Early this morning, frugal travellers were distraught to find out that their favourite ultra low cost airline went out of business. In a shocking turn of events, WOW Air released a statement declaring bankruptcy and simultaneously cancelled all of their ongoing flights. Now, we've dug into the story to find out the real reason why WOW Air shockingly went into bankruptcy.
On Thursday, March 28, WOW Air released a statement declaring that the company had effectively shut down and declared bankruptcy. Narcity reported this morning that passengers were stranded due to cancelled flights and the company ceasing operations.
There seem to be multiple reasons why the airline went downhill, ultimately shutting down operations.
The first reason why the airline declared bankruptcy is reportedly due to the fact that the company was not able to secure an investment from Icelandair and from a private-equity firm, Indigo Partners.
It's hard to believe that a popular airline like WOW Air wasn't doing well, considering everyone loved their super cheap deals. Who else would send you across the world on a flight for only $50! Well, it looks like their strategies weren't working out for them very well.
Even though the airline was immensely popular, they had an incredibly bad year fiscally. According to Business Insider, 2017 was a profitable year for the company but 2018 was "abnormally bad". Not only did they lose 33.6 million dollars last year, they also failed to merge with Icelandair, which would have helped save the company.
The absence of the merger with Icelandair caused the company to spiral into a huge downfall.
The second major reason why the company went under is due to a new purchase for their airline fleet. For many years, WOW Air operated with low-cost airplanes that were easy and effective. They didn't bother purchasing or operating with larger planes because, of course, this would come with extra costs and extra maintenance.
Recently, they decided to try something new by adding an entire fleet of larger planes, specifically the Airbus A330-300 jets. Previously, they stuck to smaller jets that would seat under 220 people. Now, they had larger jets that would seat around 340 flyers.
The new jets obviously added more costs, maintenance and required the company to sell more tickets and more seats, which ultimately added to their demise. Business Insider also added that the larger jets had "premium cabins" which definitely contradicted their message of being an ultra low-cost airline.
In the end, it seems that WOW Air made a few decisions that ended up costing them their brand and their company.