A couple of weeks ago I wrote about how WOW Air’s CEO said in an interview that the airline planned to announce service to Asia this month. Not just some service to Asia, but he said that over the next couple of years WOW Air hopes to add flights to up to 15 destinations in Asia, meaning that it could be as big of a market for them as North America.
Up until now, WOW Air’s business model has revolved around transporting people between the US and Europe via their Reykjavik hub. The airline is an ultra low cost carrier, so has low fares and high fees. The airline has two 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 now flies to 14 destinations in North America, and a similar number of destinations in Europe.
WOW Air adding flights to Asia is a curios move on many levels. It looks like we now have more insight into what we should expect. While no official announcement has been made, WOW Air is holding a press conference in Delhi on May 15 to “discuss the launch of operations in India.” So it seems pretty clear to me that WOW Air intends to launch flights between Delhi and Reykjavik sometime soon, probably this year.
https://twitter.com/mcuip/status/993829664002138112
When WOW Air’s CEO first talked about flights to “Asia,” India wasn’t the first market that came to mind for me, but geographically it makes the most sense. Reykjavik is ~4,800 miles from Delhi, so that’s quite a long flight, and they’d have to use an A330 for it.
The US to India market is already so saturated with the “big three” Gulf carriers. A good chunk of the traffic those airlines carry out of the US is to India. So is there really a market for this?
There are many things working against WOW Air here:
- They’ll have to use higher capacity A330s for all of their India flights, so it will be tough to maximize yields; most of their US routes are operated by narrowbody Airbus aircraft, which have lower capacity, and are easier to operate profitably
- The aircraft utilization for this route will be bad; WOW Air banks all their flights to Reykjavik, so chances are the plane will have to sit on the ground in Delhi for a long time, perhaps 20 hours (this is similar to their Miami situation)
- They’ll be competing head-on with the Gulf carriers, which for the most part have very low fares and excellent service
There’s one area they could really add value, though, and that’s with operating efficient, one stop-service between secondary markets in the US and India. If you fly a Gulf carrier between India and the US, you’ll need to make two stops if you’re not flying to New York, Chicago, Dallas, Los Angeles, etc.
WOW Air operates flights to cities like Cincinnati, Cleveland, Detroit, Pittsburgh, St. Louis, and more. So one stop routings there are potentially valuable.
I’m still skeptical about this plan on WOW Air’s part. Geographically India makes more sense than China, for example, but does competing head on with full service Gulf carriers really make business sense?
WOW Air’s fares will have to be really, really, really low for this to make sense. Fares to India are pretty consistently $500-850 roundtrip, so I’m not sure where the margins are for WOW Air.
With WOW Air, a carry-on for a roundtrip itinerary with two segments in each direction costs $220, and that doesn’t include any food, drinks, seat assignments, or anything else.
I’m quite skeptical about WOW Air’s plan here…
What do you make of WOW Air’s plan to add service to Delhi (and beyond)?
although i am happy for competition and fly to DEL, 4 times a year in Economy from the west coast, no thank you wow, no matter what way you cut it, chances of them lasting on this route over a year, is slim to none, its an extremely difficult market, high yield but low revenue, besides its home turf for the me3, air india and the powerhouses of cx,ba,lh,jl,nh.
good luck a fool and shirt are quickly parted,said a wise one.
Delta Charlie
Good to hear you get the visas OK. but I assume you are not a ''contract worker'' from a third world country.
I think the problem with this ladys application was that UK and France could not understand why a ''contract worker'' wanted to go to Bordeaux for 5 days for a wedding.
I assure you ,it was not simple and perhaps my point is that EU visa people just...
Delta Charlie
Good to hear you get the visas OK. but I assume you are not a ''contract worker'' from a third world country.
I think the problem with this ladys application was that UK and France could not understand why a ''contract worker'' wanted to go to Bordeaux for 5 days for a wedding.
I assure you ,it was not simple and perhaps my point is that EU visa people just do not trust anyone anymore .
spk307 you are correct and we know all that, but I was giving you a story about visa difficulties in EU for third world contract workers . Some Malaysians have the same problems with EU visas as Filipinos .
@Ken - what you describe is evidence to show that one is not planning on overstaying or illegally staying in the visiting country. Having the ducks in a row is fairly common and many of us, who we require visas frequently for travel, do not consider this to be difficult. On the contrary, as long as I have my itinerary, lodging, and travel arrangements planned (note: not even finalize but planned), my colleagues and I...
@Ken - what you describe is evidence to show that one is not planning on overstaying or illegally staying in the visiting country. Having the ducks in a row is fairly common and many of us, who we require visas frequently for travel, do not consider this to be difficult. On the contrary, as long as I have my itinerary, lodging, and travel arrangements planned (note: not even finalize but planned), my colleagues and I have never had difficulties obtaining a Schengen visa. In fact, it's simple and can be mailed in.
@Ken, that has nothing to do with this post. We are talking about traveling between two Non-EU countries, transiting in a EU country. Most EU countries allow this without the need for a visa, at least the sensible ones like Germany.
As long as both legs are on same ticket, passengers should have no problems. They can also do something like Malaysia does - if you do an international transit in KL by flying...
@Ken, that has nothing to do with this post. We are talking about traveling between two Non-EU countries, transiting in a EU country. Most EU countries allow this without the need for a visa, at least the sensible ones like Germany.
As long as both legs are on same ticket, passengers should have no problems. They can also do something like Malaysia does - if you do an international transit in KL by flying Malaysian airlines or Airasia, you are given certain visa exemptions.
Jared and Chuck
Schengen visas can be very difficult for some nationalities, and EU has definitely made the rules tighter in last 3 years , here is a story.
I am British and live in Cyprus ( an EU country but NOT in Schengen.)
A 60 year old Filipino lady we know here who has a valid work permit in Cyprus since 18 years , wanted to go to Bordeaux for a...
Jared and Chuck
Schengen visas can be very difficult for some nationalities, and EU has definitely made the rules tighter in last 3 years , here is a story.
I am British and live in Cyprus ( an EU country but NOT in Schengen.)
A 60 year old Filipino lady we know here who has a valid work permit in Cyprus since 18 years , wanted to go to Bordeaux for a wedding for 5 days so we offered to help her .
She wanted to route through London but because she wanted to do it with 2 separate tickets ( Paphos/london and London /Bordeaux on Easy Jet at a lower cost.) she needed a transit visa for UK.
UK Border Control would only accept transit visa application AFTER she received her visa for France.
Before she could get a French visa , she needed a certificate from the mayor in the wedding village that she was not working there. This was because she is deemed to be ''contract labour '' in the EU with a ''work visa'' in Cyprus . We had to find her an ''agent'' who charged Euros 100- to go to the mayors office in the French wedding village , get forms , email them to her , she completed and signed them and emailed them back . Then mayor stamped and certified she was not working there, based on her statements ( God knows how he could check that )
Then she got a French visa , but by then, time had run out to get a UK transit visa , so we helped her find an alternative flight on Aegean , Larnaca/Athens /Bordeaux return . Probably more than she wanted to pay .
I guess all this might come as a surprise to some readers
@Chuck Lesker - Exactly, my first sentence says so precisely that transit visas are not needed when traveling to or fro USA. It is given that an Indian citizen requires a valid visa to enter the USA. A return from the USA to India with an expired USA visa still does not require a transit visa, since the individual never leaves the transit area - my sister-in-law has done it multiple times.
This will work well for families. A lot of Indians working in the US with young families will make use of this to visit grandparents, etc. Kids do not need a business class seat. Parents have to fly with them. The parents usually just suck it up (this is the nature of parenting). My family of four with two 4 year olds usually just packs one large checked bag.
@Jared: not true. Transit visas are needed: https://www.schengenvisainfo.com/transit-schengen-visa/ . However, there are exceptions made if, for example, your US visa is still valid.
This comes at a good time since my parents, living in Delhi, just purchased a summer home in Vestmannaeyjar!
@Chuck Lester
None of the major Schengen hubs (FRA, MUH, AMS, CDG, LHR) require that Indians have a transit visa for connecting to-and-fro USA (yes - one cannot leave the Transit area). This is another reason why airlines such as LH, BA and AF target the Indian market aggressively. Furthermore, there is insufficient information to suggest difficulty in obtaining a Schengen visa, first time or not.
I am not surprised by WOW's move to...
@Chuck Lester
None of the major Schengen hubs (FRA, MUH, AMS, CDG, LHR) require that Indians have a transit visa for connecting to-and-fro USA (yes - one cannot leave the Transit area). This is another reason why airlines such as LH, BA and AF target the Indian market aggressively. Furthermore, there is insufficient information to suggest difficulty in obtaining a Schengen visa, first time or not.
I am not surprised by WOW's move to start flying from Delhi since Iceland is a growing interest tourist destination for Indians. For a closed economy, targeting the English speaking populace from India would be a major boost to the local Icelandic economy.
Indians living in the US hate flying through Dubai. The Arabs have a mental image of Indians as laborers,cooks and drivers and behave accordingly even if most of the Indians flying from US are Software Engineers. If Iceland can provide a more welcoming customer interaction at the same price Indians living in the US will switch to WOW. And Emirates economy has some of the worst seats flying today (the marketing of first and business...
Indians living in the US hate flying through Dubai. The Arabs have a mental image of Indians as laborers,cooks and drivers and behave accordingly even if most of the Indians flying from US are Software Engineers. If Iceland can provide a more welcoming customer interaction at the same price Indians living in the US will switch to WOW. And Emirates economy has some of the worst seats flying today (the marketing of first and business builds a halo but economy on Emirates really sucks).WOW narrow aisles might have better seats than Emirates widebodies.
I do not recall their being in-transit security check at Keflavik. Transit passengers from India (and certain other countries) via Europe usually have to clear security check for their hand luggage at their first point of entry in Europe and I don't believe this is possible at Keflavik.
I definitely think the value prospect comes from the secondary airports they fly to in the US. Sure, the ME3 fly from "DC" same as WOW; however, IAD is hellish for anyone who lives on the MD side. Also, consider that not every member of a family has a bag to check. If my husband and I fly to India, we're packing one checked bag. Maybe for a single traveler, the fare+fees is about the...
I definitely think the value prospect comes from the secondary airports they fly to in the US. Sure, the ME3 fly from "DC" same as WOW; however, IAD is hellish for anyone who lives on the MD side. Also, consider that not every member of a family has a bag to check. If my husband and I fly to India, we're packing one checked bag. Maybe for a single traveler, the fare+fees is about the same as other carriers. However, the value proposition comes from considering the total cost. Finally, one-stop flights WAS-BOM have layovers of 3-5 hours! If WOW can bank their flights with 1-2 hour layovers, that'd be a significant advantage.
It is not a matter of the procedure being difficult, although it is for first-timers, but that many Indians are arbitrarily / turned down for visas. Also note that many Indians need visas simply to TRANSIT in a Schengen airport. Maybe there are good reasons for this, but it is a big reason why the Gulf carriers have thrived. Otherwise Europe would be a perfect transit point between the US and Europe, much better than...
It is not a matter of the procedure being difficult, although it is for first-timers, but that many Indians are arbitrarily / turned down for visas. Also note that many Indians need visas simply to TRANSIT in a Schengen airport. Maybe there are good reasons for this, but it is a big reason why the Gulf carriers have thrived. Otherwise Europe would be a perfect transit point between the US and Europe, much better than 14 hours in economy to the gulf.
The ME3 have another advantage, they can serve smaller airports in India with small planes because of the short distance. Yet another flight to Delhi is not what is needed.
@Anthony
I am not sure why you say that it is difficult for Indian tourists to get a visitor/tourism visa. It's actually very easy and stream-lined. For returning visitors, one doesn't even require to visit the Schengen visa centers.
@ Hiro & Bob
Sorry I stand corrected!
Yes I did not do my homework!
@Hiro it's just a simple google search to see that Iceland is a part of the Schengen area. I guess @Bob just didn't feel like doing his due diligence.
A few quick corrections:
Iceland is most definitely a Schengen state, even though not an EU member.
Austrian stopped flying to India in 2016, handing over the "keys" to Air India.
In addition:
Let's wait and see what the actual announcement is. WOW may be dangling this tease whilst planning other things. Keep in mind that they want to set up another hub for the slower winter season. See the last paragraph here:
http://atwonline.com/airports-routes/iceland-s-wow-air-poised-announce-flights-india
A few quick corrections:
Iceland is most definitely a Schengen state, even though not an EU member.
Austrian stopped flying to India in 2016, handing over the "keys" to Air India.
In addition:
Let's wait and see what the actual announcement is. WOW may be dangling this tease whilst planning other things. Keep in mind that they want to set up another hub for the slower winter season. See the last paragraph here:
http://atwonline.com/airports-routes/iceland-s-wow-air-poised-announce-flights-india
From the other side, the return trip from DEL to US would cost around USD 750 minimum and that too if you book really well in advance. Like one of the comments mentioned Indians do travel a lot with luggage hence it would only make sense if WOW would at least have certain check-in luggage fee free of charge (as a matter of fact all LCCs in India have free check-in bag policy at least...
From the other side, the return trip from DEL to US would cost around USD 750 minimum and that too if you book really well in advance. Like one of the comments mentioned Indians do travel a lot with luggage hence it would only make sense if WOW would at least have certain check-in luggage fee free of charge (as a matter of fact all LCCs in India have free check-in bag policy at least up to 15kg). Plus, the total fare must be less than INR 35,000 (around USD 500) for the cheapest return trip, including check-in bag fee.
@Bob - Iceland is part of Schengen treaty.
@ Anthony
Iceland is not part of the European Union.
It is not either part of the European Economy area like Norway (Norway is not part of the European Union)
And I do not think that Iceland is part of the Schengen area.
Norway or Switzerland are part of the Schengen area but not Iceland.
So maybe it is easier for Indians to get a visa for Iceland.
Why do you assume DEL as opposed to BOM? (As I'm sure you know, DEL isn't the only big city in India)
Not saying it’s my belief, but I’m pretty certain it’s WOW Air’s belief that they can make money on this route based on Iceland-India traffic alone. Huge fad among Indian teenagers to visit the Blue Lagoon and why not. Add to it the fact that they can’t offer great onward aircraft to US. Also that they could codeshare with Jet or Indigo and feed from
Other cities. Yields will be high. Think about Austrian....
Not saying it’s my belief, but I’m pretty certain it’s WOW Air’s belief that they can make money on this route based on Iceland-India traffic alone. Huge fad among Indian teenagers to visit the Blue Lagoon and why not. Add to it the fact that they can’t offer great onward aircraft to US. Also that they could codeshare with Jet or Indigo and feed from
Other cities. Yields will be high. Think about Austrian. They have pretty shabby onward connectivity from Vienna which is hardly a hub. But they have been operating VIE DEL for a while.
Wow...totally agree. In fact I posted similar comments on another blog last night! ;-) Would just add that even if we cut out the west coast market to focus on transatlantic connections to leave Air China aside, the fares from India to US are simply too Low meaning wow has very limited scope to undercut and disrupt the market. I honestly think Africa would be better choice for them.
Delhi KEF is approximately 9.5...
Wow...totally agree. In fact I posted similar comments on another blog last night! ;-) Would just add that even if we cut out the west coast market to focus on transatlantic connections to leave Air China aside, the fares from India to US are simply too Low meaning wow has very limited scope to undercut and disrupt the market. I honestly think Africa would be better choice for them.
Delhi KEF is approximately 9.5 hours and kef to nyc is approx 5.5 hours meaning a very direct and convenient routing- I like the idea of getting an extra 1.5 hours of shut eye on the red eye from India and then looking forward to a short 5 hour day hop to nyc. The question is how much of a price advantage will they be actually able to offer to get service demanding Indian passengers to forgo the creature comforts and accept their “minimalist” product.
While Wow can significantly undercut legacy European and American carriers, it will struggle to retain the same cost base advantage with Gulf carriers that operate in lower cost economies and operate ultra-fuel efficient aircrafts.
While transatlantic routes have some of the highest yields (fares) in the world, India US would be among the world’s lowest yielding markets- American had to pull of its delhi chicago route inspite of having load factors over 90% simply because they could not turn a profit given the fare levels on the route. An economy return flight from London to New York runs at about 750 usd which is roughly the same as a flight from New Delhi to New York (more then twice the distance).
To get Indians to even consider switching to Wow, they would need to consistently offer fares at around 35k for a Delhi NYC return trip. Even at that price, some may question their value proposition given extras such as baggage and meals- Indians rarely travel light! The question is whether it is possible for any carrier to sustain these prices- particularly if the fuel prices go up?
Couldn’t the A321LR make it? That may allow them to compete effectively, as they won’t have as big a plane to fill.
As someone above said, the biggest advantage the Gulf carriers have is that are truly one hop for flights to India as they fly direct from DXB to the secondary markets in India.
For primary markets like SFO/LAX/NYCto DEL or BOM, there are directs and one-hops available on just about any carrier, but EK/EY will get you a one-hop to COK, HYD, AMD etc. Connections within India are terrible and people flying from the US would rather connect in DXB/AUH than in BOM/DEL.
The India-Iceland market has taken off to a certain degree so there maybe some numbers in that. Especially with Iceland's popularity in Bollywood films
Nobody has mentioned this yet, but the biggest problem to me is that nobody in mainland Europe will want to backtrack to Iceland to go to India. So they're relying on US traffic and Icelanders to fill a huge plane.
Given Indians require a visa -- and they're hard for Indians to get -- to visit the Schengen area, this strikes me as a really silly plan. Also, that long with no food/water/entertainment -- no, thank you!
@spk307:
I think that $220 is just the price of the carry-on. So that's $55 per segment ($220 total for 4 segments) for a carry-on in addition to the price of the ticket itself. Ben's point is you're going to see a commensurate ticket on Wow versus a full-service carrier as costing the same, if not more, since Wow charges for everything that's included with the ME3 but with more opportunity for things to go...
@spk307:
I think that $220 is just the price of the carry-on. So that's $55 per segment ($220 total for 4 segments) for a carry-on in addition to the price of the ticket itself. Ben's point is you're going to see a commensurate ticket on Wow versus a full-service carrier as costing the same, if not more, since Wow charges for everything that's included with the ME3 but with more opportunity for things to go awry with IRROPS and such given the fleet and network limitations on Wow.
How about people going to secondary markets in INDIA? Sure...it's better for people living in smaller cities in the US but the golf carriers fly to a truck load of cities in India. For a lot of people, is either a second stop in the US or a second stop in India.
To echo vs, I’m a CLE flyer and I would choose the 5 hour then 9 hour flight to India over the 1 hour to EWR then 16 hour to Delhi if I needed to go there. Even on an ME3 with two stops for me there’s still a very long flight to the Middle East from the US. I definitely think vs other point about Indians looking to travel home creates a market that...
To echo vs, I’m a CLE flyer and I would choose the 5 hour then 9 hour flight to India over the 1 hour to EWR then 16 hour to Delhi if I needed to go there. Even on an ME3 with two stops for me there’s still a very long flight to the Middle East from the US. I definitely think vs other point about Indians looking to travel home creates a market that may be underestimated.
What I’d really like to see from Wow would be routes that create the possibility to one stop to Eastern European cities like Sofia, Tbilisi, and Baku, or the even lesser traveled Central Asia countries. Well, to be honest I’d like to see all that instead from IcelandAir, but Wow is a good start
This seems ideal for flying from secondary east cost markets to India. I live in Pittsburgh and travel to Mumbai a couple times a year. The only one stop flight is United via EWR. All other flights are 2 stop via an east coast gateway and Europe. This could be a lot more convenient for Indians living in PIT, CLE, STL, etc. of which there are many.
As you said, the fares will have to be really, really low and the connections easy. No-one is going to choose WOW unless it is the absolute cheapest and most convenient.
It gets to a point where the profit margins must be so razor-thin that there's no real point in operating the service.
Are you not contradicting yourself?
Full service carriers charge $800 and Wow air starts from $220? If thats correct, i can see most of the demand moving to Wow air in a price sensitive market.
The profit will come from the add-ons such as luggage, meals, seat selection etc.
Prior to this though, has WOW been a profitable airline? If yes, why have they been profitable while Norwegian has not?
Indians are flocking to Iceland after Bollywood started filming song and dances there..... They might not be looking to travel to the US.
Having done a NYC to BOM direct in economy on Air India in the 777, I can only imagine what fresh hell a narrow body experience would be, even with the shorter flight time.
@Lucky Small typo, the press conference is on May 15th not May 1.
As you've stated, the prices to North America would have to be very low. I could imagine WOW offering very competitive prices to some european destinations though.
You nailed it, Lucky.
Economy fares between North America and Europe are, quite often, actually higher than fares between North America and India, for roughly double the distance. Even for an LCC like WOW, this should prove challenging.
Several years ago Finnair thought of adopting the same strategy, but they obviously crunched their numbers and wisely decided against it. The Gulf carriers carry so much O&D and regional connections from India to the Middle East,...
You nailed it, Lucky.
Economy fares between North America and Europe are, quite often, actually higher than fares between North America and India, for roughly double the distance. Even for an LCC like WOW, this should prove challenging.
Several years ago Finnair thought of adopting the same strategy, but they obviously crunched their numbers and wisely decided against it. The Gulf carriers carry so much O&D and regional connections from India to the Middle East, Africa, and Europe that they can absorb the likely losses incurred from the USA.
With WOW Air's operational reliability also somewhat questionable, this could prove to be an IRROPS immigration nightmare. Iceland is a Schengen state; Indians are definitely visa nationals.