WOW Air’s American Buyer Reveals (Bizarre?) Plans

Filed Under: WOW Air

I’ve written about the interesting situation going on in Icelandic aviation following WOW Air’s collapse in March 2019. You’d think that the lesson from the whole WOW Air situation is that there’s not really room in Iceland for a second airline basically replicating Icelandair’s business model.

Competition in Iceland is heating up?!

But that doesn’t seem to be the takeaway for some investors:

  • A couple of weeks ago it was revealed that some former WOW Air executives were planning to launch a new airline this fall that would be a lot like WOW Air; this didn’t involve WOW Air’s former CEO, and also didn’t involve any of WOW Air’s branding
  • Just days later it was revealed that some American investors paid cash to purchase WOW Air’s assets, including the logo and branding, website and domain, flight operations manual, booking system, other software, computers, spare parts, crew uniforms, and more

That second party sure was mysterious, and we now have some more details on that front.

The American WOW Air investors

The person behind the purchase of WOW Air’s assets is American businesswoman Michele Ballarin. She’s one of the owners of USAerospace, and is currently setting up an Icelandic company that would own 51% of the airline, while the US company would own 49% (since Icelandic law requires the company to be majority owned by a domestic entity).

In an interview with Icelandic media she explained her plans for the airline, and how it will be different than WOW Air was:

  • They see opportunities in the freight market between Iceland and the US, and plan to operate two freight-only Airbus jets as part of the carrier’s fleet
  • They hope to start the passenger side of the operation with three planes, and expand it to as many as 12 planes within two years
  • The company already has ~$86 million in working capital
  • In order to save costs, the company will not ferry staff between Reykjavik and Keflavik, which WOW Air used to do at significant cost
  • The new company’s IT department will be much smaller
  • The company will focus on reducing passenger compensation; presumably they’re talking about EU compensation, which would require them to have fewer delays, lose or delay fewer bags, etc.
  • They have “good ideas on how to improve passenger experience on board and at airports, which could also serve to cut compensation requests” (that’s questionable)

I’m also amused that the story in Icelandic media mentions the following:

The article also states that Ballarin is a Republican and a strong Trump supporter. She is a devout Christian, plays organ, and has two degrees in church music.

Beyond that she’s quite an interesting character. As a wealthy North Virginia businesswoman she was somehow involved in negotiations with Somali pirates over the release of a Saudi oil tanker and Ukrainian vessel about a decade ago.

Bottom line

I’m still not totally sure I follow the logic of this new airline. So their plans are to save money on IT (which usually doesn’t end well), not pay to shuttle employees between the city and the airport (???), and to save money on not compensating people (presumably by running an on-time operation and not losing bags, but good luck).

The freighter idea is interesting, though as far as I’m concerned is totally separate from the passenger airline. If they saw huge demand for cargo they could just start a cargo airline.

This doesn’t look to me like a radically different business model than what we saw from WOW Air.

What do you make of all of this?

Comments
  1. Somali pilates: the next big fitness trend?

    (Sorry, it’s more fun to joke around than to just point out a typo).

  2. @ Brian — The airport is in Keflavik, which is about 50km from Reykjavik. It’s sort of how Narita isn’t in Tokyo, and Incheon isn’t in Seoul.

  3. OMG- She’s a devout Christian and a T-R-U-M-P supporter. TWO degrees in Christian music???

    So are you going to start listing the religion and everybody’s political views of every individual that you talk about now on the blog? Including yourself, that’s a devout Democrat and homosexual?

    Show some respect for everyone, including those you disagree with.

  4. @Abe, as a Republican, you probably have a disability in reading comprehension but Lucky states that fact is mentioned in the Icelandic media. So he did not do research to find that out. Why are you such a snowflake?

  5. When they talk about not ferrying staff, does that mean that Wow Air used to run employee shuttle flights between KEF and the little airport near downtown Reykjavik? That would seem extremely costly. Having a crew shuttle bus, on the other hand, seems perfectly reasonable for an airline at a hub. Also contracting an employee shuttle bus or a van is really insignificant when it comes to an airline’s expenses. It also helps cut down on emissions from employees driving alone, which in the Nordic countries is a hot topic.

  6. @Abe He said it was interesting that the article in Icelandic media mentioned that. Quit crying.

  7. I actually think that a regenerated WOW Air could be successful. I know that some airlines will soon be launching direct TATL flights using the A321neo XLR, and that is bad news for the KEF hub model that WOW Air operated, however, I still think WOW could be really good at operating to and from secondary city pairs (LIS->KEF->PHL, for instance) so that they wouldn’t be competing with AA/BA flying from JFK direct to LHR.

    Unfortunately, Michele Ballarin doesn’t seem to have a track record of delivering on her promises. Recently, an Icelandic news website discovered that Ballarin’s company hasn’t even initiated contact with IAD about operating cargo flights, which contradicts what Ballarin has said publicly. If I had to wager on it, I would bet against USAerospace having $80M+ in capital. In fact, it may never get off the ground. If you want to learn more about Ballarin’s checkered past and delusional ravings, I recommend reading some of Keith Kloor’s reporting on the subject. It may lead the intrepid reader to determine that she is either “a mercenary, humanitarian, covert operative, or just delusional”. The most telling detail was when she sent a letter to the chairman and CEO of the issuer of one of her credit cards (she hadn’t paid her bill!) and explained that she was too busy fighting against Osama Bin Laden to pay off her credit card. Too funny!

  8. For all of you sh itting on me it’s an irrelevant fact. It’s a fact that makes absolutely no difference.

    Aside from trying to throw stones at someone for their religion and political beliefs. It’s wrong to mention and please explain what bearing it has at all?

  9. Some journalists actually took to contacting people in the US, just to verify what she said in the interview. So far, a lot of unanswered questions and many of her statements don’t add up. ( https://turisti.is/2019/07/vilja-lata-reyna-a-hvort-throtabu-wow-geti-afhent-seldar-eignir/ ) And contrary to what the press release said, they have not paid for the assets yet (cash or not) and are now on some verification mission in Iceland to review the assets.
    Smells funny, if you ask me.

  10. Just like I wouldn’t care if she was agnostic, and was a big donor to Bernie Sanders. What religion, and political view she subscribes to doesn’t make a difference at all in this article whatsoever. So why is he highlighting that?

    Come to think of it, when was the last time he highlighted ANYONE’s religion and political views in an airline related article? This is an airline/points blog right?

    (And his occasional anti-Trump rants that he tries to make look a-political don’t count)

  11. @Abe:

    Again, read the post. Ben makes light of (see also: pokes fun at) the fact that the Icelandic article felt it necessary to highlight those peculiar points that were not apropos to the overall story.

    You sure are sensitive for someone belonging to a group of folks that likes to point out – ad nauseum – how “sensitive” those liberals are. Careful, you’re getting pretty heated in these comments and wouldn’t want such a precious snowflake to melt.

  12. Given the special note, I think their/her strategy for reducing customer compensation. I think they may sue to overturn the laws requiring the compensation.

    You know Americans and their strategies for this kind of things. I am pretty sure there is some freedom of speech or religion being infringed when airlines must compensate for their faults. Did Icelandic supreme Court change over the last few years?

  13. @Abe, I’m sure you know the answer to this and your pearl clutching indignation is for show, but it’s reasonable an Icelandic newspaper would point this out because it’s describing what that society sees as the actions of a crazy person.

  14. If they are registered in the US , EU261 only applies ex EU do that will reduce liability for departures from the US. Given the history of long haul LCCs and WOW the new venture is best avoided anyhow Always travel with an airline that has a good network and back up plans in case something goes wrong

  15. I agree with Abe in that Lucky is very political, and is sensitive about others raising or making fun of certain irrelevant personal traits of people that he relates to (which I agree with Lucky on) but Lucky has no issues raising or making fun of other irrelevant personal facts about others that he does not relate to (no way can she make money on this deal and she is a devout….). very two-sided

  16. Lucky definitely knew mentioning her background would arise hatred but he still did it.
    The last thing we need in this country is hatred, unfortunately, many people intentionally utilize it for attention and profits.

  17. Wow, this conversation turned political fast. It would be nice if people could just read information as information, rather than some deliberate provocation. Lucky did nothing wrong, and this is a blog, not the Washington Post, no one is claiming to create neutral journalism here, just interesting stories.

    As for the topic at hand, the plan is clearly deluded. The market has clearly established there is no room for two low-cost connecting carriers in Iceland. An airline that starts by publicly refusing to transport its own staff to work will obviously not “get off the ground” and the bus ticket to Keflavik was the very least of WOW’s problems…. this is a bizarre fever-dream that will never happen.

  18. Abe, I think I speak for many readers on this blog (and a significant plurality, if not a majority of Americans) when I say that Trump supporters deserve absolutely no respect. Certainly not fake Christians who somehow believe that caping for a serial rapist who cheated on his stripper wife with multiple porn stars in any way embodies the teachings of Jesus Christ.

  19. Of course this is aviation related . Related to the business maneuvering is the person buying a major portion of the airline assets . She does sound like an interesting and unusual person .
    I didn’t notice any derogatory remarks in quotes from the article .
    One of my favorite quotes from Wm. Shakespeare : ” Me thinks he doth protest too much. “

  20. Unlike the author’s opinion I believe there’s always room for more competition because that means there’s lower pricing and more people have the opportunity as terrorist to fly places I’m sure the competition now doesn’t fly to all 50 states in the u.s. and that’s all the other places they can go take people how about Vegas to Iceland or Miami to Iceland or Orlando

  21. EU 261 applies because Iceland is part of the European Economic Area. It applies to any flight leaving Iceland. The only thing I have been unable to determine is whether it applies for a US to Iceland flight. The source I looked at said it had to be an EU carrier. Perhaps it wouldn’t apply to an EEA carrier. Anyone know for sure?

  22. Please bring back Pan American World Airways! I miss there impeccable service, the food! there world wide destinations.

  23. The Courtyard by Marriott is opening at the Keflavik airport in Dec 2019. It’s located 1 mile from the airport, but as of now isn’t providing an airport shuttle. Cab fare won’t be as much getting there Vs the almost 1 hr drive to the downtown hotel area. Perhaps the plan WOW has is to overnight their staff at the Courtyard Vs downtown hotels?

  24. Robert Schrader. I will pray for you. You are obviously a very angry, disapointed, judgmental person.

  25. Abe – it’s a very relevant fact. It’s a very quick way of pointing out that she has a few screws loose, for example.

  26. Ken – It applies to any ECAA (so the majority of European countries – including Iceland and Norway) carrier.

    EU/EEA/EFTA/ECAA are confusingly used interchangeably and incorrectly all the time, just like lots of people mix up England/Britain/British Isles/UK.

  27. Abe, I’m a conservative too, but I’m not offended by Ben quoting the Icelandic media, nor do I see any disparaging subtext in mentioning her political and religious beliefs. Get over yourself.

  28. It’s funny how Abe thinks that some mentioning Trump is the same and as disparaging him.

    Some insight into a Trump supporter’s mind, perhaps?

  29. Richard Branson once said: ‘If you want to be a Millionaire, start with a billion dollars and launch a new airline.’

    Good luck with this plan. They will need it :/

  30. I also have a 40 km drive to work, and I have to get to work at my own cost. Shouldn’t airplane employees also be expected to do that?

  31. Greetings from Iceland.
    So she outlined these plans around a week ago in an interview with Iceland’s largest newspaper Morgunblaðið; and the comments on Facebook and other media were just scathing. The ones on the right complained how foreigners are buying everything and want to make money off Iceland, and the ones on the left vow to never fly with an airline owned by a religious Trump-supporter.
    Pecunia non olet, so never mind that hundreds of jobs might be created and it might help the slight downturn in tourism we’re experiencing this year, but okay…
    Thankfully Iceland is still a much more libertarian country than most places in Europe, but we also used to be a little more open minded…

  32. Republicans are for the most part just terrible people with awful business acumen who are occasionally able to succeed by treating employees like garbage. That is all.

  33. Wow was the worst airline ever a total ripoff and I am glad they bankrupted. Good luck trying to restore the “brand” to its “glory”. Terrible company.

  34. @Abe:
    Since you’ve been asking about relevance so insistently, I’ll try to spell it out.

    First of all, neither this blog nor the Icelandic source went digging for that information. It was related to them. Secondly, it is relevant that she identifies as a Trump supporter and then attempts to establish her own bona fides by adding the political and religious identification. This is why:

    Trump has made it very clear that he will use the power of the federal government to advance private commercial interests, both his own and those others. This is especially true of the persons he considers supporters. For example, he is currently raising trial balloons about raising tariffs on France. There are no significant trade disputes between the United States and France, but France has just raised taxes on some American tech companies. So Trump is threatening one of the bluntest instruments of trade policy for non-trade reasons in a commercial dispute. This is only one example of many but it is the most current one.

    There have been a number of business persons with questionable histories that have used this willingness as a weapon in negotiations. By making it clear that she is a friend of Trump, Ballarin is trying to insinuate that denying her the necessary permissions to trade as WOW2 will carry costs to Iceland. Again, Ballarin volunteered this to the reporters, they didn’t interrogate her for it.

    This is especially relevant in the context that USAerospace hasn’t actually made any deals yet. She claims that her company is “currently completing its purchase” but that’s a meaningless phrase. Having been involved in a number of corporate acquisitions and takeovers, “currently completing” means anything from “just finished the due diligence reports” to “sending the paperwork into the regulators” to “notifying the shareholders of the exchange procedures”. In point of fact, it means only and exactly what the speaker wishes were the situation. Which is, obviously, not necessarily what the situation actually is. In this case, its clear that the deal is far from done as, for example, they are still “planning” on creating the actually owning entities.

    All in all, it is therefore interesting and relevant that the “face” of this basically unknown corporation attempting to acquire a well-known entity is making and obvious and somewhat clumsy attempt to trade on the implied threat of her relationship with the very mercurial president of the US.

  35. Did this US Business woman put down her own money into Wow Air ?Surely Wow Air will have to follow European compensation rules for passengers whether this investor is a Trump supporter or not.
    @Martin who said “I also have a 40 km drive to work, and I have to get to work at my own cost. Shouldn’t airplane employees also be expected to do that?”
    It depends how much you are paid.(Iceland is the most expensive country in Europe & much more expensive than the US,so the cost of gas must me crazy over there)

  36. WOW Air will most certainly be bankrupted again with this Trump supporting, inexperienced, Neanderthal at the helm. When/if she gets this thing off the ground (literally and figuratively), please don’t support this woman—she’s already spouting lies just like the orange man-baby she supports. Disgusting.

  37. @Abe
    Knowing that she is a TRUMP supporter and devout Christian provides context…As soon as I knew that, I knew that she is an idiot and believes in fairytales; both reasons that the company will likely fail.

  38. @Robert Schrader your lack of tolerance is ridiculous and no a majority of Americans don’t believe that Trump supporters should get no respect. We are all entitled our opinions. When you start to say don’t respect others opinions that’s when things get bad. It’s also when Trump wins because it motivates his supporters to go out and vote. To give you an idea of how powerful the media is and how stupid Americans are (sorry we are)…even the lowest estimates from the Washington Post say that taxes went down for 65 percent of Americans. Yet only 40 percent think they got a tax cut. That means that 1/4 Americans are too stupid or lazy to understand they got a tax cut. Heck when polling started it was as high as 65 percent of Americans thought they wouldn’t get one. Even middle class 30-100K a year earners were almost 75 percent likely to pay less. The point I am making is make an educated argument. Don’t be a blind supporter for any party. Or one of those democrats who pretends to understand the poor and exploit them (see Lyndon Johnson). By the way I see that you have a business. If you are lucky to start making profits and are an LLC must be nice to pay less corporate tax…hmm who was it who lowered that rate again? (By the way this is coming from someone who loathes Trump for his social stands, albeit he is better than Pence. I just think the economy is great, wages are going up, and my wallet votes)

  39. Sorry I actually work for a living so I don’t have time to sit on this blog and respond to every single post. Mixing politics into these posts is so ridiculous, and we see that by the comments. @Ben if you want to continue to do this that’s your prerogative, it’s your blog buddy. As you see it really fosters some terrific comments and attention.

    Somebody shows @Robert Schrader how a “progressive tolerant” liberal like himself can be so intolerant and frankly dumb, and his response is “boo hoo.” Cool dude! According to you 50% of Americans deserve zero respect. But conservatives and Trump supporters are the hateful racists. You can’t make this stuff up.

  40. As an Icelandic airline (regardless of ownership), the new “Wow Air” will still have to follow EU261 compensation rules — arriving in the Single Market/Iceland, departing the Single Market/Iceland, and traveling within the Single Market/Iceland — and that’s a beautiful thing! European airlines are nudged to be on time and treat passengers fairly.

  41. @Abe

    BRAVO! Well Said!

    If you are interested; The Conservative Treehouse is an incredible site with factual info on President Trump, and everything he has accomplished thus far.

  42. Politics+airline fodder do not make for an airline and points blog. At this point Lucky has made so much money he probably doesn’t care much about what we think, and that’s fine.

    But let’s call a spade a spade here.

  43. @Abe:

    I love your under-informed trolling across multiple blogs. I appreciate that you’re sticking to your guns and use the same handle over at Live and Let’s Fly, just like me. I’ll be the enlightened yin to your pitied, deplorable yang. How’s that sound? We can be like The Blues Brothers, but you can spout ignorant, political nonsense instead of R&B tunes while I temper your inane ramblings with informed, polite discourse. Cool? Cool. I look forward to this new partnership.

  44. First, if someone wants to try and out maneuver an established airline and offer a service in competition to an already established provider then what is the problem? There is no room for a second carrier? What difference does it make to you? How much money do you have invested in this project? At least, as far as I can tell, she is investing over $89 million dollars to get this off the ground. If you don’t like what is established then don’t support it by not flying on this new airline. All many of you want to do is whine about HER. I love the way many of you talk about “free speech” then if someone expresses an opposing opinion then you act like two year olds and try and shout them down. If she fails it will be no skin off your butts.

  45. I’ve flown Wow and for a non frills flight it was very good. I would guess that they got into trouble with internal to Wow connecting flights (missing them). If they came back, I would concentrate on nonstop flights to/from Iceland only (aside from any freight business).

  46. She lost any possible business of mine at trump supporter. I hope the next person to buy these assets is smarter. There are already a LOT of choices to Iceland and Europe, no need to fly her airline. PS. Iceland is definitely worth the trip!

  47. Martin
    Yes every person on the planet should have to do everything exactly as you choose to do it for yourself.

    Robert
    People like you are insuring that Trump will be serving 6 more years.

  48. How much cargo can possibly go via air to Iceland? I am sure if the market was big enough the usual suspects would jump on it. If you lease them aircraft and crew you better get paid up front in cash. If you sell them fuel or supplies it better be cash and carry. Whether or not Bernie or Donald are flying the plane.

  49. Dee More – considering it’s a relatively small island, I imagine most items are imported by ship or plane; e.g., building/construction supplies, automotive/truck/industrial equipment supplies, amazon shipments, food stuffs, etc. It’s the time sensitive items they would go after.

  50. @AdamR I don’t post anywhere else, sorry to burst your bubble but this is the only place. And Flyertalk…

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