WOW Air Wants To Add Up To 15 Destinations In Asia

WOW Air is an Icelandic ultra low cost carrier that has built their business model around transporting passengers between the US and Europe via their hub in Reykjavik. The airline has two unique advantages:

  • Iceland has great geography, as it’s right on the way between the US and mainland Europe, so it allows them to sell one-stop tickets between all kinds of city pairs that don’t otherwise have nonstop flights
  • Iceland is a beautiful country that a lot of people want to visit, so they can offer a free stopover in Iceland as a unique advantage of booking with them

The airline has been growing at an incredibly fast pace. They only started flying to North America about three years ago, and already fly to over a dozen destinations here, which is impressive. Some have questioned whether their growth rate is sustainable, given the limitations of their hub in Reykjavik, which is nearly at capacity. It seems like at some point there may be consolidation in their future, as it could make sense for them to partner with an airline like Norwegian, for example, given their generally similar business models.

As it turns out, WOW Air has some big growth plans that I find a bit surprising. Air Transport World has an interview with WOW Air’s CEO, in which he indicates their next area of growth. Specifically, WOW Air plans to announce routes to Asia as of next month. He says that this is the area where he sees the most growth, and just as WOW Air has added 14 routes to North America in the past few years, he could also see WOW Air adding 14-15 destinations in Asia, making Iceland the “Dubai of the North.”

This is interesting, though I’m skeptical on a few fronts:

  • Airfare from both the US and Europe to Asia is cheap nowadays, due to the Gulf carriers, and also due to the amount of growth we’ve seen from Chinese airlines; this is mostly competition they haven’t had to deal with while transporting people between the US and Europe
  • WOW Air is able to use narrowbody, fairly low capacity planes, for most of their North America and Europe flights, while they’d mostly have to use higher capacity A330s to Asia, which are tougher to fill
  • Keflavik Airport doesn’t have much room for growth, so they’re facing serious constraints there
  • WOW Air doesn’t have the same geographical advantage transporting people to Asia as they do with their current business model, where they’re transporting people between the US and Europe.

For example, flying from Los Angeles to Reykjavik to London is only about 40 miles further than the direct air distance, so that’s almost nothing.

That same advantage doesn’t exist to much of Asia. Boston to Beijing is about the best case scenario here, and that adds about 600 miles to the journey. The same routing out of London would add about 1,100 miles to the journey.

If we’re talking about Western Asia then there’s potential for more time savings, but then that adds even more to the travel time for those coming from various points in Europe. For example, if they flew from Boston to Reykjavik to Ürümqi, that’s a pretty direct routing that only adds about 150 miles to the direct distance. The bigger issue, though, is that I assume there’s not enough demand to fill planes there with any frequency.

Another interesting point raised in the interview is that WOW Air would like to find a second seasonal hub. In winter WOW Air has excess capacity, and they’d like to find a way that to use that extra capacity to fly somewhere other than Iceland. WOW Air’s biggest competitor is Icelandair, and as some of you may remember, recently Icelandair placed a bid for Azores Airlines, and I figured there could be a similar general motivation there. Of course the Azores is also seasonal, but certainly less so than Iceland.

Bottom line

It seems like there’s lots of potential for WOW Air to create a second seasonal hub, given the excess capacity they have in winter. However, I can’t fully wrap my head around their Asia plans, and am curious to see what they do. Iceland doesn’t have the same geographic advantage for Asia, they’d mostly have to use higher capacity planes, and airfare is already so cheap to/from Asia, in most markets.

So to suggest this market could be developed as much as the US to Europe market is a real head-scratcher, in my opinion.

What do you make of WOW Air planning on adding up to 15 destinations in Asia?

Comments

  1. That’s impossible. Iceland has no rights to fly over Russia. SAS has the sole rights for Scandinavia under bilaterial treaties. Forget about airport slots and aircraft equipment.

    It’s why Norwegian can only fly to SIN from LGW.

    Please do your research, Lucky.

  2. @ keitherson — Not sure which part you’re suggesting is impossible? I’m passing on what WOW Air’s CEO is saying, and sharing some of the reasons I don’t think it will work.

  3. @keitherson, it’s a good thing that Iceland, while a Nordic country, isn’t part of Scandinavia.

  4. @keitherson

    1. Iceland isn’t a Scandinavian country. The Scandinavian countries are Sweden, Norway and Denmark.
    2. If you meant that Iceland was a Nordic country (which it is), consider Finland, another, whose Finnair has a vast number of Russian overfly rights.

    It seems Russia tends to allow only one airline per country to use its airspace, and I don’t believe Icelandair flies to Asia. If this is true I image WOW are trying to get there before Icelandair.

  5. @ Ben — Methinks WOW also needs to build another terminal and runway at KEF. The place is already a madhouse, and I find it hard to understand how they can continue to add so many flights without some serious expansion of KEF.

  6. No-one is going to fly from Europe or North America to Asia, via Iceland, no matter how cheap it is. It doesn’t make any sense at all.

  7. @james

    I agree it’s not the fastest or most convenient route, but there are a lot of leisure travelers who are more time-rich than dollar-rich. Perhaps WOW couldn’t make money by discounting those flights to the extent that they undercut more direct flight prices, but there is always a niche market for the cheapest provider.

  8. Not too bad. India routes will have a great potential, where to North America Iceland is not too deviated from a direct distance. SE Asia – North America (minus West Coast/Pacific Canada) will also be feasible since SQ already operates the route via MAN or FRA.

  9. If there were such thing as a Dubai of the North, Helsinki would be it – not Reykjavik – and that’s exactly the business model of Finnair.

  10. It does always surprise me that people fly, for example, from LHR to Tokyo via DXB, adding around 2,500 miles into the trip. I think if people will pay for that, LHR-KEF-Tokyo could well work – it only adds on 700 miles.

  11. I flew on wow from Miami to Paris via Iceland in October. I’m sad to see them go!! Don’t know why they couldn’t make it work 🙁
    They didnt not get me for any extras
    We got random seats and were placed in a row on the left side of the aircraft. The configuration was 2x4x2 on the A330 ( which we loved, especially getting a set of 2 seats for 2 people)
    We arrIced in Iceland at 4am and after a brief stop through immigration and NOT having to teclear security we were at our departure gate in no time. After a 30 min wait we boarded and were on our way to Paris. Arrived in the domestic terminal in Paris so even more time saved there

    On the way back we purchased a duffle bag and a suitcase for $40 and checked it for free on our AA flight using miles which included a free bag each.
    I wouldn’t fly them on the return day flight but going to Europe on a red eye it was more comfortable than AAs 787 with a stranger in our row.
    Plus saved us a tun of miles!

    I only paid $69 one way and it was an enjoyable flight

  12. @Keitherson

    You’re very wrong! Norwegian Air Shuttle flies from Copenhagen to Bangkok…. I’m pretty sure they fly over Russian airspace! So there’s no way that SAS has the exclusive rights to fly over Russia.

  13. I think this would most certainly work. Now, most here fly (or would love to) premium classes. But the majority of the population around the world still fly at the back of the bus. People won’t mind a stop in Iceland as long as the price is right. And the funny thing is that even if most passengers only save say €50 compared to a legacy carrier, holidaymakers will still fly the low cost and spend more time on the way.

    Flying BA from most of Europe to say Australasia involves lots of backtracking. And what’s the big difference to flying e.g. from TXL to PVG via Iceland instead MXP-LHR-PVG?

  14. This Russian airspace problem is easily to solve. Putin just says “make it so”.

    As far as directness of the route, over 1,000 miles is getting far but 600 miles is nothing. In the late 80’s, some wiseguys flew PeoplExpress from Newark to Denver to places like St. Louis. Very backwards ticketing. Many people fly longer routings when connecting at DFW or ATL, like PDX-DFW-PHL or SFO-ATL-LGA. I once flew on a SEA (or some west coast city)-PHL-ATL.

  15. The airspace restrictions over Russia only apply to the Siberian airspace. Overflying the western part of Russia is not an issue and traffic between Europe and South East Asia is not impacted.

  16. I flew LHR-KEF last July on Icelandair. KEF was a complete zoo in the late afternoon as everyone going both directions was changing planes. Seemed to me that few were actually staying in Iceland as we were. Don’t know how they could fit more traffic there.

    However a KEF-HNL flight might be interesting.

  17. Agreed that flyers will do most anything if the price is right; I have a lot of friends who flew WOW from SFO to one of their Europe destinations when the only departure time from KEF was 6 am, when the SFO flight landed at 2 pm the previous day. They slept at the airport in between because it was the cheapest way to get there ($69 one way)

    Routing to Asia via Iceland, they’ll still get passengers if they can keep fares low enough

  18. Maybe not Japan or Thailand, but what about US East Coast via Iceland to India, Sir Lanka or the Maldives? Might work pretty well.

    It’s a pity Finnair hasn’t realised that the most direct route from JFK to Delhi goes directly above Helsinki, their hub. There would be a lot of potential in the US–India market for Finnair, but maybe they lose the race to WOW.

  19. I don’t think it makes much sense for Wow and Norwegian to partner. What would be the benefit?

  20. I think everyone might be missing something. Iceland’s is a great place to hub between North America and India, a large but low yielding market, That ought to be something WOW might be able to make a go of.

    Using Lucky’s logic above KEF is pretty much directly on the BOS-BOM great circle. Lots of one stop options from the US could be interesting and, at the right price, you’d even get people willing to backtrack to fill a few seats.

  21. If distance really were that much of a factor it’s almost 400km shorter to go from BOS-BOM via KEF than via DXB.

  22. Price sensitive customers might be willing to fly North America to Asia via KEF. However, they won’t make WOW any money. For all the “success” of Norwegian people like to talk about, they still lose a lot of money and as fuel price increases they are running out of money. It’s really not only a matter of how many people are willing to fly a route as much as how much are they willing to pay to do it. I am not surprised that DY flies above 90% load factor on most of its routes; yet a carrier like DL that barely flies above 70% makes good money on its TA routes while DY doesn’t.

  23. If you read the article, you will note that Wow is looking to set up a second hub! They have excess air raft in European winter. This means the Asian routes will probably be from second hub not Iceland.
    India could realy work for them as a hub. Huge ppopulation with money who love to travel.
    Most of Europe would be 7 hours away, no problem for a330 and new a321neo
    Major Asian destinations around 4 to 5 hours
    Australia – India is grossly under served ( Only Air India flies non stop!)
    Flights could operate Reykavik – London or other European port – India -Australia

  24. Another option is Iceland – Vancouver – Australia and New Zealand.
    Aussies Canadians and Kiwis are very budget concious and love to travel.
    Aussies are wary at moment of travelling via Middle East and Nobody wants to fly Qantas To London via Perth in economy!!!!!
    Australia – Canada route is another route with few flights. Only Air Canada who don’t have a great reputation in Australia.
    Could be a cash cow!!!!++

  25. My personal guess on the story (based on your distance calculations) would have been that they look at travel between the Indian subcontinent and the US East Coast. Many airlines do so but getting rights into India is the big issue here. I got no idea how they want to convince the Indian government and administration to let them in and do so within a reasonable timeframe.

    But in this June 2017 interview http://www.visir.is/g/2017170609317/wow-air-flygur-til-asiu-a-naesta-ari-til-ad-maeta-aukinni-samkeppni-yfir-hafid- he states the routes to Asia are intended to fill gaps which will arise due to jetBlue and others soon offering non-stop flights to europe which will reduce interest in stopping over in Iceland.

    So it could be a full stop-over bet WOW does, where the travel distance means less because passangers stay two to three days in Iceland which makes it irrelevant if the travel distance one-stop has 1,000 additional miles or just 50, for the total travel time point-to-point is two to three days.

    That would explain his “Dubai of the North” comparison since it is then about selling a flight along with touristic experiences and endevors at the stop-over destination and which otherwise makes no sense (WOW will not operate a global hub-and-spoke regime).

    So the question is: Can one find enough Chinese travellers to the US East Coast who would be keen to dip their foot into a hot outdoor tub at minus 20 Celsius or who want to visit an active volcano or a geyser?

  26. JFK-IST (5016mi) // JFK-KEF-IST (5173mi, adds 157 miles)
    JFK-TLV (5677mi) // JFK-KEF-TLV (5876, adds 199 miles)
    JFK-DXB (6849mi) // JFK-KEF-DXB (6897mi, adds 48 miles)
    JFK-IKA (6140mi) // JFK-KEF-IKA (6167mi, adds 27 miles)
    JFK-DEL (7318mi) // JFK-KEF-DEL (7342mi, adds 24 miles)
    JFK-MLE (8721mi) // JFK-KEF-MLE (8737mi, adds 16 miles)

    JFK-BKK (8677mi) // JFK-KEF-BKK (8904mi, adds 227 miles)
    JFK-SIN (9537mi) // JFK-KEF-SIN (9773mi, adds 236 miles)
    JFK-HKG (8072mi) // JFK-KEF-HKG (8636mi, adds 564 miles)
    JFK-NRT (6745mi) // JFK-KEF-NRT (8089mi, adds 1344 miles)

    Seems like the logical area they’d be looking at is east of Turkey, west of Thailand?
    Not sure if there’s enough American traffic (esp with EY/EK coverage in North America), and since EU folks would backtrack immensely.

  27. Lucky, you should’ve put in routings to Western and Southern Asian destinations. As @Alvin mentioned, this seems to be the logical region.

    GYD-JFK 5831mi, GYD-KEF-JFK 5844 mi
    ISB-JFK 6904mi, ISB-KEF-JFK 6923 mi
    BOM-JFK 7799mi, BOM-KEF-JFK 7799 mi
    CMB-JFK 8741mi, CMB-KEF-JFK 8742 mi
    IKA-JFK 6140 mi, IKA-KEF-JFK 6167 mi

    Not only are these tiny detours, but from what I have seen (I live in India), Iceland is becoming a popular out of the way destination for those Indians who can afford it, and a low-cost non-stop option would make this even more attractive. They’d also have less one-stop competition in West/South Asia (barring maybe DEL and IKA).

  28. “Keflavik Airport doesn’t have much room for growth, so they’re facing serious constraints there”

    What do you base this on, Ben? ISAVIA is currently looking at some serious expansion plans for the airport, subject to investment!

  29. I think it makes good sense:
    US East Coast to India could be a huge market, would work via Iceland and is price sensitive.
    They could pick a Southern European hub, like Athens, Nikosia, etc and fly from anywhere in Europe to South East Asia in Winter – which is high-season in Thailand, Cambodia, Myanmar and those destinations are popular with European tourists…

  30. Based in Sydney I got a little excited when I saw that headline.

    While we have got some great LCC in the form of Scoot or Air Asia X – both who offer a premium service, the Air Asia X one is a better offering that Scoot – its always hard to get that leg between Asia and Europe. Scoot do Athens from Singapore and are now advertising some Berlin flights – not sure if its there metal or someone elses. So a WOW offering if they have a premium cabin from KUL or BKK or SIN would be stunning if they went into a EU port – even Charleroi as you can then get on a train and get to anywhere in a few hours.

  31. I actually think that WOW Air is trying to target the CIS Countries from US East Coast. Once this impending US Government-Russian Government debacle really gets heated up, I’m sure Aeroflot will cease operations to the US.
    This will create a huge void for budget minded travelers who just want to get to their countries. Think Uzbekistan, Kazakhstan, Azerbaijan, Georgia, Armenia. All have decent one-stop service via Russia, Turkey or the ME but no real budget options. WOW Air can fill that and get a bunch of passengers.

  32. Lol interesting how you assumed Asia was referring to Chinese cities as opposed to South Asia for example

  33. regarding the seasonal hub, what do you think would be more logical? Europe to Asia/ middle-east or North America to South America/Asia?
    I guess that North America would be their best bet as there is already of LCC’s offering routes in Europe.

  34. Competition with direct flights isn’t what they’d be after. WOW’s model is about offering cheaper one-connection routes that aren’t too far out of the way. No one is going to fly LAX-KEF-Asia, because there are a ton of cheap one-stop-to-Asia flights ex-LAX. But for PIT, BWI, even BOS, you’d be adding maybe an hour more of flight time (if that), but the possibility of substantially cheaper flights. Where current options involve connections in SEA, LAX, DFW, I’d be happy to fly through KEF. The same logic holds for cities like DUB or EDI. India and NE Asia are obvious targets.

  35. okay so im hearing more about wow air… honestly I haven’t heard about them until someone sent me a link to their contest… I sure hope they can connect to more destinations in Asia making it more affordable to reach europe for us 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *