News has come out that a US-based party has repurchased all assets from within WOW Air’s bankruptcy estate. The news was revealed by Icelandic business newspaper Viðskiptablaðið last week. Reportedly, a North Virginia businesswoman by the name of Michele Ballarin as well as Oasis Aviation Group, a Washington Dulles-based company she chairs, are the parties involved. This news comes after reports earlier in the month that other individuals had an interest in reviving the airline.
The Icelandic newspaper Morgunblaðið is saying that US Aerospace Associates, also linked with Ballarin, has not yet completed any purchase. However, CH-Aviation reports that in an interview with Morgunblaðið, Ballarin confirmed her plans to start up a new airline from WOW’s assets. With the airline name yet to be public, it would be an Icelandic company with 49% US ownership.
Ballarin visited Iceland last week and revealed that she also met representatives of airport operator Isavia and Icelandic Transport Authority. She says that she intends to work with Isavia to fly two cargo aircraft to Iceland that will carry goods related to Iceland’s fishing industry.
The claim from Ballarin with regards to WOW Air is that USD85 million has been secured for the first two years of the company’s operation. This figure could be raised to USD100 million if needed.
Plans for the future airline
Ballarin reportedly intends to use Southwest Airlines as a model structure. She plans to operate three A321-200neos, with a goal to increase the size of the fleet to ten and then twelve aircraft of the same or similar type within two years.
Ballarin says that the destinations flown by the new airline would be similar to those of WOW air. Washington Dulles would be an additional location as it is where the headquarters of US Aerospace Associates is located.
Are the claims credible?
Ballarin says that the Washington Aviation Authority was “incredibly excited” for WOW Air’s arrival. However, Morgunblaðið also reports that Dulles Airport representatives in Washington do not recognize the claims made by Ballarin. The tourist website Túturi reports that its sources claim that Ballarin’s statements are not credible. Dulles media representatives are saying that the Washington Aviation Authority is not familiar with US Aerospace Associates or Mrs. Ballarin’s affiliates.
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No need for another Icelandic airline?
Some high-level voices in Iceland are saying WOW Air doesn’t need any reviving. In another report by Morgunblaðið, Jón Karl Ólafsson, Chairman of Travelco’s Board of Directors and former CEO of Icelandair Group says it is not necessary to have more than one airline in Iceland.
Ólafsson says that the airline market in Iceland is too small but at the same time the competition has never been greater than it is today:
“What I have said over the years is that competition in flights to and from Iceland has never been greater than it is today. If we just go 10 to 20 years back when Icelandair was here in the market, with the entry of smaller airlines, whether it was Arnarflug or Iceland Express and more, at this time this was primarily at best an oligopoly market,”
We’ll try to keep on top of this strange situation as all of it appears first in Icelandic media reports. Do you think Iceland needs to have more than one airline? Or was WOW Air’s collapse a symptom of an over-saturated market?