We’ve seen a huge amount of transatlantic growth the past few years thanks to ultra low cost carriers. This has come with several different business models, like Norwegian, operating point-to-point flights with efficient aircraft, and WOW Air, using Iceland as a hub to connect markets in the US to markets in Europe.
WOW Air has been expanding like crazy. They launched their first flight to the US in March 2015 (to Boston), and since then they’ve added service to well over a dozen US destinations.
On one hand their growth is impressive, though on the other hand it seems unsustainable, and it also seems like they’re very much just throwing darts here, as they’ve already canceled several routes.
In May 2018, WOW Air launched flights to Cincinnati, Cleveland, and St. Louis. These were exciting routes for all three markets, given that they don’t otherwise see much transatlantic service. On one hand, an airline like WOW Air being able to offer one-stop service between secondary markets and several points within Europe is a great opportunity.
At the same time, one has to wonder how much demand there really is. Well, we now know the answer — apparently not enough. WOW Air has announced that they’ll discontinue flights to Cincinnati, Cleveland, and St. Louis, just months after launching them.
WOW Air will be discontinuing seasonal flights to Cincinnati and Cleveland later this month, and they won’t return next summer, while the year-round service to St. Louis will be discontinued as of January 7, 2018. As far as Midewest destinations go, WOW Air will be maintaining service to Chicago and Detroit.
An airline representative has said that the routes didn’t meet their goals for load factors.
Long term one really does have to wonder what WOW Air’s strategy is. Both WOW Air and Icelandair recorded significant losses in 2017, and with oil prices on the rise, this over-expansion very much seems like a zero sum game for the airlines.
We recently saw Primera Air liquidate from one day to the next. That caught a lot of us off guard, since for a while this ultra low cost carrier concept seemed unstoppable. However, without big cash reserves and profitable routes, one really has to wonder if we might not see more of this in the near future.
WOW Air’s focus is now on Asia. The airline has said that they want to add service to 15 destinations in Asia, and they’ll be launching flights to New Delhi later this year. Presumably these routes are being launched largely with the intent of connecting people between Asia and the US, so the success of the Asia routes relies on the success of routes to secondary US markets.
What do you think — is this just smart trial and error for WOW Air, or is this indicative of bigger problems with their business model?
(Tip of the hat to USA Today)
Does no one remember why People Express went out of business? When you expand endlessly because that's the only way you can keep going you will fail. I'm surprised all these TA carriers have survived this long.
@travis, you are right, NYC people are raging assholes. Stupid, too. And ugly. Elitist and snobby. Think they’re better and smarter than everyone. Eff NYC.
(posted from corner of 17th and Broadway)
I live under the flight path of arrivals to CVG and see all sorts of planes coming in at 2000 feet altitude...so far I haven't seen a single magenta-colored WOW Airbus. Guess I won't be seeing any going forward.
The Asia expansion for Wow seems stupid to me. The majority of destinations that have a significant enough market to allow Wow to make an impact already have flights to most major destinations in Europe and have connections to the major hubs in the middle east. So I would start placing bets on when Wow will disappear in a massive purple bang.
What's not mentioned is that Pittsburgh and JFK are on the WOW Bubble too, as there are no flights on the schedule currently past end of March. For international flights, seem like the summer schedule should be out by now for them.
I live in Cincinnati and didn't even have enough time to try WOW airlines out!!!
Why anyone would want to travel to the US baffles me. There are so many more wonderful places in this world to visit. However, the US is cheap so that could be a reason. The only successful business model for European airlines seems to be enabling travel for expats to and from the US and Asia. That's where the money lies. Americans simply don't travel a lot.
@Kevin - really? I've never had any difficulties in flying direct to anywhere from Chicago. Don't see any benefits of moving to LA, NYC and SF when Chicago is home. I've only driven though LA and that was enough. I have lived in San Francisco and NYC, but don't really want to settle there. So I don't really see your point expect the usual elitism that the coastal folks have, with the exception of fabulous...
@Kevin - really? I've never had any difficulties in flying direct to anywhere from Chicago. Don't see any benefits of moving to LA, NYC and SF when Chicago is home. I've only driven though LA and that was enough. I have lived in San Francisco and NYC, but don't really want to settle there. So I don't really see your point expect the usual elitism that the coastal folks have, with the exception of fabulous Boston. Moving to a city just for direct flights is a ridiculous reason...
@Travis, lol. There you go, another reason why people wouldn’t want to live in big cities like LA, NYC or SF Bay Area. Enjoy multiple connections to your foreign destinations. Hope there aren’t additional weather delays etc to add to your traveling time. :)
I think they went to fast with these..should have chosen one city to expand, probably Cincinnati. But honestly why are they going midwest? Most of these areas are losing population. They should look South and West for expansion. For example, I think their Orlando flight will do well. Additionally, looking at Raleigh-Durham in the south is a missing opportunity for an airline like wow and icelandair. Its a top 15 growing community in the US....
I think they went to fast with these..should have chosen one city to expand, probably Cincinnati. But honestly why are they going midwest? Most of these areas are losing population. They should look South and West for expansion. For example, I think their Orlando flight will do well. Additionally, looking at Raleigh-Durham in the south is a missing opportunity for an airline like wow and icelandair. Its a top 15 growing community in the US. Also they have the capability to expand internationally with RDU has only one daily flight to London and Paris.
@Anthony
Exactly. No one wants to visit the Midwest, especially in this political climate. I have no idea how European LCCs can make money on any of these routes.
Shocking that Europeans -- who have cheap flights to almost everywhere in the world (i.e. Southeast Asia, Africa, Latin America) -- wouldn't want to pay $400 + (when you add fees and luggage) to travel to St. Louis or Cleveland via Iceland!
The problem with the trans-Atlantic LCC model is that Americans *always* want to go to Europe, but Europeans *rarely* want to go to the United States, especially these sixth-tier destinations.
Thomas - Have fun paying much higher fares if the LCCs all collapse then...
BWI Flyer - Food prices have nothing to do with greed... It's a high wage/high cost society (the US would be similar if you didn't leave your poorer citizens to live on the streets and die/go bankrupt when they get sick) which is relatively small and remote.
Do you think places like SE Asia are just particularly generous or something?
Did they run out of space on the KEF side? We flew HEL-KEF-IAD this summer on IcelandAir, and the airport was an absolute madhouse, since all the flights from Europe come in at once, then the flights to US leave about an hour later. Great timing for connections, but it was one huge mass of people and it was difficult to even walk down the corridors as they were teeming with people. Victim of its own success I suppose.
Wow air is Not a good company for the travel they are so dirty they are charged for the laggag and food bad service they served my water the cup small alcohol in. So if you want to fly why don't fly with delta or United airlines
@Kevin - but many of us don't like the people from NYC, SF, and LA and choose to live elsewhere...
Wow - love the derogatory comments concerning the manufacturing hubs of America - yes, we do indeed have passports. So, I work in the greater Cincy area for GEA. I visited Iceland about a month ago - my third visit in five years. I didn't use Wow Air. I can really only see the business model being attractive to the seasonal college students and/or young professionals. The unreliable service with high costs for extra luggage...
Wow - love the derogatory comments concerning the manufacturing hubs of America - yes, we do indeed have passports. So, I work in the greater Cincy area for GEA. I visited Iceland about a month ago - my third visit in five years. I didn't use Wow Air. I can really only see the business model being attractive to the seasonal college students and/or young professionals. The unreliable service with high costs for extra luggage is simply unattractive. In my case, I prefer to fly Air Canada from CVG-YUL-KEF. A comfortable journey with a nice layover in Montreal.
As far as expansion to Asia - that's where the money is for tourism so I can definitely see the expansion being intelligent, if the visa restrictions for Iceland were less stringent.
To all those talking about Chicago and Detroit not being "midwestern." Detroit, the Twin Cities, and Chicago are actually very midwestern in culture and demographics. This coming from a Midwesterner....
The stop in Iceland and also the fact that these cities are not exactly wealthy, plus are culturally disinterested, killed this route. Those few who want to/can afford to travel to Europe from those cities might as well funnel through Chicago or one of the East Coast gateways.
To me Detroit and Chicago aren't all that "midwest" :)
Sad for STL but at least Wow didn't pull a "Primera" or "Monarch" on them and just quit the routes midstream.
We just returned from KEF to STL yesterday. WOW received some financial incentives to start the route but from what I understand they never materialized because the load factor targets weren't met. Bottom line, not enough butts in seats. I also saw many Asian tourists in Reykjavik so that may bode well at least in the short term, although the young Icelander we met working at the coffee shop said she would much rather fly...
We just returned from KEF to STL yesterday. WOW received some financial incentives to start the route but from what I understand they never materialized because the load factor targets weren't met. Bottom line, not enough butts in seats. I also saw many Asian tourists in Reykjavik so that may bode well at least in the short term, although the young Icelander we met working at the coffee shop said she would much rather fly Norwegian. On our plane, I counted at least 10 passengers who were stretched out across their entire row. We had a great flight and would love to go back to Iceland as there is so much to see. Without WOW, it will cost more and take at least one connection.
I don't mind if WOW Air and the other long haul lowcosters will be gone. I won't fly them anyway...
There’s a reason why cities like nyc, sf Bay Area, and la is expensive and worth it....lots of nonstop options to many places in the world compare to those cheaper cities. But then again, I suppose some people feel the housing cost do not justify the nonstop options among other things.
I also think Iceland is just mega overrated and overpriced. Not much loss on either side in my opinion.
WOW probs only launched these routes, bc they got some favorable subsidies from the airports, no? In my opinion, for long haul, we still need hub and spoke. Even with fuel efficiency and smaller planes that can fly long distance, point to point connection for secondary and tertiary (long haul) markets just don't make much business sense. Ben, It will be a fun and educational piece for you to write about! The future of aviation: point to point vs hub and spoke.
*unsustainable pricing, that was meant to read above...
“...for a while this ultra-low-cost carrier concept seemed unstoppable”
When?
The ultra-low-cost longhaul business has never been sustainable and precisely no one has made the model work profitably...
Norwegian is nowhere near out of the woods and may well still go under or sell sell themselves to IAG. WOW is struggling. Air Asia X cancelled most of their true long haul services ages ago. Anyone remember Oasis that tried to launch from HKG all...
“...for a while this ultra-low-cost carrier concept seemed unstoppable”
When?
The ultra-low-cost longhaul business has never been sustainable and precisely no one has made the model work profitably...
Norwegian is nowhere near out of the woods and may well still go under or sell sell themselves to IAG. WOW is struggling. Air Asia X cancelled most of their true long haul services ages ago. Anyone remember Oasis that tried to launch from HKG all those years ago? They have succeeded in launching price wars to make legacies compete with instatinable proving (and cut cabin services and standards in the process), and they have set vast piles of money on fire doing so.
In this particular case you have to wonder what the added benefit of one-stop service to Europe was on WOW given the big 3 US carriers already offer that from these midwestern cities.
Poor St. Louis. It's the 22nd largest metro area in the US (and falling) and the biggest one without any non-stops to Europe (though Cleveland is bigger and now only has seasonal flights to Iceland, which barely counts). STL has fallen a long way since its glory days as a TWA hub.
The airport is now a total ghost town, with two of five concourses totally closed down. (You can rent Concourse B as...
Poor St. Louis. It's the 22nd largest metro area in the US (and falling) and the biggest one without any non-stops to Europe (though Cleveland is bigger and now only has seasonal flights to Iceland, which barely counts). STL has fallen a long way since its glory days as a TWA hub.
The airport is now a total ghost town, with two of five concourses totally closed down. (You can rent Concourse B as an event space, if you want to go with a dilapidated airport vibe for your party.) STL also has very high fees because they foolishly spent over $1 billion in the late 1990s on a new extra runway, which now barely gets used. These high fees make it hard to attract new airlines and flights. Needless to say, as someone who likes it travel, I'm very glad I don't live in St. Louis anymore. STL has to be one of the saddest airports in a major city in the US.
There's something else going on here. A month ago, WOW insisted that they would return to Cleveland in the spring. There's plenty of demand for transatlantic service from Cleveland, but not enough to fill a plane that has the range to make it all the way. I suspect there are significant financial problems at WOW, and they're doing their best to get on top of it before they get swamped.
Those are 3 depressed markets. They probably shouldn't have tried to fly to any of those 3 to begin with.
Why even bother flying to those destinations? Do these people have passports? Stick to Asia, European tourists don't want to visit shitty cities in America, and those Americans are about as culturally aware as rocks.
It's not about Americans. It's about Iceland. It is extremely expensive and considering the number of tourists there (mostly Asian actually) - busloads and busloads - it really isn't worth going there. Iceland eventually will be the victim of their own greed. A hamburger for $28? How about $38... Many people started to realize that $99 each way is really not a good deal when you have to pay the price after you get there....
It's not about Americans. It's about Iceland. It is extremely expensive and considering the number of tourists there (mostly Asian actually) - busloads and busloads - it really isn't worth going there. Iceland eventually will be the victim of their own greed. A hamburger for $28? How about $38... Many people started to realize that $99 each way is really not a good deal when you have to pay the price after you get there. Well there is it is. They can concentrate on the Asian market and ruin the beauty of their country completely. Their choice
Not to be that guy, but told you sooooooo.......
"I could see these flights making sense from say April-October, primarily as a feeder for Americans in those cities to get to Europe. There are certainly enough people with enough income in those cities to make spring/summer/early fall trips to Europe. But I don’t see much reverse traffic, as I can’t see many Europeans wanting to vacation in any of those cities/areas. And I doubt there...
Not to be that guy, but told you sooooooo.......
"I could see these flights making sense from say April-October, primarily as a feeder for Americans in those cities to get to Europe. There are certainly enough people with enough income in those cities to make spring/summer/early fall trips to Europe. But I don’t see much reverse traffic, as I can’t see many Europeans wanting to vacation in any of those cities/areas. And I doubt there will be a lot of traffic going over to Europe in from November-March, as business travelers who normally fill seats at this time won’t be taking Wow. Any thoughts as to these flights being seasonal?"
You say the only Midwest service that will be maintained is Detroit. But you didn't mentioned the discontinuation of the Chicago service and I see them selling ticket to the end of the calendar.
Feel like Iceland was a huge fad 2 years ago when wow/icelandair had really good deals but I don't get that same excitement from people nowadays, though I could be way off. While I personally loved Iceland, it's not at the top of my list to go back to and it's so dang expensive I could see it being a turn off for some.
I think many if not all of these airlines had overestimated the potential of these secondary routes. What works on domestic / Intra-european routes hasn't translated well in transatlantic markets.
Their prices are simply not competitive enough compared to legacy carriers.
WOW air probably got subsidies on these routes anyway so they're probably jumping out of a sinking titanic.
But even on flights to Delhi WOW intends to operate 3 instead of 5...
I think many if not all of these airlines had overestimated the potential of these secondary routes. What works on domestic / Intra-european routes hasn't translated well in transatlantic markets.
Their prices are simply not competitive enough compared to legacy carriers.
WOW air probably got subsidies on these routes anyway so they're probably jumping out of a sinking titanic.
But even on flights to Delhi WOW intends to operate 3 instead of 5 weekly flights from January. So bookings must be unsatisfactory too.
@ABQ
STL was supposed to be the first city to get BA’s 787 to LHR, but they’ve been beat out by AUS, MSY, BNA and PIT and still don’t have it yet.
There's a reason these cities don't see much transatlantic action. Now WOW knows WHY
Surprised???? “Exciting routes for all three markets...” You just forgot to add these were not exciting router for the airline.
This gives us some perspective of how hard it is to run a successful airline plus how hard it is to be in an industry with really high costs! People need to start understanding why airlines are cramming in as many seats as possible when there are sub-$600 RT fares from the US to almost anywhere in the world...
WOW still flies to Chicago (which is in the midwest).
WOW... I honestly didn't expect this. At least Cincinnati still has Delta to Paris and Cleveland has Icelandair to Rekyjavik, but St. Louis has nothing.
Just recently returned from Iceland and was surprised by the large amount of tourism from the Asian demographic. Maybe there's a market since tourism is booming now?
As a side-note, Chicago is still considered the Midwest.
Extra fun if their debt is in US $, which has been appreciating, and rates rising.
presumably Jan 7, 2019 for STL stoppage.
Asia??? Seriously? Are they planning to fly between Iceland and Asian markets? I suppose up over the top it isn't quite so far. But what aircraft will they use for that?