The Icelandic budget airline isn’t the first European flight provider to run out of money.
The Icelandic budget airline Wow Air has reportedly ceased all operations until it can raise more money — and has canceled all flights, leaving passengers stranded around the world.
“We’re paying money for it and we’re not getting our money’s worth. We’re kind of like cockroaches or garbage in their eyes,” Bjorn Kjartansson, a Wow Air passenger who is now stranded in Boston Logan Airport after his flight to Iceland was canceled, told the local CBS affiliate WBZ. Kjartansson said he had received several text alerts the night before his flight saying the trip was delayed, only to have it be canceled altogether.
Earlier this week, the airline claimed it was in the “final stages” of a funding round and told passengers flights were being delayed until “documentation with all parties involved have been finalized.”
But after the last-ditch fundraising effort failed, Wow Air was forced to cease all operations effective immediately, leaving passengers who had already purchased tickets — and some of whom were already at the airport — without a way to get to their destination.
“We have run out of time and have unfortunately not been able to secure funding for the company,” the airline’s chair Skuli Mogensen said in a letter to employees that was obtained by Bloomberg. “I will never be able to forgive myself for not taking action sooner.”
Saurabh Aggarwal, a passenger who was supposed to fly from Toronto to Reykjavik on Wednesday night, told CNN that passengers were given conflicting information about the flight’s status before it was eventually canceled. Aggarwal added that the airline did not provide the stranded passengers with accommodations nor did it issue refunds. “This really scared everyone. At that point we were finally given back our bags and no money as of now has been scheduled to me,” Aggarwal said.
@wowairsupport flight WW104 from #EWR was cancelled after a 4 hour delay and they gave us a $12 voucher Pandemonium at the gate. I need a refund + new earliest flight ASAP. @EWRairport pic.twitter.com/4No3qzidAg
— Crypto Gumb (@derekGUMB) March 28, 2019
The airline has canceled all of the 29 flights it had scheduled for Thursday and asked 2,700 passengers to find alternate travel plans with other airlines, Bloomberg reports. Per CNN, some of Wow Air’s rivals, including EasyJet and Norwegian Air, have begun offering reduced fares to the passengers Wow Air left behind.
As Bloomberg notes, this could be bad news for Iceland’s economy, which relies heavily on tourism. The Wow Air collapse has weakened the Icelandic krona, which fell 1.44 percent on Thursday. Stefan Broddi Gudjonsson, an economist at Arion Banki, told Bloomberg that the Wow Air shutdown could lead to a 16 percent drop in tourism to Iceland this year and a 1.9 percent drop in overall gross domestic product.
Wow Air is the eighth European airline to have failed since the summer of 2018, according to Bloomberg, which cites fluctuating fuel costs, over-capacity, and a continent-wide fare war as the culprits in Wow Air’s downfall.
In October, the Danish budget airline Primera Air shut down and declared bankruptcy. Like Wow, it left passengers stranded around the world. Other budget airlines, including the Swiss airline SkyWork and the Belgian airline VLM have also shuttered. As Aditi Shikrant wrote for The Goods at the time, these shutterings are indicative of a larger problem plaguing budget airlines: The more they expand their services, the more precarious they become.
The issue isn’t just that these airlines are expanding faster than they should be; all airlines have to deal with the same problems, particularly fuel costs, but because of their low margins, these problems hit budget carriers the hardest. While Wow’s financial ruin may be good news for its competitors in the short term, it’s very possible that it won’t be the last low-cost carrier to abruptly shut down.
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Breaking News: Wow Air has abruptly shut down, leaving customers stranded around the world - News Paper
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