The new owner of Iceland-based low-cost carrier Wow Air has plans to relaunch the carrier with flights beginning in December, delayed from an initially scheduled mid-October start date.
The carrier ceased operation on March 28 after unsuccessfully searching for months for a financial backer. Wow Air, founded in 2011, operated long-haul service between Europe and North America and also transported more than a third of passengers traveling to Iceland.
Specific plans for the airline remain murky, other than that the carrier plans to focus on the Icelandic tourism market and to launch cargo operations with a focus on Icelandic exports, primarily fish products. The newly launched carrier will begin service at a time when the air cargo market is struggling, with nine consecutive months of year-over-year declines, according to data published by the International Air Transport Association (IATA).
In 2018, 2.3 million travellers visited Iceland, 5.5% more than the previous year, according to the Icelandic Tourist Board. Of that number, a little short of 700,000 were U.S. tourists.
The value of Iceland’s 2018 export of fish products was about $1.9 billion, a 22% increase over 2017. About 80% of exports were destined for Europe, and most of the export value comes from sales to the U.K. at 15.3% and France at 11.3%, according to Icelandic government statistics. And the export statistics include fish exports carried as marine as well as air cargo.
The Wow Air brand and associated rights were purchased in early September by Michele Ballarin, chairman of Virginia-based USAerospace, for an undisclosed amount, with plans to initially launch service between Washington Dulles International and Keflavik International Airport outside of Reykjavik, the capital and largest city in Iceland. Ballarin has indicated that $85 million has been secured for operation of the company for the first two years, which could if needed be raised to $100 million.
The original defunct Wow Air connected Europe and the U.S. through Keflavik. And while the original Wow Air flew under an Icelandic air operator certificate (AOC), the resuscitated carrier expects to be granted an AOC by the U.S. Federal Aviation Administration (FAA).
The new Wow Air has a tough row to hoe. Ambitious plans call for building luxury passenger lounges at both Washington and Dulles and providing travelers with meals concocted by a Michelin three-starred chef who previously worked with an affiliated Ballarin operation.
The reincarnated Wow Air also will need to contend with a number of other carriers on service between the U.S. and Iceland, including flag carrier Icelandair.
The original Wow Air ran into a host of problems. Wow Air creditors agreed on March 25 to convert debt into equity in return for a 49% stake in the company. Wow Air, however, was unable to find an investor for the other 51% to avoid bankruptcy and raise the estimated $41 million to keep the carrier aloft.
U.S. private equity firm Indigo Partners in late March withdrew an offer to buy a stake in the loss-making carrier. Indigo, which holds stakes in several low-cost carriers, including Frontier Airlines in the U.S., reported reaching a preliminary deal to acquire 49% of the carrier. That deal, however, did not fly as Indigo discovered that there were gaping holes in Wow Air’s finances and more debt than previously thought.
Icelandair previously agreed to buy privately owned Wow Air in an all-share deal but ditched those plans in late November 2018.