Cause of Failure

In the first few years that it started operations, WOW Air delighted their US travelers with the prospect of below $100 flights to Europe. How true was it? Well, in 2017, WOW Air was accused of spreading false claims, after media outlets reported its claim that it would fly passengers from London to New York for £99, which it said was below cost. That flight leg, priced at £99, was only available as part of a more expensive return flight!

Aside from these false rumors and claims, which some may say are a common thing within the airline industry anyways, there are some bigger reasons.

In a Financial Times interview, WOW Air CEO Skuli Mogensen stated that the reason the airline essentially failed was their decision to hire a fleet of wide-body Airbus A330s (which added up to significantly higher fuel costs). He also stated in that interview that this decision, which turned out to be a final nail in the coffin for WOW Air, was taken while there was too much debt on the balance sheet and given the challenging environment in the airline industry, they could not secure further funding.

It's true that the ultra-low-cost airline industry, especially in Europe faces a challenging environment. Since the summer of 2018, 8 European airlines had failed according to an article by Bloomberg (with most blames going towards rising fuel prices). The case of WOW Air is nothing new in these regards.

The unique case of the spectacular failure of WOW Air can be frankly described in one sentence - They wanted to become too big too fast.

Within a short span of time, since they started in 2011, WOW Air was reportedly planning to add 15 destinations in Asia just before going bankrupt. With just 10 planes, they planned to cover 30 destinations (no wonder they averaged 15-30 minutes late for most of their flights). By comparison Southwest Airlines a US-based low-cost carrier has 750 planes for 100 destinations. They also overthought the importance of Iceland as a destination for stopovers on transatlantic flights, while acting as if they were too big to fail, and thought that somehow the Iceland government, given the importance of tourism in the country, would bail them out of their debt burdens.





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