Transatlantic low cost carrier Wow Air failed and shut down at the end of March. That followed transatlantic low cost carrier Primera going out of business in the fall. The third – and biggest player – in the category, Norwegian, continues to struggle despite lessened competition.
Former Spirit Airlines CEO and Wow Air board member Ben Baldanza argues Wow Air’s problem was that its costs were too high, they hired local Icelandic labor, should have fully financed aircraft, and stuck to narrowbodies. He also argues they should have had a second hub in Southern Europe to shift capacity to in winter months.
Wow Air, Copyright: zhukovsky / 123RF Stock Photo
Wow Air wasn’t just a connecting airline, its cheap fares brought people to Iceland and its collapse has been costly to Iceland’s economy. As a result there’s been a move to resurrect the carrier. There may not be a fully formed business plan, just a sense of national urgency. There’s been a rush to find an investor for Wow Air’s assets who would resurrect the Reykjavik operation.
Now after several hiccups Michele Ballarin held a press conference to announce her acquisition of the airline’s assets out of bankruptcy, and her plans to re-launch air service. (HT: One Mile at a Time)
If this actually happens, Ballarin may become the most interesting figure in an industry that includes people like Richard Branson, Akbar al Baker, and Michael O’Leary.
Who Is Buying Wow Air?
Michele Ballarin is a West Virginia heiress who served as a go-between with Somali pirates and tried to get the CIA to hire her to kill Al Qaeda jihadists. She was “a trusted confidante of Somali pirates and warlords.”
Ballarin ran for Congress in the 1980s in Morgantown but the 31 year old lost badly, paying for her campaign “with money from her first husband, a man several decades older than her who had landed on the Normandy beaches on D-Day and amassed a small fortune as a real-estate developer.” She met him while an undergraduate at West Virginia University. She was taking a ballet class, and he was a ballet donor.
She and her second husband, a bartender at Manhattan’s 21 Club, moved to Georgetown and then moved to an estate in Markham, Virginia named “Wolf’s Crag,” which had belonged to a famous Confederate commander known as “The Black Knight of the Confederacy.”
During the 1990s she moved into new ventures from “real-estate development to international finance to selling body armor.” That’s when she became interested in Somalia,
As she describes it, it was a casual meeting with a group of Somali Americans set up by a friend of hers from the Freemason lodge in Washington that sparked her interest in the war-racked country, and the transformation of Michele into Amira began.
She started traveling to Africa, and soon the devoutly Christian woman who played the organ at her church each Sunday became entranced by the teachings of Sufism, a mystical branch of Islam once dominant on the Indian subcontinent and North Africa. Sufism had lost ground after the breakup of the Ottoman Empire had spawned more muscular forms of Islam, but it is still practiced widely in Somalia.
Ballarin became convinced that promoting Sufi groups inside the country was the best way to diminish what she saw as a toxic influence of strict Wahhabism that had gained a foothold in the Horn of Africa with the help of rich Saudi donors, who sent money there to build radical schools and mosques.
In 2006 she helped set up resistance movement bases in Somalia. She brokered meetings with key national security figures in DC. The next year she wrote to the CIA looking for work “hunting and killing” Al Qaeda terrorists. This was rejected.
However the Department of Defense was more receptive to her plan to “set up a humanitarian food program that would be a cover to collect intelligence.” They liked the idea that she was funding much of the effort with her own money.
Ballerin claims credit for helping Somali hit men “kill five prominent al Shabaab operatives who were gathering for a meeting in Mogadishu” in a plan she helped hatch while staying in a suite at the Djibouti Palace Kempinski. Somalis refer to her as “Amira” which is Arabic for “princess.” At one point she held the title of “presidential advisor for Reconstruction and Humanitarian Assistance” in Somalia.
In 2010 she sought to start commercial air service from Mogadishu under the banner “Oasis Aviation Group.”
What Is Their Plan?
The claim is that Wow Air will,
- Launch next month with Washington Dulles – Reykjavik flights.
- Begin with two aircraft, growing to four by summer, with a vision to run 10-12 planes
- Focus on cargo (“Help your incredible fish that has become quite desired commodity for the patrons of restaurants..bring your fresh off the hook fish to tables on the East Coast.”)
- “Bring better nutrition back on board aircraft…make flying fun again” and claims to have a 3 star Michelin chef working for two years on inflight cuisine despite not operating a commercial airline.
- Use biometric boarding to board an aircraft in 8 minutes.
- Try to offer an airport lounge for everyone (it’s been “requested” of the airports), because at most airlines coach passengers subsidize lounge access for business and first class passengers (?)
- Have $85 million in funding with no debt
Here’s Michele Ballarin giving the press conference:
Isn’t That Totally Nuts?
In short, yes, it certainly seems nuts to me. Ballarin hasn’t even announced what aircraft they’ll operate other than to say they like Boeing planes and Airbus planes and plan to operate both despite never growing beyond a fleet of about a dozen planes. They don’t know where they’ll fly beyond Iceland in Europe or what other U.S. cities they’ll serve.
The company acquiring Wow is reportedly 51% Icelandic owned, although it’s not clear how that’s the case, how much money is real, or who else is involved. It’s not obvious how they’ll fly on an existing U.S. operating certificate if the airline isn’t owned by a U.S. company, unless that company is going to effectively wet least from Ballarin.
Meanwhile passengers are going to receive bottled Icelandic water inflight instead of charging for water, and customers won’t have to “overpay for a seat.”
Is this a low cost carrier or a premium carrier with low fares? Where will they fly? What’s their business model? How will they succeed in a market where Wow Air failed, when they compete head-on with Icelandair at the Reykjavik hub?
If this airline was really going to launch just before the winter season where they’d start burning cash, I’d say that’s a problem. But since my bet is this doesn’t actually happen, it won’t be lighting nearly as much money on fire.