The Conversation: Skúli Mogensen, WOW Air

The Icelandic entrepreneur talks to Andy Hoskins about starting an airline “for fun” and its steady ascent

Awide grin spreads across the face of Skúli Mogensen when he talks about the origins of WOW Air, of which he is founder, CEO and sole owner.

“Sometimes I say it started out of boredom,” he explains. “I’d been in tech and telecoms, made some money and retired at 40,” he continues in something of an understatement. “But I woke up one day and realised I didn’t have any friends to play with because normal people work. I was missing the action and I needed to get going again.”

After years of flying on business between Iceland, Europe and North America and “looking at the overheads of Iceland Air and its ageing fleet, I thought surely we can do better,” says Mogensen. “But you don’t start an airline thinking it’s going to be a financial success. Everyone advised me not to do it, but we’ve made it work.”

Six years after the low-cost carrier’s first flight took off from its base at Iceland’s Keflavik International Airport, its fleet stands at 20 aircraft and its network at 38 destinations.

In April the airline launched WOW Premium fares – with larger seats and a pitch of 37 to 45 inches, plus fast-track security and other perks – in a bid to win a greater share of the business market. It has also added its third UK route, from London Stansted, and a hattrick of developments was completed when WOW revealed in May that it will commence services between Iceland and New Delhi in December, its first South Asia service.

“Three years ago we had no North America destinations and now we have 14. Could we have 14 destinations in Asia in three years time? Yes,” says Mogensen, although he adds a word of caution. “Asia looks good in Excel but it’s easy to get rich in Excel.”

He is serious, however, when he says Iceland has the potential to become the “Dubai of the north”, connecting North America and Asia over the top of the world.

In North America WOW has predominantly focused on secondary markets where there is little existing competition – recently adding Pittsburgh, Cleveland, St Louis and Detroit – much like its larger low-cost counterpart, Norwegian, has done.

“Our value is in secondary markets but we also have premium destinations such as New York JFK. London direct to the US is feasible,” he says. “But going direct between the big US and European hubs is where there's the most competition. We are at the size now where we are able to play around with our network.”

One area in which Mogensen can draw on previous experience is technology. He speaks enthusiastically about “business intelligence” and the information businesses have about consumers today, and how he hopes to “make the seat fare as close to zero as possible” by selling ancillary services such as accommodation, car rental and theatre tickets.

“We currently have $52 per passenger in ancillary revenue,” he explains. “I expect that to be closer to $60 by the end of the year and I would be disappointed if we didn't have higher ancillary revenue than passenger revenue within four years. I think we will be the first airline to do so and it will be a game changer. We are not just an airline – we are in the travel experience business.”

In the meantime, Mogensen is pondering the next move for WOW. “We have been profitable since 2015 and we still continue to expand but I like to think we are prudent, largely because the airline is 100% owned and funded by me. I'm still the start-up guy in the garage watching every penny,” he says.

“One of the things now being discussed is whether we should raise capital for the first time in order to fund continued growth, or should we slow things down a bit. I’m having such a great time essentially doing what I want and that’s a fantastic luxury.

“Has it been a success from day one? No, and the verdict is still out. Anyone running an airline today know it’s a tough industry but it's also a hell of a lot of fun.”

I like to think we are prudent, largely because the airline is 100% owned and funded by me. I'm still the start-up guy in the garage watching every penny”