Another One Bites The Dust: The Failure and Shutdown of WOW Air, and why people should avoid ULCC's
In my short 36 years here on this planet, I've come to realize airlines come and go, and people being what they are, are always looking for a bargain basement deal when it comes to airfare. They can't help it, they're cheap. They want Nordstrom frills on a Walmart or Dollar General budget. Airlines (successful airlines, that is) cater to these folks at manageable fare levels that are usually a mix of decent pricing with a little dash of profit for the carrier. I mean, the airline does have bills to pay, too.
Budget airlines have prospered worldwide, expecially here in the United States, in Canada, Asia, and in Europe. Europe's airline industry is where the US was in the 1980's. You have the traditional formerly state run network majors like Air France-KLM, Lufthansa, and Aeroflot. You have a few airlines that are still technically State-run like Alitalia (although for how long they'll keep flying is anyone guess, and I'm crossing my fingers they'll still be flying by the time I board them in June). You have this new breed of quasi-Low Cost Carriers like Aegean, Scandinavian, and Aer Lingus (both of which used to be major state-run enterprises), and now you have an anomaly known as a ULCC (Ultra Low Cost Carrier), such as successful airlines like easyJet, RyanAir, Norwegian and Vueling, to not quite so high flying entities like WOW Air, Wizzair (really, that's it's name), and Primera. I won't even go in to fly-by-night con jobs like SkyGreece.
We all heard the headlines as of the date of this writing. WOW Air suspends all flights, passengers stranded at airports in the US and in Europe. Starving college kids with no other funds are sleeping on airport floors waiting for some form, any form of help getting them back home. In the last year alone 6 European carriers have gone bust. Flybmi, Germania, Monarch (which is really sad), Primera, Air Berlin, and Cobalt (I was actually rooting for them) of Cyprus. All claimed crushing debt loads and inability to hedge for the lean winter months and over expansion in some cases. To it's credit, Air Berlin was the only airline that didn't leave passengers stranded, and forged agreements with Lufthansa, Germanwings, and a handful of other airlines to help get their passengers unstuck.
In the case of WOW Air, Icelandair (it's biggest rival, and almost savior) is offering passengers holding confirmed WOW tickets discounted Standard Economy fares from the cities WOW operated to with Icelandair, for travel between March 28th, and April 11th, 2019. This is pretty standard in the industry, and accepted by the International Air Transport Association (IATA) worldwide when an airline suspends operations. So if any of my readers out there are stuck with WOW, head over to Icelandair, see how much it'll be to get you home.
As a Travel Agent, I've helped travelers get unstranded before, during the shutdown of SkyGreece in 2015. In that case though, the jokers that ran that "airline" (and I use the term loosely) simply took off with the money and had no way to help their passengers out. Let me tell you, getting people out of Athens and Budapest to Toronto or New York in the middle of July was NO easy matter. Every single flight I could think of was completely full, so I had to get creative and routed passengers from Athens and Budapest through places like Moscow, Reykjavik (on Icelandair), Doha, Dubai, and Cairo. There was just no other way. Also, because of the SkyGreece situation, no other airlines would offer discounts for the folks, which made matters worse tenfold.
So when I book travel for my clients, I avoid the ULCC's at ALL costs. The headache is not worth the savings. Yes, that $149 fare from Los Angeles to Oslo looks awesome, doesnt it? Well, take a look at WOW's operation reliability, there was none. Flights were rarely on time, or they were badly under-catered, and everything you wanted came at a cost. Seat assignment? Pay extra. Meal onboard, even on the long hauls? Pay up. Print your boarding pass? Yep, fork it over for that too. Reasons like this are why most Travel Insurance companies wouldn't issue policies on these carriers. You're literally better off on the real airlines.
Which brings me to another topic. Travel Insurance. I highly recommend it for ALL my clients heading abroad, even if it's back home to their village to visit friends and family. There's no two ways about it, that extra couple of hundred dollars sure beats paying out the nost to get yourself unstranded when your airline goes bust.
WOW Air wasn't a bad idea, to begin with. Far from, actually. When they started out, it was to fly people from Europe to Iceland on the cheap with no frills, as most flight were within 4 hours. They started off marvelously, and load factors were high, but the fares werent. In my opinion, the fares were TOO low. There was ZERO profit on a LOT of their flights, but the money was pouring in from the extras you had to pay for. So much so, the CEO of WOW Air thought it would be a fantastic idea to expand the brand and concept to long haul flights. So he went to Airbus, which made his smaller, perfectly suited Airbus A320's and A321's that faithfully flew Europeans to Iceland for the last few years, and bought the bigger (and in my humble opinion, the perfect widebody) Airbus A330. This plane is a monster, it held 342 passengers in WOW's layout. They used it to fly from Reykjavik to Los Angeles and San Francisco. The new widebody, long-haul operation cost WOW far too much in capital expeditures, training costs, etc. Plus, it was badly timed. Tourism levels to Iceland in 2018 dropped off enough to the point where even Icelandair was having trouble filling up it's usually overbooked Boeing 757's. Also, the price of fuel in Europe had spiked right when the A330's began revenue service for WOW. It was a carefully curated disaster from the start.
Well, it turns out the Airbus A330 operations were too expensive and WOW took a bath. They laid off employees, had their come to Jesus moment, and looked for salvation. Icelandair, naturally, was the first to bat an eye. They took a look at the operation, and the books. They didnt like a lot of what they saw and offered WOW $18 million. Well, WOW didn't think much of the deal and snubbed their noses at it. In comes Indigo Partners, who've turned around airlines like Spirit and Frontier here in the United States into very profitable and successful followers of the ULCC concept. Their chief, Bill Franke, once took America West Airlines out of bankruptcy. It was safe to say WOW would've been in good hands. Indigo also looked at the operation and the books, and originally offered $75 million for the airline, but in a last minute twist, pulled out of the deal. Something must've been in the books that was so bad Indigo pulled out faster than Icelandair did. Time will tell. But as it is, WOW Air, as a going concern, is dead in the water. As the immortal Freddie Mercury sang: "Another one bites the dust".
As for the Walmart mentality passengers, spend the extra bucks and go with a real, VIABLE carrier, and cover yourself with Travel Insurance. You'll thank me later.