Why Did WOW Air Fail?

Unfortunately it’s a lot more complicated than just saying they “didn’t make money”.

It should be noted that Wow leased the A330s. Possible additional lease payments or simply additional losses incurred lowered theIr EBITDA which caused them to miss bank convenants in their debt agreements. I.e. Debt/EBITDA ratios.

I noticed Virgin Atlantic is also offering to help Wow pax.

also another big thing that isn't mentioned is that WOW Air based all their flights around connecting passengers from North America to Europe and vice versa. To do this, they had very short connecting times between their European and American flights, but those flights had to sit in their destinations for hours, losing a vast amount of money

Very good article, Lucky. I was also very puzzled when they started announcing Asia flights. Didn't' make any sense.

A couple of years ago they were threatening the entire trans-atlantic system with their fares, but they ran out of money. Sad.

Why no mention that Iceland is literally one of THE most expensive places in the world to live? Because of the cost structure and extremely high fixed costs you had to be somewhat delusional to think that you'd make money...ever,

I agree with @AJ Montana. Something that did strike me as odd about WOW's business model was the atrocious aircraft utilization. The whole story of Southwest was how they build tight turn-arounds and fast boarding because they needed to make the most out of their planes. As you noted in the article about WOW's Orlando service, the planes were scheduled to sit empty for 20 hours every rotation.

I was looking through some of their original investment fluff and part of the plan had been a target of cities on either side of the atlantic that were within 6 flight hours of KEF. The idea was that this allowed better aircraft utilization than their competitors. If they had just stuck to that plan, they could have gotten by with cheaper aircraft, less fuel, better utilization.

Step 1. Collect underpants.
Step 2. ????
Step 3. Profit.

I feel like South Park saw this one coming.

Interesting article. It would have been interesting to see your thoughts on why Germania and Flybmi collapsed as well, though. WOW did get much more articles from you...

Now OMG Airlines

I’d add poor strategic network planning to the list...they essentially just copied Iceland Air’s network in many respects.

"Because the major airlines aren’t making money off economy transatlantic fares in the off season. [...] but the reality is that airlines make their money off the handful of people on each flight who are spending $10,000 for a full fare business class ticket."

Really? How many people are actually paying 10,000 $ in a flight?
I'm not trying to be pedantic, but let's assume on typical 777 TATL flight:

5x F @ 10,000 $ = 50,000 $
20x J @ 5,000 $ = 100,000 $
40x J @ 2,500 $ = 100,000 $
100x Y @ 800 $ = 80,000 $
200x Y @ 400 $ = 80,000 $

I might be wrong on the number assumption, but based on such calculation, I believe the airlines are still making a significant revenue from low-season economy fare. Without those 2x 80,000 $ income from economy fare, their total revenue will drop by 40% and I think in terms of total amount (not fare per passenger) it's still quite significant and probably more than merely "the major airlines aren’t making money off economy transatlantic fares"

When WOW started, it literally was WOW! But the business model was unsustainable. I'm surprised more airlines do not focus on customer service from booking to flight attendants and pilots. For me, when I am booking a flight and it's a $100+/- difference I will go with the friendlier airline for the experience.

Southwest's FA's tend to be a bit friendlier although it seems like maybe it's changing a bit, I enjoyed their smiles and their sometimes funny way of announcing emergency procedures. I used to fly AA for First class/business class but just got tired of unfriendly and uninviting FA's.

Friendly customer service do matter and for some reason, airlines do not focus on this.

@EV: You need to compare that legacy-carrier revenue vs. one from an all-economy cabin. Replace the 65 premium seats with 200 economy seats and recompute revenue under the same assumptions. You'll see that it's drastically lower.

@AZ: I think until the demise WOW only had narrow body aircraft with much lower operational cost than 777, accordingly. Revenue might be low, but so as the operational cost.

Low-cost long-haul flights are notoriously tough - the same is happening on the other side of the world with AirAsia X. I think it all boils down to the passengers preference of wanting a bit more comfort and less hassle on the add-ons.

I was just wondering, would a new LCC that uses Anchorage as a central connecting point work?

Regarding FLYBE: I recently booked a flight on Virgin Atlantic with a connecting flight on Flybe. They could only give me a departing time, but no flight number or plane details. Do we know any more about details of the acquisition?

I'm really not surprised they failed. WOW always had terrible/non-existent customer service. Was on a direct flight to LAX-KEF, I checked in early and then me and 20 other passengers bags didn't get there. My first solo trip and I was in Iceland during the Winter with literally the clothes on my back. Spent 4 hours shopping for clothes, boots, toiletries, travel, adapters etc. Cost came to $400 including getting taxis to the stores- Iceland is very expensive. In talking with one of the workers at the store- she stated WOW air did that all the time with passengers and she always saw them in the store shopping for everything like I did. Because Wow only flew every other day- on my 4 day trip in Iceland, I got my clothes 3 days in- the night before I left. I went down to the WOW HQ office to inquire about reimbursement (the office wasn't very nice and was run down). They just told me to keep receipts and file and claim with them.

Once I filed for reimbursement- they first stated I had to prove I didn't get any travel insurance reimbursement from my credit card- I had to call my credit card company and get a custom letter made- that took about six weeks. Then after I converted all the receipts converting them from Icelandic currency to the US rate and re-filing- the offered me $200. They stated that I got to keep the clothes for future use so they only would pay for half. No consideration for the time I spent out of my vacation either. This was all done via e-mail/web with a team in India- there was no one I could call into to speak to about it.

I appealed and they told me tough luck. Anyway, upon a great suggestion from a customer service supervisor- I ended up disputing the actual cost of the airfare with my credit card with Wow- suddenly they were open to negotiating. Long story my credit card, which was a basic card from Chase, ended up getting me $350. I got the funds after 6 months.

So when I hear that Wow air has stranded passengers- I'm not surprised. They really never cared about customer service. Good news is, that made me find travel blogs such as this- so that I would never be in that position again. Lesson learned- I got the Chase Sapphire Reserve immediately thereafter.