For the last several years fares between the US and Europe have been available at incredibly low prices, driven down by a generation of ultra low cost carriers — deep discount airlines no longer just flying short haul routes, but operating across the Pond the way that Freddie Laker’s Skytrain service once pioneered.
There have been too many players flying too many seats at too low a price for too long, in a market that’s long been challenging, and airlines trying to make it in this environment have struggled.
- Primera shut down
- Norwegian was near collapse at the end of 2018.
- Wow Air began cutting routes before then looking for a partner to throw it a lifeline.
Wow Air, Copyright: zhukovsky / 123RF Stock Photo
It looked like Icelandair might acquire Wow Air, saving the carrier but also consolidating the low cost transatlantic carrier market and bringing about higher fares. No deal was agreed to, however.
Wow Air sold planes to stay afloat. Then with the expectation that Indigo Partners would invest they ran a huge fare sale. The question is, for folks who bought travel into the future, will the airline be around to fly?
The Indigo deal came with harsher conditions than Wow Air realized and they couldn’t come to a deal. Icelandair jumped back into the mix but now says no deal could be reached and talks have concluded. (HT: One Mile at a Time)
The era of $49 one way fares between the US and Europe has been richly rewarding for consumers but hangs in the balance. Betteridge’s law of headlines states “Any headline that ends in a question mark can be answered by the word no.” In this case, however, that would be too optimistic by far.
Update: Wow Air will have a statement on Monday and is in discussion with creditors over a possible debt-equity swap.
Gary does not seem to understand Betteridge’s law. The title begs yes. The law says no
In terms of toast:for 2019, and in order:
Wow…. toast
Jet…toast
Norwegian…toast
Interesting times. There may suddenly be quite a few single aisle airframes returned to lessors, just as the MAX program is stumbling.
A few ‘opportunistic’ buys or leases may open up on widebodies, too.
Did the model of selling seats at under cost fail, or did it fail because the majors were willing to lower their product and price to the level of these companies, therefore removing their benefit?
Icelandair will come back to reap the assets of defunct WOW for pennies on the króna !
With regard to the following line: “There have been too many players flying too many seats at too low a price for too long, in a market that’s long been challenging, and airlines trying to make it in this environment have struggled.”
As a non-apologist for one or more of the industry’s transatlantic-flying cartel kingpins, I welcomed the additional players, additional seats and lower prices that WOW and Norwegian brought to the markets of relevance. WOW and Norwegian’s hatchet job on the government-backed, industry cartel kingpins’ pricing power has done consumers a favor.
The industry’s TATL-flying cartel kingpins had already done a lot of damage to consumers’ well-being and they would have done even more damage sooner to consumers in the absence of WOW and Norwegian’s presence in the markets of relevance.
Off subject does anybody know what WOW is a acronym for?
@Mike
Hehehe HeywoodBanks.