WOW Air marks a shift in strategy
CEO says exit from St. Louis, Cincinnati, Cleveland not a sign of pending trouble
WOW Air confirmed it was axing three U.S. cities this week, leading to speculation the Icelandic budget carrier known for dirt-cheap flights to Europe might be scaling back here.
But that’s not so, the carrier’s top executive says. In fact, the airline still harbors ambitious plans for North America, Skuli Mogensen, WOW’s founder and CEO, told USA TODAY on Wednesday.
“We are absolutely going to continue to invest in our network in North America,” Mogensen said, adding that proof of that is only a week away.
“We are going to announce one new major destination in North America next week,” he said, declining to offer more specifics.
Mogensen also said WOW will beef up flights from its biggest cities in the U.S. and Canada by next summer.
But Mogensen’s bullish comments about the North American market came just a day after WOW confirmed it will end service at three of its newest U.S. destinations: Cincinnati, Cleveland and St. Louis.
WOW announced its expansion to the cities with great fanfare last year, expanding to midsized Midwestern markets that rarely get new trans-Atlantic options – let alone on a budget carrier known for $99 one-way fares to Europe.
Flights from those cities launched this past May but will end this month in Cincinnati and Cleveland and in January in St. Louis.
A fourth city announced during WOW’s recent Midwest push – Detroit – will remain a destination for WOW. So will Chicago O’Hare, WOW’s first Midwest city that was announced in a previ- ous round of expansion. But the airline’s exit is a disappointment for the other three airports, where the new nonstop routes to Europe were a prestigious addition to existing flight schedules.
What led to WOW’s demise of service there? Conventional wisdom would suggest the routes were losing money, perhaps sinking into the red amid rapidly rising jet fuel prices. Otherwise, why would WOW pull out?
But Mogensen refused to say the routes operated at a loss, instead suggesting the carrier simply had better prospects elsewhere.
“They were not performing as well as many other cities where we think we can add capacity … and do even better,” he said.
The real culprit for the dropped Midwestern cities may actually be WOW’s upcoming service to India. Mogensen says the carrier’s soon-to-launch flights between New Delhi and Iceland has created a surge in demand for connecting flights to North America, and the airline is now trying to shift capacity to those routes with the greatest potential.
Mogensen said part of WOW’s strategy is “to be more aggressive – certainly more aggressive than legacy carriers – in exploring new destinations” such as those it tried in the U.S. Midwest.
“But,” he said, “as a result, we also have to be very disciplined in not falling in love prematurely with any single route and be willing to do proper analysis and move the aircraft around.
“We have a finite number of aircraft flying,” he said. “We have a finite number of slots at Keflavik (WOW’s hub airport near Reykjavik). So we have to optimize how we utilize that from time to time.”
As for WOW’s new India service, New Delhi-Reykjavik flights begin Dec. 6 and are already on sale. WOW will open with three flights a week between the cities on new Airbus A330neo wide-body jets that seat 365 passengers.
Mogensen said based on current bookings, “80 percent of the Delhi passengers are using Iceland as a hub flying into North America.”
“This is driving some of the shifts that we are now discussing regarding next year,” Mogensen said, “because we see the demand from Delhi is going more toward the larger destinations that we’re already servicing (in North America).”
That’s led to “great demand” for North American connections, “primarily from our bigger existing destinations” there, Mogensen said. “So we need to fill that capacity by adding frequency to ex- isting routes.”
Mogensen declined to specify what cities will see a capacity boost. But when asked specifically if WOW destinations such as New York, Boston and Baltimore/Washington are the types of big markets with proven international demand, he called those “good guesses” but did not elaborate further.
Despite the strategy shift, however, Mogensen did not rule out returning to midsized markets such as the ones being dropped in the Midwest.
WOW Air launched in 2012 and launched its first flights to the United States in 2015, expanding rapidly in North America since then.
Even with the loss of the three Midwestern cities, WOW still offers either seasonal or year-round service to 12 U.S. and Canadian airports from its hub in Iceland. Those destinations are Baltimore/Washington, Boston, Chicago O’Hare, Dallas/Fort Worth, Detroit, Los Angeles, Montreal, New York JFK, Pittsburgh, San Francisco, Toronto and Newark, New Jersey.
Flights to a 13th North American destination – Orlando, Florida – are scheduled to begin Dec. 19. The new destination that Mogensen said would be announced next week would grow WOW’s North American count of airports to 14.