The Rise And Fall Of WOW Air: Iceland’s Bold Purple Airline

Icelandic airline WOW Air collapsed in March 2019, leaving passengers stranded and leaving Iceland with just one airline. This article looks back at the growth of WOW Air over its eight-year operation and what led to its downfall.

WOW Air operated from 2011 to 2019 from a Reykjavik hub. Photo: BriYYZ via Wikimedia

Founded in 2011

WOW Air was established in November 2011 by Icelandic entrepreneur Skúli Mogensen. He saw a gap in the market with low-cost operations to and from Iceland and an opportunity to market flights to both Europe and North America.

It would use a similar strategy to flag carrier Icelandair, with the hub location of the country. It could market flights both as single routes to and from Iceland as well as routes between the US and Europe (and later Asia) with a connection in Reykjavík.

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Growing routes quickly

The airline started small, serving Paris Charles de Gaulle first (from May 2012), but expanded quickly. It soon added flights to London Gatwick, Copenhagen Kastrup, and Berlin Schönefeld. As part of this expansion, it took over Iceland Express, a small airline founded in 2002 that operated to several European and North American destinations.

Iceland Express 737
WOW Air acquired Iceland Express in October 2012. Photo: Juergen Lehle via Wikimedia

Passenger numbers grew quickly. In 2013 it carried 400,000 passengers and increased this to over 1,000,000 in 2014. Services to the United States began in 2015, and to Canada in 2016. With these new routes, passenger numbers reached 3.5 million in 2018. And it launched flights to Delhi in November 2018 (as part of a strategy to expand to Asia). But it dropped this route (along with Chicago and Los Angeles) just over a month later, as an early public sign of difficulties.

Aircraft sported a distinctive purple livery. Photo: Getty Images

Facing financial difficulties

Dropping these routes came soon after the airline started to show financial problems. Surging oil prices were likely the main cause of these problems. Prices per gallon had risen from $0.93 in February 2016 to $1.85 in February 2018, and further to $2.25 in September 2018. Such rises hit many airlines hard. But as a low-cost airline and still going through its initial expansion, WOW Air was particularly affected. It had also just acquired new aircraft (three Airbus A330-300s) as part of an expansion. This turned out to be terrible timing, given the rise in operating costs.

WOW Air A330
A WOW Air A330, taken on shortly before financial problems hit. Photo: ERIC SALARD via Wikimedia

The competition was certainly a factor too. The transatlantic market is highly competitive, with many full-service airlines offering direct flights and having more flexibility in pricing. Low-cost airline Norwegian was also offering more direct routes using efficient Boeing 787 aircraft.

Investment attempts

In November 2018, it was announced that Icelandair was looking at the full acquisition of WOW Air. With similar strategies and routes, this could have worked. But the proposed deal fell through at the last minute, with Icelandair claiming that WOW Air could not fulfill certain conditions of the purchase.

Icelandair 757
Joining with Icelandair would have lead to a monopoly on US-Iceland-Europe routes. Photo: Getty Images

There was interest too from Indigo Partners. With its investments in other low-cost airlines such as Frontier and Wizz, it would have been a good match for WOW Air, but investment failed to proceed.

Collapse of the airline

Without investment, WOW Air’s problems mounted. It cut back staff, and returned four aircraft to lessors, and canceled further aircraft orders. CEO Mogensen even injected a further €5.5 million ($6.5 million) of his own money into the airline.

On March 28th, 2019, WOW Air announced it was ceasing operations. Passengers were left stranded overseas, but the collapse was not really a surprise. The airline had been canceling flights for days beforehand. And there had been extensive negative press in the weeks and months leading up to it. This certainly did not help as the airline tried to deal with investment offers and generate revenue.

At the time of its collapse, WOW Air’s fleet consisted of Airbus A321-200 and Airbus A321neo aircraft. These found new homes with Air Canada Rouge, Condor, Turkish low-cost airline Onur Air, and leasing companies Bocomm and ALC.

Air Canada Rouge
Air Canada Rouge acquired eight former WOW Air A321s, but many have been grounded in 2020. Photo: Getty Images

The collapse also had a serious impact on the economy of Iceland. Tourism forms a major part of Iceland’s economy, and WOW Air played a big role in this with its low-cost flights. The ongoing grounding of Icelandair’s 737 MAX aircraft did not help either. Bloomberg predicted that the county’s economy, previously on track to grow by 1.8% in 2019, would, in fact, contract by 0.4%.

Making a comeback?

There has been plenty of discussion about the possible return of WOW Air. As early as September 2019, there were reports of a new service that would operate to the US only, with increased comfort and service levels.

Then again, in May 2020, there was talk of resuming service under a new ‘HonestFares’ model with low prices but more inclusions than in the past. The pandemic and slowdown in aviation in 2020 have undoubtedly affected this, and we will have to wait to see what, if any, service resumes. The website maintains that “WOW air is committed to making flying fun again!” and we will report as soon as it announces more.

Would you like to share any memories of Wow Air? Would you like to see it return? Let us know your thoughts in the comments.