Novel: New Low Cost Carrier To Launch In Iceland

Filed Under: WOW Air

In late March 2019, Icelandic low cost carrier WOW Air ceased operations. The airline was founded in 2011, and in many ways they tried to replicate Icelandair’s business model.

Unfortunately they had some major missteps that led to their ultimate demise. Why the airline failed depends on who you ask. If you ask the pilots, it’s the fault of journalists. If you ask the CEO, it’s because they made the mistake of ordering A330s. If you ask most people, it’s simply because the overall business model didn’t make sense given the competitive landscape.

Ever since WOW Air ceased operations there have been rumors of the airline making a return. It looks like this is closer to becoming a reality, though in a different form than one might expect.

Media in Iceland is reporting that two former WOW Air executives plan to launch an airline in Iceland this fall, which has the working name WAB Air. In reality the airline will likely have a different name, as “WAB” stands for “We Are Back.”

The plan is for the new airline to initially fly six planes to 14 destinations in Europe and North America. In the next 12 months they hope to employ 500 people and fly a million passengers, with revenue over 20 billion krónur next year (~160 million USD).

So, where’s the money coming from? Irish investment fund Avianta Capital has allegedly agreed to invest somewhere around 40 million USD in the new airline, in exchange for 75% of the company. Interestingly that fund is owned by the daughter of one of the founders of Ryanair.

The remaining 25% of the company would be owned a company called Neo, which is partly owned by WOW Air’s former head of flight operations, as well as a board member who was also in WOW Air’s former financial analysis department.

Interestingly former WOW Air CEO Skúli Mogensen isn’t involved in this new airline, and that seems to be by design. That’s interesting nonetheless, given that he has been wanting to resurrect the airline as well.

Bottom line

I don’t want to completely dismiss this idea, because with better discipline an airline like this could succeed, I imagine. The problem with so many of these types of airlines is that executives get ahead of themselves.

At the same time, it seems clear that this business model isn’t the cash cow that many assumed it once was, especially when you consider the seasonality of Iceland, as well as the general downward pressure on transatlantic fares.

Do you think WAB Air will get off the ground?

Comments
  1. If they’re able to get labor at a discount (likely given all the job losses) and take on only the most profitable routes WOW Air operated (also likely), this would work out pretty well.

  2. Isn’t this going against the trend towards long and thin routes to connect more pairs of destinations with non-stop flights?

    Seems to me that the idea of using Iceland as a connecting hub is only going to get weaker over time, especially with the A320 LR and XLR.

  3. Poor av geek management losers. All candy canes and lollipops to them. It will fail . Instead, those idiots should start and airline in Africa or On Korean Peninsula.

  4. I do think this has potential. There are a number of factors that led to WOW’s demise. I think a lot of these factors flowed from this desire to do a big-bang expansion to all these new cities that just didn’t seem to fit in to their network well. After their first few cities in the northeast, they began adding places that resulted in horrible aircraft utilization. As Daniel said, if they can pick off the most profitable routes from the old network and lock in cheaper labor and supplies in the aftermath of WOW’s collapse, this could definitely work.

  5. I’m with Adam on this one. We’ll see more and more single aisle planes flying over Iceland and connecting smaller cities in both continents. And Iceland as a destination is very cool but it’s the kind of place most people visit once and that’s it, unlike lets say a beach destination where a lot of people visit over and over again.

    If the model didn’t work in the past, I don’t see it working in the future, even with more discipline.

  6. Wow Air offered plane tickets between the US from like 17 American cities to Iceland Europe for less than the cost of a taxi drive between Manhattan & JFK.
    Wow Air also had superb Airbus aircrafts and not crammed Boeing aircrafts(like those from RyanAir)
    How could it go on like that ? Of course it went bust.
    Given that Iceland heavily relies on Tourism (Despite Iceland being ian ncredibly expensive place to live in),i m suprised the Icelandic government is not financially involved in this new airline.

  7. You need a proper business class next time. The very small premium economy they had at the front was always sold out months in advance.
    Not everybody wants to travel uncomfortably at any price, so also they need to improved the main airports in terms of terminal infrastructure and landings capacity rather than remote stand stairs and buses in freezing Iceland. It is ok on European but not at 4am in North Atlantic Winters.

  8. may be i can get my money back from the airline ,875:00 dollars to see my dying niece in Holland, that i can’t afford to go see , maybe i can see her now , WAB needs to give the money before launching a new airline ..

  9. Got look mathilda,

    But see how much Iceland owes the UK and then wrote it off after the Banking Crisis. It was a lot.

  10. I’m currently in Iceland. there’s still a WOW airplane sitting out when you leave the airport

  11. Hope they learn the lesson and fly Boeing this time around. Look at Norweigan shuttle and Ryanair? They are in business because they have the right plane.

    By the way Ben, thanks for making this blog all American again. I knew you would do the right thing!

  12. Will it get off the ground? Probably .

    Should it get off the ground? No, definitely not. There simply is not a valid business case to base a ULCC operation in Iceland.

    Iceland can really support only one carrier and that slot has been taken by Icelandair.

  13. This airline is needed- Iceland needs a Airline to help with all the tourism. we hope this time the goverement steps in to shore up the airline? Having this airline will rebuilt the tourism and employ alot of workers again. alot of people lost jobs when wow fell apart. i am happy to see this new WAB i loved flying to iceland and wish the airline a stong success in there new operation and i look forward to flying again to iceland on WAB.

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