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

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:

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• 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?