a thing for the legacies, in exchange for Round trip prices ticking up a little. They will hold out on doing so for as long as possible though.
wizz air is hungarian
Doesn’t look like Stewart or Providence have been shut down. Some routes have been cut but both still have a flight to Dublin.
I should probably rephrase to say that they cut their crew base and pilot base at the airport and moved their prices up to $800 to Ireland which is not competitive. It seems like just a matter of time. https://www.google.com/amp/s/www.recordonline.com/news/20190117/questions-about-norwegians-future-at-stewart-airport%3ftemplate=ampart
My guess is that the current booking situation has much more to do with the aircraft situation on that route – they were running a 737-MAX, which they temporarily replaced with a 787 after those were grounded, and as of yesterday, an A330-300 leased from Evelop. It sounds like they’re also bringing in passengers from from their PVD-DUB route for these flights. In any case, I think it’s no less premature to say it’s a matter of time for this route than it is for any other route they run, personally. Running a better aircraft and subsequently a leased one sounds like some level of commitment to Stewart, for now.
Air Belgium is defunct???
This is not the first time that such a phenomenon has occurred. In 2008, Skybus Airlines (which operated out of Columbus, Ohio), deliberately sold tickets for future flights, knowing in advance, that it was going out of business. As a result, hundreds of passengers were stranded all over the USA, far from their homes. I don’t think that the FAA, or even the Justice Department, ever held any executives of that defunct carrier accountable.