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hvusslax
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:57 am

As is usual in media, the headline of this Bloomberg piece is rather disconnected from the actual story. Yes, the Central Bank is now predicting a small contraction in GDP for 2019 after several years of very fast growth. Yes, that is partially caused by reduction in tourist numbers although the disappointing fisheries season is probably just as important.

One thing to consider is that not all tourists are of equal value to the economy. Everyone in the tourism sector knows that the average WOW passenger staid for fewer nights, staid closer to Reykjavík and spent less on high value services than other tourists. It should not surprising that this is the case as WOW would surely have a higher proportion of passengers where the trip to Iceland was more of an impulse buy because of the low price of air fare. While it is of course damaging to total tourism revenues to lose WOW I think the damage is less than could be expected from just counting the total number of visitors. Iceland is the kind of place that should focus on quality over quantity anyways.
 
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:58 am

PatrickZ80 wrote:
klm617 wrote:
There were no rescue flights for passengers in Detroit or Baltimore and those market to this day are still unserved.


You mean no direct rescue flights, which is true. However there were one-stop rescue flights on the American carriers. For example you could have flown from Keflavik to Detroit through New York.

You say these markets are unserved, but that's incorrect. They are served, just not with a direct flight. That's true for 99% of America, so nothing new there. However for a good part of America it's possible to get to Keflavik one-stop on either American, Delta or United. This includes Detroit and Baltimore as well.


FI also has an extensive codeshare agreement with B6, WS and AS that covers alot of the US as well.
Nothing compares to taking off in an empty 757 with full thrust!
 
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AirlineCritic
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 8:59 am

Losing competition and seats is always bad. Yet it is of course true that unsustainable businesses must fail. I think the WOW situation is an overall negative for the country, but there's some potential competition in the low cost carrier space that may fill in... say Norwegian establishing a another base in Iceland (although they too might not bee sustainable). But I think it would be good to have additional airlines based in Iceland.

Then there are of course others flying in. I've never been to Iceland before but this year been three times for diverse reasons, all flown on AY. They have a nice service and good timings to get here, and yes, apparently some Asian folk flying to Iceland via HEL. Not all flights have been full though, on my small sample of personal experiences.

And yes, Iceland is pretty expensive. But even that varies a bit. I didn't go earlier because the flights seemed insanely expensive. This year I've paid around 200€ for each return ticket. Hotels... paid around 100€ for lower end hotels but still decent rooms. Just don't get on a taxi to Reykjavik from the airport, that is reportedly around 250€... renting a car can be half that cost, even if you take it for several days.
 
IWMBH
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 9:58 am

ewt340 wrote:
IWMBH wrote:
ewt340 wrote:
I guess it's for Icelandair to do the dirty job now.


The dirty job? You mean to do the thing the company was started for, flying customers?


No, to get as much traffic to and from Iceland to help the economy regardless of the costs.


Icelandair is listed on the NASDAQ, they have an obligation to their stockholder to make a profit, not to help the Iceland economy.
 
mjoelnir
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 10:02 am

I am astonished about the views of several posters in regards to KEF. Today there is one airline with their hub in KEF that is Icelandair. They have competition both from Europe and the USA, on most of their routes. KEF is a smallish airport compared to many, but still with a wide variety of routes. If we can not call KEF today an airport with serious competition, than we can look at the complete USA and talk about there not being any competition on any airport. We can also have a look at Europe and find many bigger airports with less competition.

The other point in regards to the demise of WOW. Airlines are filling in the gabs. Icelandair for example offers 10% more seats from and to Iceland in S19 compared to S18. They have also a higher load factor in regards to filled seats. O&D passenger at Icelandair are up over 20%, transfer passengers are down by 4%. The main brake for Icelandair is in regards to the grounding of the MAX, as there should be 9 MAX operating now. Icelandair is concentrating on O&D pax, higher fares than transfer, and will push for transfer passengers again when their fleet problems are solved.

The next point is that the current tourists spend on average more than the tourists in 2018, starting off with at the airport.

passenger numbers for KEF in April 2018 and 2019.

April 2019 departing 180,259, arriving 174,415, transfer 119,845
April 2018 departing 198,359, arriving 197,636, transfer 253.979

The drop in O&D is about 10%, the drop in transfer passengers is over 50%.

So the drop is mainly in transfer passengers, less in tourist coming to Iceland.

We can talk about tourism being down about 10%, but that is partly compensated by the average tourist spending more and staying longer.
 
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 10:05 am

mjoelnir wrote:
I am astonished about the views of several posters in regards to KEF. Today there is one airline with their hub in KEF that is Icelandair. They have competition both from Europe and the USA, on most of their routes. KEF is a smallish airport compared to many, but still with a wide variety of routes. If we can not call KEF today an airport with serious competition, than we can look at the complete USA and talk about there not being any competition on any airport. We can also have a look at Europe and find many bigger airports with less competition.

The other point in regards to the demise of WOW. Airlines are filling in the gabs. Icelandair for example offers 10% more seats from and to Iceland in S19 compared to S18. They have also a higher load factor in regards to filled seats. O&D passenger at Icelandair are up over 20%, transfer passengers are down by 4%. The main brake for Icelandair is in regards to the grounding of the MAX, as there should be 9 MAX operating now. Icelandair is concentrating on O&D pax, higher fares than transfer, and will push for transfer passengers again when their fleet problems are solved.

The next point is that the current tourists spend on average more than the tourists in 2018, starting off with at the airport.

passenger numbers for KEF in April 2018 and 2019.

April 2019 departing 180,259, arriving 174,415, transfer 119,845
April 2018 departing 198,359, arriving 197,636, transfer 253.979

The drop in O&D is about 10%, the drop in transfer passengers is over 50%.

So the drop is mainly in transfer passengers, less in tourist coming to Iceland.

We can talk about tourism being down about 10%, but that is partly compensated by the average tourist spending more and staying longer.


Agreed on all points. The ignorance towards facts by some posters is quite staggering really.
Nothing compares to taking off in an empty 757 with full thrust!
 
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Blimpie
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 10:47 am

enilria wrote:
Blimpie wrote:
Yeah, I saw this come over my desk and rolled my eyes. I don't have any does what Bloomberg does anymore. Iceland's stock in the tourist industry has been projected to dry up long before WOW ceased operation. I recall penning an article two years ago on the tourism departments projected figures for a reduction in tourism revenue, and these numbers seem to be par for the course.

While, I'm sure WOW's failure may have had some impact on on tourism, I really think this article is overstating WOW's collapse as a factor. Iceland's tourism has been a bubble for a few years now, and a large portion of the growth in tourism they have seen were the results of Icelandair's aggressive marketing and stay-over options.

I really have to wonder what some of the other newsrooms are doing anymore. It really feels like the inmates are running the asylum some days. Now, if you don't mind me, some numpty intern has sent me his Angry Birds fanfic instead of an article on Fiji.

I disagree with all of that except the decline of journalism. 100% agree there.

You have to have seats to have visitors. Fewer seats, fewer visitors. The math is simple. Also, Icelandair was adding seats to defend against WOW. That also has stopped coupled with the MAX parking.

As long as the low fares were there the market would have kept growing. Look at Dubai. It's 115F there in the Summer, at best, and it keeps growing and growing and growing. If you look at all the markets that gained WOW service, Iceland jumped to one of their top markets. If that had continued, so would the tourism expansion. Another factor people forget is that WOW and to a lesser extent Icelandair were extremely liberal on stopover pricing compared to the rest of the industry (sans-Emirates). If you were on a tourist bus A LOT of passengers would say "I had a 20 hour connect to get a good fare to Europe/USA, so I added a couple of nights here and they didn't charge extra". That was never going to stop and was simply a function of pricing and airline scheduling. Iceland was drawing from all of Europe to the USA as a stopover.

klm617 wrote:
I am sorry but allowing WOW Air to collapse was not in anyone's best interest except Icelandair. Sorry that's a fact toursism and jobs in Iceland suffer when you take away almost 50% of the capacity why is that so hard to understand. WOW Air provided a product that was beneficial to many and I stand with WOW Air and what they intended to do.

I think I have mixed feelings about that. So, yes they could have done like many foreign countries have done and subsidized a national carrier because the losses at an airline are dwarfed by the economic impact on an overall economy. If you take that off the table as an option, WOW was not financially sustainable. The network was fine, the problem was that the yield necessary for a market the size of Iceland to support two airlines wasn't there, particularly in the Winter when you need to basically give the seats away. So, there was a market at a price that to the overall economy was beneficial, but which could not allow WOW to obtain a profit as a component of that system. Arguably, it's a business study on how subsidies could create an economic impact multiplier. This is what China is doing to a massive extent with the 3rd tier Chinese long-haul air markets and giant subsidies.

More or less the whole situation is a great justification for China or Qatar and what they have done/are doing.


I guess we can agree to disagree, but most of the two pages support my thesis that WOW's collapse has little to do with declining tourism. If; however, you're debating my claims about Iceland's tourism is in decline, and the projections, then I'll toss this in :)

https://www.ferdamalastofa.is/is/um-fer ... thega-2018
https://www.usatoday.com/story/travel/d ... 379260002/
https://www.telegraph.co.uk/travel/dest ... ble-burst/
https://www.travelagentcentral.com/dest ... ally-burst
https://skift.com/2019/01/16/why-icelan ... y-be-over/
Now get the hell off of my lawn your dang kids!
 
klm617
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 11:15 am

PatrickZ80 wrote:
klm617 wrote:
There were no rescue flights for passengers in Detroit or Baltimore and those market to this day are still unserved.


You mean no direct rescue flights, which is true. However there were one-stop rescue flights on the American carriers. For example you could have flown from Keflavik to Detroit through New York.

You say these markets are unserved, but that's incorrect. They are served, just not with a direct flight. That's true for 99% of America, so nothing new there. However for a good part of America it's possible to get to Keflavik one-stop on either American, Delta or United. This includes Detroit and Baltimore as well.


I had those options before why would I chose Icelandair when I can just revert back to the options I had before WOW Air went out of business. I am certainly not going to go out of my way to make a connection when I had direct flights with WOW.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
ewt340
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 12:29 pm

IWMBH wrote:
ewt340 wrote:
IWMBH wrote:

The dirty job? You mean to do the thing the company was started for, flying customers?


No, to get as much traffic to and from Iceland to help the economy regardless of the costs.


Icelandair is listed on the NASDAQ, they have an obligation to their stockholder to make a profit, not to help the Iceland economy.


Now that's the death trap that many airlines fall for.
 
twicearound
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 12:57 pm

I think many people forget that the issue of these ULLC long haul carriers has been around for decades. Laker Airways and People Express were the pioneers of transatlantic LCC travel. AND THEY FAILED. $99 fares to Europe are unsustainable and unprofitable. This has been proven time over time, yet these startups like to come in with their "original" business plan and disrupt the market with their junk fares. What is the outcome? Legacies reacting by striping down service offerings and behaving like an LCC. A flooded market with unprofitable fares, and a consumer market that begins to expect these rock bottom fares to Europe. Air travel is still a relative luxury item. Certain socioeconomic groups can't REALLY afford to travel the way they think they can. When people get the false sense that they can afford a European vacation every year and then suddenly they can't because the fares actually reflect the true market, who's winning then? Before I'm accused of sounding like an elitist (I'm not) here's a good analogy: If I really want a expensive car but can't afford an $800 a month car payment what do I do? Not buy said car. But if the car manufacturer wants to flood the market and gain sales without any thought to their profits they begin to sell the car below cost for half price. So I jump on the deal and buy one. Lots of people would in this scenario. But what happens when the manufacturer decides they no longer want to lose money? Price goes back up and the next time I want to buy this car I can't afford it again. I feel cheated and angry. No one really wins.
 
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 1:04 pm

ewt340 wrote:
IWMBH wrote:
ewt340 wrote:

No, to get as much traffic to and from Iceland to help the economy regardless of the costs.


Icelandair is listed on the NASDAQ, they have an obligation to their stockholder to make a profit, not to help the Iceland economy.


Now that's the death trap that many airlines fall for.


No, that would be to help the domestic economy regardless of the costs... ;)
Nothing compares to taking off in an empty 757 with full thrust!
 
Bricktop
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 1:46 pm

SRQKEF wrote:
mjoelnir wrote:
I am astonished about the views of several posters in regards to KEF. Today there is one airline with their hub in KEF that is Icelandair. They have competition both from Europe and the USA, on most of their routes. KEF is a smallish airport compared to many, but still with a wide variety of routes. If we can not call KEF today an airport with serious competition, than we can look at the complete USA and talk about there not being any competition on any airport. We can also have a look at Europe and find many bigger airports with less competition.


Agreed on all points. The ignorance towards facts by some posters is quite staggering really.

A little hometown sophistry going on here, at least with my very small sample of departures tomorrow, Saturday May 25.
Air Baltic                 1   1.4%
Air Greenland         1   1.4%
British Airways        1   1.4%
Delta Air Lines      2   2.9%
easyJet         2   2.9%
Finnair         1   1.4%
Icelandair      50   71.4%
Lufthansa      2   2.9%
Norwegian Air Int   1   1.4%
S7 Airlines      1   1.4%
SAS            2   2.9%
Transavia France   1   1.4%
Wizz Air         5   7.1%
            70   


13 airlines sounds great, but FI has >70% of the market. 10 times as many flights as its nearest "competitor" and all the rest are onesies and twosies.
Destinations where more than one airline serves are 7. CPH, FRA, HEL, LHR, MSP, JFK, and OSL, all served by FI and only one other. The only destination which gets 2 departures on an airline which is not FI is FRA with 2 flights by LH. Competitive my posterior. Kindly spare us the "yeah but other places.." line. It was greatly in FI's interest to string WOW along until they withered. I don't blame them one bit, and probably would have done the same in my role of non-armchair CEO, so lets not pretend that they are lilywhite and not back to a virtual fortress situation.

But the point mjoelnir makes is a good one (choking sound from me). The decline is in transfers, which has very little value to the economy compared to visitors. Unless that is, what was argued in the EK profits thread, that good numbers of those transfers took advantage of stopovers. If I was going to Europe via Iceland, I would certainly take advantage of the opportunity, if only to hoist a beer with the Hammer himself.
 
mjoelnir
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 1:54 pm

twicearound wrote:
I think many people forget that the issue of these ULLC long haul carriers has been around for decades. Laker Airways and People Express were the pioneers of transatlantic LCC travel. AND THEY FAILED. $99 fares to Europe are unsustainable and unprofitable. This has been proven time over time, yet these startups like to come in with their "original" business plan and disrupt the market with their junk fares. What is the outcome? Legacies reacting by striping down service offerings and behaving like an LCC. A flooded market with unprofitable fares, and a consumer market that begins to expect these rock bottom fares to Europe. Air travel is still a relative luxury item. Certain socioeconomic groups can't REALLY afford to travel the way they think they can. When people get the false sense that they can afford a European vacation every year and then suddenly they can't because the fares actually reflect the true market, who's winning then? Before I'm accused of sounding like an elitist (I'm not) here's a good analogy: If I really want a expensive car but can't afford an $800 a month car payment what do I do? Not buy said car. But if the car manufacturer wants to flood the market and gain sales without any thought to their profits they begin to sell the car below cost for half price. So I jump on the deal and buy one. Lots of people would in this scenario. But what happens when the manufacturer decides they no longer want to lose money? Price goes back up and the next time I want to buy this car I can't afford it again. I feel cheated and angry. No one really wins.


The pioneer of low price TATL is actually Loftleiðir that later merged with Flugfélag Íslands to form Flugleiðir or Icelandair. Their main airport in mainland Europe was LUX, because no other airport accepted the low cost airline standing outside IATA. In the USA they had landing rights in JFK, ORD and DTW. Once upon a time they managed to corner 8% of the passenger traffic across the pool, from North America to Europe and vice versa.
So the pioneer of low price TATL is doing well and living.
 
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 2:16 pm

Bricktop wrote:
SRQKEF wrote:
mjoelnir wrote:
I am astonished about the views of several posters in regards to KEF. Today there is one airline with their hub in KEF that is Icelandair. They have competition both from Europe and the USA, on most of their routes. KEF is a smallish airport compared to many, but still with a wide variety of routes. If we can not call KEF today an airport with serious competition, than we can look at the complete USA and talk about there not being any competition on any airport. We can also have a look at Europe and find many bigger airports with less competition.


Agreed on all points. The ignorance towards facts by some posters is quite staggering really.

A little hometown sophistry going on here, at least with my very small sample of departures tomorrow, Saturday May 25.
Air Baltic                 1   1.4%
Air Greenland         1   1.4%
British Airways        1   1.4%
Delta Air Lines      2   2.9%
easyJet         2   2.9%
Finnair         1   1.4%
Icelandair      50   71.4%
Lufthansa      2   2.9%
Norwegian Air Int   1   1.4%
S7 Airlines      1   1.4%
SAS            2   2.9%
Transavia France   1   1.4%
Wizz Air         5   7.1%
            70   


13 airlines sounds great, but FI has >70% of the market. 10 times as many flights as its nearest "competitor" and all the rest are onesies and twosies.
Destinations where more than one airline serves are 7. CPH, FRA, HEL, LHR, MSP, JFK, and OSL, all served by FI and only one other. The only destination which gets 2 departures on an airline which is not FI is FRA with 2 flights by LH. Competitive my posterior. Kindly spare us the "yeah but other places.." line. It was greatly in FI's interest to string WOW along until they withered. I don't blame them one bit, and probably would have done the same in my role of non-armchair CEO, so lets not pretend that they are lilywhite and not back to a virtual fortress situation.

But the point mjoelnir makes is a good one (choking sound from me). The decline is in transfers, which has very little value to the economy compared to visitors. Unless that is, what was argued in the EK profits thread, that good numbers of those transfers took advantage of stopovers. If I was going to Europe via Iceland, I would certainly take advantage of the opportunity, if only to hoist a beer with the Hammer himself.


Transfer pax with stopovers are counted as visitors AFAIK. And while I agree that FI's marketshare might look unhealthy on paper, you have to remember this is a country of 350,000 people. FI could never be this big on O&D pax alone, and the other airlines that don't have any connections here can thus never match their level of service due to the number of destinations FI offers. If you look at big O&D markets like NYC (FI/DL/UA), LON (FI/U2/W6/DY), CPH (FI/SK), FRA/MUC (FI/LH) and OSL (FI/SK/DY) you can see that there's healthy competition there. The reason FI has 70% share is due to smaller destinations like YEG, DEN and PDX that would never ever have another carrier serving them. Two network carriers in KEF going after that market was just too much, so back when WOW was here the fares were too low to be profitable on many routes.

Just to clarify, I certainly agree with you the current level of competition isn't enough. That doesn't make WOW's business model sustainable. What might work here would be a smaller O&D focused operation, whether it was a new airline or just the opening of a base from an existing European LCC (DY/U2/FR etc), with flights to major cities in Europe along with holiday destinations in Southern Europe (ALC, BCN, PMI, TFS etc).
Nothing compares to taking off in an empty 757 with full thrust!
 
klm617
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 2:59 pm

Bricktop wrote:
SRQKEF wrote:
mjoelnir wrote:
I am astonished about the views of several posters in regards to KEF. Today there is one airline with their hub in KEF that is Icelandair. They have competition both from Europe and the USA, on most of their routes. KEF is a smallish airport compared to many, but still with a wide variety of routes. If we can not call KEF today an airport with serious competition, than we can look at the complete USA and talk about there not being any competition on any airport. We can also have a look at Europe and find many bigger airports with less competition.


Agreed on all points. The ignorance towards facts by some posters is quite staggering really.

A little hometown sophistry going on here, at least with my very small sample of departures tomorrow, Saturday May 25.
Air Baltic                 1   1.4%
Air Greenland         1   1.4%
British Airways        1   1.4%
Delta Air Lines      2   2.9%
easyJet         2   2.9%
Finnair         1   1.4%
Icelandair      50   71.4%
Lufthansa      2   2.9%
Norwegian Air Int   1   1.4%
S7 Airlines      1   1.4%
SAS            2   2.9%
Transavia France   1   1.4%
Wizz Air         5   7.1%
            70   


13 airlines sounds great, but FI has >70% of the market. 10 times as many flights as its nearest "competitor" and all the rest are onesies and twosies.
Destinations where more than one airline serves are 7. CPH, FRA, HEL, LHR, MSP, JFK, and OSL, all served by FI and only one other. The only destination which gets 2 departures on an airline which is not FI is FRA with 2 flights by LH. Competitive my posterior. Kindly spare us the "yeah but other places.." line. It was greatly in FI's interest to string WOW along until they withered. I don't blame them one bit, and probably would have done the same in my role of non-armchair CEO, so lets not pretend that they are lilywhite and not back to a virtual fortress situation.

But the point mjoelnir makes is a good one (choking sound from me). The decline is in transfers, which has very little value to the economy compared to visitors. Unless that is, what was argued in the EK profits thread, that good numbers of those transfers took advantage of stopovers. If I was going to Europe via Iceland, I would certainly take advantage of the opportunity, if only to hoist a beer with the Hammer himself.


Thank you for pointing out what most don't get here. When the CEO of WOW Air realized what FI was trying to do he pulled out and went to indigo but by then FI had already damaged WOW Air beyond saving. We all know the key to running a profitable airlines is by killing the competition that is a fact proven over and over again in this industry.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 3:02 pm

twicearound wrote:
I think many people forget that the issue of these ULLC long haul carriers has been around for decades. Laker Airways and People Express were the pioneers of transatlantic LCC travel. AND THEY FAILED. $99 fares to Europe are unsustainable and unprofitable. This has been proven time over time, yet these startups like to come in with their "original" business plan and disrupt the market with their junk fares. What is the outcome? Legacies reacting by striping down service offerings and behaving like an LCC. A flooded market with unprofitable fares, and a consumer market that begins to expect these rock bottom fares to Europe. Air travel is still a relative luxury item. Certain socioeconomic groups can't REALLY afford to travel the way they think they can. When people get the false sense that they can afford a European vacation every year and then suddenly they can't because the fares actually reflect the true market, who's winning then? Before I'm accused of sounding like an elitist (I'm not) here's a good analogy: If I really want a expensive car but can't afford an $800 a month car payment what do I do? Not buy said car. But if the car manufacturer wants to flood the market and gain sales without any thought to their profits they begin to sell the car below cost for half price. So I jump on the deal and buy one. Lots of people would in this scenario. But what happens when the manufacturer decides they no longer want to lose money? Price goes back up and the next time I want to buy this car I can't afford it again. I feel cheated and angry. No one really wins.


The real issue is all these carriers keep piling on in the same over saturated markets where they have no pricing power. The model is not flawed just the thought process when it comes to choosing the markets they serve. Now the plan is to go into markets that can't sustain service but they fly there just because of the money they are given again going down a road of unsustainability.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
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Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 3:06 pm

SRQKEF wrote:
Bricktop wrote:
SRQKEF wrote:

Agreed on all points. The ignorance towards facts by some posters is quite staggering really.

A little hometown sophistry going on here, at least with my very small sample of departures tomorrow, Saturday May 25.
Air Baltic                 1   1.4%
Air Greenland         1   1.4%
British Airways        1   1.4%
Delta Air Lines      2   2.9%
easyJet         2   2.9%
Finnair         1   1.4%
Icelandair      50   71.4%
Lufthansa      2   2.9%
Norwegian Air Int   1   1.4%
S7 Airlines      1   1.4%
SAS            2   2.9%
Transavia France   1   1.4%
Wizz Air         5   7.1%
            70   


13 airlines sounds great, but FI has >70% of the market. 10 times as many flights as its nearest "competitor" and all the rest are onesies and twosies.
Destinations where more than one airline serves are 7. CPH, FRA, HEL, LHR, MSP, JFK, and OSL, all served by FI and only one other. The only destination which gets 2 departures on an airline which is not FI is FRA with 2 flights by LH. Competitive my posterior. Kindly spare us the "yeah but other places.." line. It was greatly in FI's interest to string WOW along until they withered. I don't blame them one bit, and probably would have done the same in my role of non-armchair CEO, so lets not pretend that they are lilywhite and not back to a virtual fortress situation.

But the point mjoelnir makes is a good one (choking sound from me). The decline is in transfers, which has very little value to the economy compared to visitors. Unless that is, what was argued in the EK profits thread, that good numbers of those transfers took advantage of stopovers. If I was going to Europe via Iceland, I would certainly take advantage of the opportunity, if only to hoist a beer with the Hammer himself.


Transfer pax with stopovers are counted as visitors AFAIK. And while I agree that FI's marketshare might look unhealthy on paper, you have to remember this is a country of 350,000 people. FI could never be this big on O&D pax alone, and the other airlines that don't have any connections here can thus never match their level of service due to the number of destinations FI offers. If you look at big O&D markets like NYC (FI/DL/UA), LON (FI/U2/W6/DY), CPH (FI/SK), FRA/MUC (FI/LH) and OSL (FI/SK/DY) you can see that there's healthy competition there. The reason FI has 70% share is due to smaller destinations like YEG, DEN and PDX that would never ever have another carrier serving them. Two network carriers in KEF going after that market was just too much, so back when WOW was here the fares were too low to be profitable on many routes.

Just to clarify, I certainly agree with you the current level of competition isn't enough. That doesn't make WOW's business model sustainable. What might work here would be a smaller O&D focused operation, whether it was a new airline or just the opening of a base from an existing European LCC (DY/U2/FR etc), with flights to major cities in Europe along with holiday destinations in Southern Europe (ALC, BCN, PMI, TFS etc).


Why do you have such an issue with carriers serving North America from Iceland. I would agree with you on YEG but DEN and PDX already have quite a few options to Europe for airports of their size.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 3:12 pm

klm617 wrote:
Bricktop wrote:
SRQKEF wrote:

Agreed on all points. The ignorance towards facts by some posters is quite staggering really.

A little hometown sophistry going on here, at least with my very small sample of departures tomorrow, Saturday May 25.
Air Baltic                 1   1.4%
Air Greenland         1   1.4%
British Airways        1   1.4%
Delta Air Lines      2   2.9%
easyJet         2   2.9%
Finnair         1   1.4%
Icelandair      50   71.4%
Lufthansa      2   2.9%
Norwegian Air Int   1   1.4%
S7 Airlines      1   1.4%
SAS            2   2.9%
Transavia France   1   1.4%
Wizz Air         5   7.1%
            70   


13 airlines sounds great, but FI has >70% of the market. 10 times as many flights as its nearest "competitor" and all the rest are onesies and twosies.
Destinations where more than one airline serves are 7. CPH, FRA, HEL, LHR, MSP, JFK, and OSL, all served by FI and only one other. The only destination which gets 2 departures on an airline which is not FI is FRA with 2 flights by LH. Competitive my posterior. Kindly spare us the "yeah but other places.." line. It was greatly in FI's interest to string WOW along until they withered. I don't blame them one bit, and probably would have done the same in my role of non-armchair CEO, so lets not pretend that they are lilywhite and not back to a virtual fortress situation.

But the point mjoelnir makes is a good one (choking sound from me). The decline is in transfers, which has very little value to the economy compared to visitors. Unless that is, what was argued in the EK profits thread, that good numbers of those transfers took advantage of stopovers. If I was going to Europe via Iceland, I would certainly take advantage of the opportunity, if only to hoist a beer with the Hammer himself.


Thank you for pointing out what most don't get here. When the CEO of WOW Air realized what FI was trying to do he pulled out and went to indigo but by then FI had already damaged WOW Air beyond saving. We all know the key to running a profitable airlines is by killing the competition that is a fact proven over and over again in this industry.


*sigh*...

https://simpleflying.com/icelandair-pul ... -collapse/
https://www.flightglobal.com/news/artic ... ns-456853/

So, let me spell it for you: I-T W-A-S-N-'-T W-O-W T-H-A-T P-U-L-L-E-D O-U-T B-U-T F-I.

WOW came begging to FI, FI checked their finances and saw that the massive debt wasn't worth it.
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 3:15 pm

klm617 wrote:
SRQKEF wrote:
Bricktop wrote:
A little hometown sophistry going on here, at least with my very small sample of departures tomorrow, Saturday May 25.
Air Baltic                 1   1.4%
Air Greenland         1   1.4%
British Airways        1   1.4%
Delta Air Lines      2   2.9%
easyJet         2   2.9%
Finnair         1   1.4%
Icelandair      50   71.4%
Lufthansa      2   2.9%
Norwegian Air Int   1   1.4%
S7 Airlines      1   1.4%
SAS            2   2.9%
Transavia France   1   1.4%
Wizz Air         5   7.1%
            70   


13 airlines sounds great, but FI has >70% of the market. 10 times as many flights as its nearest "competitor" and all the rest are onesies and twosies.
Destinations where more than one airline serves are 7. CPH, FRA, HEL, LHR, MSP, JFK, and OSL, all served by FI and only one other. The only destination which gets 2 departures on an airline which is not FI is FRA with 2 flights by LH. Competitive my posterior. Kindly spare us the "yeah but other places.." line. It was greatly in FI's interest to string WOW along until they withered. I don't blame them one bit, and probably would have done the same in my role of non-armchair CEO, so lets not pretend that they are lilywhite and not back to a virtual fortress situation.

But the point mjoelnir makes is a good one (choking sound from me). The decline is in transfers, which has very little value to the economy compared to visitors. Unless that is, what was argued in the EK profits thread, that good numbers of those transfers took advantage of stopovers. If I was going to Europe via Iceland, I would certainly take advantage of the opportunity, if only to hoist a beer with the Hammer himself.


Transfer pax with stopovers are counted as visitors AFAIK. And while I agree that FI's marketshare might look unhealthy on paper, you have to remember this is a country of 350,000 people. FI could never be this big on O&D pax alone, and the other airlines that don't have any connections here can thus never match their level of service due to the number of destinations FI offers. If you look at big O&D markets like NYC (FI/DL/UA), LON (FI/U2/W6/DY), CPH (FI/SK), FRA/MUC (FI/LH) and OSL (FI/SK/DY) you can see that there's healthy competition there. The reason FI has 70% share is due to smaller destinations like YEG, DEN and PDX that would never ever have another carrier serving them. Two network carriers in KEF going after that market was just too much, so back when WOW was here the fares were too low to be profitable on many routes.

Just to clarify, I certainly agree with you the current level of competition isn't enough. That doesn't make WOW's business model sustainable. What might work here would be a smaller O&D focused operation, whether it was a new airline or just the opening of a base from an existing European LCC (DY/U2/FR etc), with flights to major cities in Europe along with holiday destinations in Southern Europe (ALC, BCN, PMI, TFS etc).


Why do you have such an issue with carriers serving North America from Iceland. I would agree with you on YEG but DEN and PDX already have quite a few options to Europe for airports of their size.


I don't have any issue with airlines serving North America from Iceland, in fact I love that we have all 4 major North American airlines serving KEF right now. If a US airline decided to serve KEF from DEN or PDX I would be incredibly surprised first and foremost, because it's never going to happen, but I'd also be very happy at any increased service and variation here. However, even if PDX and DEN already have LHR, FRA and some other destinations I don't really see UA or DL adding KEF to the route map from there anytime soon, just being realistic here... ;)
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 3:45 pm

SRQKEF wrote:
klm617 wrote:
SRQKEF wrote:

Transfer pax with stopovers are counted as visitors AFAIK. And while I agree that FI's marketshare might look unhealthy on paper, you have to remember this is a country of 350,000 people. FI could never be this big on O&D pax alone, and the other airlines that don't have any connections here can thus never match their level of service due to the number of destinations FI offers. If you look at big O&D markets like NYC (FI/DL/UA), LON (FI/U2/W6/DY), CPH (FI/SK), FRA/MUC (FI/LH) and OSL (FI/SK/DY) you can see that there's healthy competition there. The reason FI has 70% share is due to smaller destinations like YEG, DEN and PDX that would never ever have another carrier serving them. Two network carriers in KEF going after that market was just too much, so back when WOW was here the fares were too low to be profitable on many routes.

Just to clarify, I certainly agree with you the current level of competition isn't enough. That doesn't make WOW's business model sustainable. What might work here would be a smaller O&D focused operation, whether it was a new airline or just the opening of a base from an existing European LCC (DY/U2/FR etc), with flights to major cities in Europe along with holiday destinations in Southern Europe (ALC, BCN, PMI, TFS etc).


Why do you have such an issue with carriers serving North America from Iceland. I would agree with you on YEG but DEN and PDX already have quite a few options to Europe for airports of their size.


I don't have any issue with airlines serving North America from Iceland, in fact I love that we have all 4 major North American airlines serving KEF right now. If a US airline decided to serve KEF from DEN or PDX I would be incredibly surprised first and foremost, because it's never going to happen, but I'd also be very happy at any increased service and variation here. However, even if PDX and DEN already have LHR, FRA and some other destinations I don't really see UA or DL adding KEF to the route map from there anytime soon, just being realistic here... ;)


And because of WOW Air you have all those airlines serving KEF not because of FI. So again a lot of people benefited from having WOW Air in the market and the only entity that benefited from their demise is FI. None of those airlines added flights to KEF until WOW Air entered that market.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
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enilria
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 3:52 pm

Blimpie wrote:
enilria wrote:
Blimpie wrote:
Yeah, I saw this come over my desk and rolled my eyes. I don't have any does what Bloomberg does anymore. Iceland's stock in the tourist industry has been projected to dry up long before WOW ceased operation. I recall penning an article two years ago on the tourism departments projected figures for a reduction in tourism revenue, and these numbers seem to be par for the course.

While, I'm sure WOW's failure may have had some impact on on tourism, I really think this article is overstating WOW's collapse as a factor. Iceland's tourism has been a bubble for a few years now, and a large portion of the growth in tourism they have seen were the results of Icelandair's aggressive marketing and stay-over options.

I really have to wonder what some of the other newsrooms are doing anymore. It really feels like the inmates are running the asylum some days. Now, if you don't mind me, some numpty intern has sent me his Angry Birds fanfic instead of an article on Fiji.

I disagree with all of that except the decline of journalism. 100% agree there.

You have to have seats to have visitors. Fewer seats, fewer visitors. The math is simple. Also, Icelandair was adding seats to defend against WOW. That also has stopped coupled with the MAX parking.

As long as the low fares were there the market would have kept growing. Look at Dubai. It's 115F there in the Summer, at best, and it keeps growing and growing and growing. If you look at all the markets that gained WOW service, Iceland jumped to one of their top markets. If that had continued, so would the tourism expansion. Another factor people forget is that WOW and to a lesser extent Icelandair were extremely liberal on stopover pricing compared to the rest of the industry (sans-Emirates). If you were on a tourist bus A LOT of passengers would say "I had a 20 hour connect to get a good fare to Europe/USA, so I added a couple of nights here and they didn't charge extra". That was never going to stop and was simply a function of pricing and airline scheduling. Iceland was drawing from all of Europe to the USA as a stopover.

klm617 wrote:
I am sorry but allowing WOW Air to collapse was not in anyone's best interest except Icelandair. Sorry that's a fact toursism and jobs in Iceland suffer when you take away almost 50% of the capacity why is that so hard to understand. WOW Air provided a product that was beneficial to many and I stand with WOW Air and what they intended to do.

I think I have mixed feelings about that. So, yes they could have done like many foreign countries have done and subsidized a national carrier because the losses at an airline are dwarfed by the economic impact on an overall economy. If you take that off the table as an option, WOW was not financially sustainable. The network was fine, the problem was that the yield necessary for a market the size of Iceland to support two airlines wasn't there, particularly in the Winter when you need to basically give the seats away. So, there was a market at a price that to the overall economy was beneficial, but which could not allow WOW to obtain a profit as a component of that system. Arguably, it's a business study on how subsidies could create an economic impact multiplier. This is what China is doing to a massive extent with the 3rd tier Chinese long-haul air markets and giant subsidies.

More or less the whole situation is a great justification for China or Qatar and what they have done/are doing.


I guess we can agree to disagree, but most of the two pages support my thesis that WOW's collapse has little to do with declining tourism. If; however, you're debating my claims about Iceland's tourism is in decline, and the projections, then I'll toss this in :)

https://www.ferdamalastofa.is/is/um-fer ... thega-2018
https://www.usatoday.com/story/travel/d ... 379260002/
https://www.telegraph.co.uk/travel/dest ... ble-burst/
https://www.travelagentcentral.com/dest ... ally-burst
https://skift.com/2019/01/16/why-icelan ... y-be-over/

Keep in mind they had been shrinking for around 6 months, so yes the final moments were not the relevant as they only had like 4-5 planes left, but if you compare the prior Summer to this Summer it will be dramatic.
 
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 4:06 pm

enilria wrote:
Blimpie wrote:
enilria wrote:
I disagree with all of that except the decline of journalism. 100% agree there.

You have to have seats to have visitors. Fewer seats, fewer visitors. The math is simple. Also, Icelandair was adding seats to defend against WOW. That also has stopped coupled with the MAX parking.

As long as the low fares were there the market would have kept growing. Look at Dubai. It's 115F there in the Summer, at best, and it keeps growing and growing and growing. If you look at all the markets that gained WOW service, Iceland jumped to one of their top markets. If that had continued, so would the tourism expansion. Another factor people forget is that WOW and to a lesser extent Icelandair were extremely liberal on stopover pricing compared to the rest of the industry (sans-Emirates). If you were on a tourist bus A LOT of passengers would say "I had a 20 hour connect to get a good fare to Europe/USA, so I added a couple of nights here and they didn't charge extra". That was never going to stop and was simply a function of pricing and airline scheduling. Iceland was drawing from all of Europe to the USA as a stopover.


I think I have mixed feelings about that. So, yes they could have done like many foreign countries have done and subsidized a national carrier because the losses at an airline are dwarfed by the economic impact on an overall economy. If you take that off the table as an option, WOW was not financially sustainable. The network was fine, the problem was that the yield necessary for a market the size of Iceland to support two airlines wasn't there, particularly in the Winter when you need to basically give the seats away. So, there was a market at a price that to the overall economy was beneficial, but which could not allow WOW to obtain a profit as a component of that system. Arguably, it's a business study on how subsidies could create an economic impact multiplier. This is what China is doing to a massive extent with the 3rd tier Chinese long-haul air markets and giant subsidies.

More or less the whole situation is a great justification for China or Qatar and what they have done/are doing.


I guess we can agree to disagree, but most of the two pages support my thesis that WOW's collapse has little to do with declining tourism. If; however, you're debating my claims about Iceland's tourism is in decline, and the projections, then I'll toss this in :)

https://www.ferdamalastofa.is/is/um-fer ... thega-2018
https://www.usatoday.com/story/travel/d ... 379260002/
https://www.telegraph.co.uk/travel/dest ... ble-burst/
https://www.travelagentcentral.com/dest ... ally-burst
https://skift.com/2019/01/16/why-icelan ... y-be-over/

Keep in mind they had been shrinking for around 6 months, so yes the final moments were not the relevant as they only had like 4-5 planes left, but if you compare the prior Summer to this Summer it will be dramatic.


Exactly and this is going to be the first peak summer travel season without WOW Air in the market. Let's revisit this in November when we can really see what impact WOW Air's demise had on the economy of Iceland.
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 5:19 pm

klm617 wrote:
SRQKEF wrote:
klm617 wrote:

Why do you have such an issue with carriers serving North America from Iceland. I would agree with you on YEG but DEN and PDX already have quite a few options to Europe for airports of their size.


I don't have any issue with airlines serving North America from Iceland, in fact I love that we have all 4 major North American airlines serving KEF right now. If a US airline decided to serve KEF from DEN or PDX I would be incredibly surprised first and foremost, because it's never going to happen, but I'd also be very happy at any increased service and variation here. However, even if PDX and DEN already have LHR, FRA and some other destinations I don't really see UA or DL adding KEF to the route map from there anytime soon, just being realistic here... ;)


And because of WOW Air you have all those airlines serving KEF not because of FI. So again a lot of people benefited from having WOW Air in the market and the only entity that benefited from their demise is FI. None of those airlines added flights to KEF until WOW Air entered that market.


You really believe DL, AA, UA and AC all started daily flights here just because of WOW? :rotfl:

DL has flown here every summer since 2011 and are now year round for a few years, so that’s one airline that WOW didn’t “convince” to start KEF. Aside from that, I can’t even follow your logic. So you think people are travelling to Iceland in much larger numbers because of a different airline than the one their travelling with that has little to no recognition, not because the destination itself is trending? :roll:
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 5:45 pm

SRQKEF wrote:
klm617 wrote:
SRQKEF wrote:

I don't have any issue with airlines serving North America from Iceland, in fact I love that we have all 4 major North American airlines serving KEF right now. If a US airline decided to serve KEF from DEN or PDX I would be incredibly surprised first and foremost, because it's never going to happen, but I'd also be very happy at any increased service and variation here. However, even if PDX and DEN already have LHR, FRA and some other destinations I don't really see UA or DL adding KEF to the route map from there anytime soon, just being realistic here... ;)


And because of WOW Air you have all those airlines serving KEF not because of FI. So again a lot of people benefited from having WOW Air in the market and the only entity that benefited from their demise is FI. None of those airlines added flights to KEF until WOW Air entered that market.


You really believe DL, AA, UA and AC all started daily flights here just because of WOW? :rotfl:

DL has flown here every summer since 2011 and are now year round for a few years, so that’s one airline that WOW didn’t “convince” to start KEF. Aside from that, I can’t even follow your logic. So you think people are travelling to Iceland in much larger numbers because of a different airline than the one their travelling with that has little to no recognition, not because the destination itself is trending? :roll:


Yes and WOW Air perpetuated that service AA wasn't flying to KEF until WOW Air entered DFW you can twist your logic any way you want to suit your agenda but those are the facts FI didn't create the environment for those airlines to start fly to KEF WOW Air created those opportunities. I know you love Icelandair and want to attribute all of the good fortunes of KEF to them but the fact of the matter is that until WOW started operations there nothing really was going on. Even Delta only went year round after WOW started operations there because the US3 were feeling the pressure. I can't follow the logic of anyone wanting to see a company go under that benefitted so many.
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:01 pm

klm617 wrote:
SRQKEF wrote:
klm617 wrote:

And because of WOW Air you have all those airlines serving KEF not because of FI. So again a lot of people benefited from having WOW Air in the market and the only entity that benefited from their demise is FI. None of those airlines added flights to KEF until WOW Air entered that market.


You really believe DL, AA, UA and AC all started daily flights here just because of WOW? :rotfl:

DL has flown here every summer since 2011 and are now year round for a few years, so that’s one airline that WOW didn’t “convince” to start KEF. Aside from that, I can’t even follow your logic. So you think people are travelling to Iceland in much larger numbers because of a different airline than the one their travelling with that has little to no recognition, not because the destination itself is trending? :roll:


Yes and WOW Air perpetuated that service AA wasn't flying to KEF until WOW Air entered DFW you can twist your logic any way you want to suit your agenda but those are the facts FI didn't create the environment for those airlines to start fly to KEF WOW Air created those opportunities. I know you love Icelandair and want to attribute all of the good fortunes of KEF to them but the fact of the matter is that until WOW started operations there nothing really was going on. Even Delta only went year round after WOW started operations there because the US3 were feeling the pressure. I can't follow the logic of anyone wanting to see a company go under that benefitted so many.


If you really think this is how the world works, good for you. I obviously never wanted the company to go under, but I sure as hell didn’t want it to keep operating in an unsustainable manner and dragging a responsible airline that has a much much larger impact on the Icelandic economy down with them. No matter how great it was being able to go to LAX/SFO for sub 200$, that kind of thing just isn’t possible in the long term. I was rooting for WOW to make it until the end, just as a sustainable operation of a reasonable size that could peacefully co-exist along with other airlines in the market. Unfortunately it was too little too late.

And no, KEF’s growth isn’t because of FI but it’s most definitely not because of WOW either. It’s because of the emergence of Iceland as a major tourism market. You do have a point that AA did probably start service here from DFW to defend its home turf because both Icelandic carriers suddenly added it, but it seems it’s doing well enough to keep flying even with FI out of there as well. Aside from that, AC and UA most definitely didn’t start flying here because of WOW and in fact AC started YUL/YYZ-KEF before WOW even went TATL. DL’s initial service may have been a response to FI increasing flights from JFK/BOS to CDG/AMS via KEF, but nevertheless it has been a huge success since.
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:03 pm

WOW!
 
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SRQKEF
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:06 pm

kjeld0d wrote:
WOW!


A+ for consistency! :mrgreen:
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:23 pm

SRQKEF wrote:
mjoelnir wrote:
I am astonished about the views of several posters in regards to KEF. Today there is one airline with their hub in KEF that is Icelandair. They have competition both from Europe and the USA, on most of their routes. KEF is a smallish airport compared to many, but still with a wide variety of routes. If we can not call KEF today an airport with serious competition, than we can look at the complete USA and talk about there not being any competition on any airport. We can also have a look at Europe and find many bigger airports with less competition.

The other point in regards to the demise of WOW. Airlines are filling in the gabs. Icelandair for example offers 10% more seats from and to Iceland in S19 compared to S18. They have also a higher load factor in regards to filled seats. O&D passenger at Icelandair are up over 20%, transfer passengers are down by 4%. The main brake for Icelandair is in regards to the grounding of the MAX, as there should be 9 MAX operating now. Icelandair is concentrating on O&D pax, higher fares than transfer, and will push for transfer passengers again when their fleet problems are solved.

The next point is that the current tourists spend on average more than the tourists in 2018, starting off with at the airport.

passenger numbers for KEF in April 2018 and 2019.

April 2019 departing 180,259, arriving 174,415, transfer 119,845
April 2018 departing 198,359, arriving 197,636, transfer 253.979

The drop in O&D is about 10%, the drop in transfer passengers is over 50%.

So the drop is mainly in transfer passengers, less in tourist coming to Iceland.

We can talk about tourism being down about 10%, but that is partly compensated by the average tourist spending more and staying longer.


Agreed on all points. The ignorance towards facts by some posters is quite staggering really.


I'm sorry to say ignorance towards facts is becoming an ever bigger thing here in the United States. Wow failed because they were trying to sell an inferior product at a very low price. This strategy failed. This will sound a bit harsh, but Wow's customers were the least desirable for Icelandic tourism. Iceland will be fine.
 
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Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:36 pm

mjoelnir wrote:
twicearound wrote:
I think many people forget that the issue of these ULLC long haul carriers has been around for decades. Laker Airways and People Express were the pioneers of transatlantic LCC travel. AND THEY FAILED. $99 fares to Europe are unsustainable and unprofitable. This has been proven time over time, yet these startups like to come in with their "original" business plan and disrupt the market with their junk fares. What is the outcome? Legacies reacting by striping down service offerings and behaving like an LCC. A flooded market with unprofitable fares, and a consumer market that begins to expect these rock bottom fares to Europe. Air travel is still a relative luxury item. Certain socioeconomic groups can't REALLY afford to travel the way they think they can. When people get the false sense that they can afford a European vacation every year and then suddenly they can't because the fares actually reflect the true market, who's winning then? Before I'm accused of sounding like an elitist (I'm not) here's a good analogy: If I really want a expensive car but can't afford an $800 a month car payment what do I do? Not buy said car. But if the car manufacturer wants to flood the market and gain sales without any thought to their profits they begin to sell the car below cost for half price. So I jump on the deal and buy one. Lots of people would in this scenario. But what happens when the manufacturer decides they no longer want to lose money? Price goes back up and the next time I want to buy this car I can't afford it again. I feel cheated and angry. No one really wins.


The pioneer of low price TATL is actually Loftleiðir that later merged with Flugfélag Íslands to form Flugleiðir or Icelandair. Their main airport in mainland Europe was LUX, because no other airport accepted the low cost airline standing outside IATA. In the USA they had landing rights in JFK, ORD and DTW. Once upon a time they managed to corner 8% of the passenger traffic across the pool, from North America to Europe and vice versa.
So the pioneer of low price TATL is doing well and living.


My Mom and Dad flew ORD - KEF - LUX way back when, DC-8. My Dad thought is was pretty cool, he felt like he was beating the system.
 
LAXdude1023
Posts: 5872
Joined: Thu Sep 07, 2006 3:16 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:41 pm

Man, there some Alex Jones **** going on this thread. The conspiracy theories abound.
"I dance and laugh among the rotten"
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:46 pm

SRQKEF wrote:
klm617 wrote:
SRQKEF wrote:

You really believe DL, AA, UA and AC all started daily flights here just because of WOW? :rotfl:

DL has flown here every summer since 2011 and are now year round for a few years, so that’s one airline that WOW didn’t “convince” to start KEF. Aside from that, I can’t even follow your logic. So you think people are travelling to Iceland in much larger numbers because of a different airline than the one their travelling with that has little to no recognition, not because the destination itself is trending? :roll:


Yes and WOW Air perpetuated that service AA wasn't flying to KEF until WOW Air entered DFW you can twist your logic any way you want to suit your agenda but those are the facts FI didn't create the environment for those airlines to start fly to KEF WOW Air created those opportunities. I know you love Icelandair and want to attribute all of the good fortunes of KEF to them but the fact of the matter is that until WOW started operations there nothing really was going on. Even Delta only went year round after WOW started operations there because the US3 were feeling the pressure. I can't follow the logic of anyone wanting to see a company go under that benefitted so many.


If you really think this is how the world works, good for you. I obviously never wanted the company to go under, but I sure as hell didn’t want it to keep operating in an unsustainable manner and dragging a responsible airline that has a much much larger impact on the Icelandic economy down with them. No matter how great it was being able to go to LAX/SFO for sub 200$, that kind of thing just isn’t possible in the long term. I was rooting for WOW to make it until the end, just as a sustainable operation of a reasonable size that could peacefully co-exist along with other airlines in the market. Unfortunately it was too little too late.

And no, KEF’s growth isn’t because of FI but it’s most definitely not because of WOW either. It’s because of the emergence of Iceland as a major tourism market. You do have a point that AA did probably start service here from DFW to defend its home turf because both Icelandic carriers suddenly added it, but it seems it’s doing well enough to keep flying even with FI out of there as well. Aside from that, AC and UA most definitely didn’t start flying here because of WOW and in fact AC started YUL/YYZ-KEF before WOW even went TATL. DL’s initial service may have been a response to FI increasing flights from JFK/BOS to CDG/AMS via KEF, but nevertheless it has been a huge success since.


You are correct WOW Air was not sustainable flying people from LAX and SFO for $200 RT but it was at $750 which is still below the curve and that's where the WOW Air business plan was flawed by continuing to dump low fare seats in an already over saturated market where they had no pricing power and then to add insult to injury adding unsustainable markets just because an airport threw money at them. But operating their narrow body fleets into markets that they had pricing power and a market void to fill was surely a sustainable business model. If they had been given a chance in their present form they could have easily moved on and been profitable. Don't you think it was rather cruel that they were left to fonder on during the weakest months of the year for travel only to be put out of business just before the peak travel season when they could have turned themselves around.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 6:47 pm

mcg wrote:
mjoelnir wrote:
twicearound wrote:
I think many people forget that the issue of these ULLC long haul carriers has been around for decades. Laker Airways and People Express were the pioneers of transatlantic LCC travel. AND THEY FAILED. $99 fares to Europe are unsustainable and unprofitable. This has been proven time over time, yet these startups like to come in with their "original" business plan and disrupt the market with their junk fares. What is the outcome? Legacies reacting by striping down service offerings and behaving like an LCC. A flooded market with unprofitable fares, and a consumer market that begins to expect these rock bottom fares to Europe. Air travel is still a relative luxury item. Certain socioeconomic groups can't REALLY afford to travel the way they think they can. When people get the false sense that they can afford a European vacation every year and then suddenly they can't because the fares actually reflect the true market, who's winning then? Before I'm accused of sounding like an elitist (I'm not) here's a good analogy: If I really want a expensive car but can't afford an $800 a month car payment what do I do? Not buy said car. But if the car manufacturer wants to flood the market and gain sales without any thought to their profits they begin to sell the car below cost for half price. So I jump on the deal and buy one. Lots of people would in this scenario. But what happens when the manufacturer decides they no longer want to lose money? Price goes back up and the next time I want to buy this car I can't afford it again. I feel cheated and angry. No one really wins.


The pioneer of low price TATL is actually Loftleiðir that later merged with Flugfélag Íslands to form Flugleiðir or Icelandair. Their main airport in mainland Europe was LUX, because no other airport accepted the low cost airline standing outside IATA. In the USA they had landing rights in JFK, ORD and DTW. Once upon a time they managed to corner 8% of the passenger traffic across the pool, from North America to Europe and vice versa.
So the pioneer of low price TATL is doing well and living.


My Mom and Dad flew ORD - KEF - LUX way back when, DC-8. My Dad thought is was pretty cool, he felt like he was beating the system.


I also flew the DC-8-63 on LUX-KEF-DTW it was an amazing experience to say the least.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
User avatar
SRQKEF
Posts: 1877
Joined: Fri Jun 17, 2011 7:10 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 7:07 pm

klm617 wrote:
SRQKEF wrote:
klm617 wrote:

Yes and WOW Air perpetuated that service AA wasn't flying to KEF until WOW Air entered DFW you can twist your logic any way you want to suit your agenda but those are the facts FI didn't create the environment for those airlines to start fly to KEF WOW Air created those opportunities. I know you love Icelandair and want to attribute all of the good fortunes of KEF to them but the fact of the matter is that until WOW started operations there nothing really was going on. Even Delta only went year round after WOW started operations there because the US3 were feeling the pressure. I can't follow the logic of anyone wanting to see a company go under that benefitted so many.


If you really think this is how the world works, good for you. I obviously never wanted the company to go under, but I sure as hell didn’t want it to keep operating in an unsustainable manner and dragging a responsible airline that has a much much larger impact on the Icelandic economy down with them. No matter how great it was being able to go to LAX/SFO for sub 200$, that kind of thing just isn’t possible in the long term. I was rooting for WOW to make it until the end, just as a sustainable operation of a reasonable size that could peacefully co-exist along with other airlines in the market. Unfortunately it was too little too late.

And no, KEF’s growth isn’t because of FI but it’s most definitely not because of WOW either. It’s because of the emergence of Iceland as a major tourism market. You do have a point that AA did probably start service here from DFW to defend its home turf because both Icelandic carriers suddenly added it, but it seems it’s doing well enough to keep flying even with FI out of there as well. Aside from that, AC and UA most definitely didn’t start flying here because of WOW and in fact AC started YUL/YYZ-KEF before WOW even went TATL. DL’s initial service may have been a response to FI increasing flights from JFK/BOS to CDG/AMS via KEF, but nevertheless it has been a huge success since.


You are correct WOW Air was not sustainable flying people from LAX and SFO for $200 RT but it was at $750 which is still below the curve and that's where the WOW Air business plan was flawed by continuing to dump low fare seats in an already over saturated market where they had no pricing power and then to add insult to injury adding unsustainable markets just because an airport threw money at them. But operating their narrow body fleets into markets that they had pricing power and a market void to fill was surely a sustainable business model. If they had been given a chance in their present form they could have easily moved on and been profitable. Don't you think it was rather cruel that they were left to fonder on during the weakest months of the year for travel only to be put out of business just before the peak travel season when they could have turned themselves around.


It was cruel for their staff how things ended, and I feel for them. However, they weren't "put out of business" by anyone but themselves. It isn't the duty of anyone, neither the Icelandic public or private companies such as Icelandair, to pay for the mistakes of an overambitious businessman that got carried away with dreams of conquering the whole Nordic aviation market.
Nothing compares to taking off in an empty 757 with full thrust!
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 7:27 pm

SRQKEF wrote:
klm617 wrote:
SRQKEF wrote:

If you really think this is how the world works, good for you. I obviously never wanted the company to go under, but I sure as hell didn’t want it to keep operating in an unsustainable manner and dragging a responsible airline that has a much much larger impact on the Icelandic economy down with them. No matter how great it was being able to go to LAX/SFO for sub 200$, that kind of thing just isn’t possible in the long term. I was rooting for WOW to make it until the end, just as a sustainable operation of a reasonable size that could peacefully co-exist along with other airlines in the market. Unfortunately it was too little too late.

And no, KEF’s growth isn’t because of FI but it’s most definitely not because of WOW either. It’s because of the emergence of Iceland as a major tourism market. You do have a point that AA did probably start service here from DFW to defend its home turf because both Icelandic carriers suddenly added it, but it seems it’s doing well enough to keep flying even with FI out of there as well. Aside from that, AC and UA most definitely didn’t start flying here because of WOW and in fact AC started YUL/YYZ-KEF before WOW even went TATL. DL’s initial service may have been a response to FI increasing flights from JFK/BOS to CDG/AMS via KEF, but nevertheless it has been a huge success since.


You are correct WOW Air was not sustainable flying people from LAX and SFO for $200 RT but it was at $750 which is still below the curve and that's where the WOW Air business plan was flawed by continuing to dump low fare seats in an already over saturated market where they had no pricing power and then to add insult to injury adding unsustainable markets just because an airport threw money at them. But operating their narrow body fleets into markets that they had pricing power and a market void to fill was surely a sustainable business model. If they had been given a chance in their present form they could have easily moved on and been profitable. Don't you think it was rather cruel that they were left to fonder on during the weakest months of the year for travel only to be put out of business just before the peak travel season when they could have turned themselves around.


It was cruel for their staff how things ended, and I feel for them. However, they weren't "put out of business" by anyone but themselves. It isn't the duty of anyone, neither the Icelandic public or private companies such as Icelandair, to pay for the mistakes of an overambitious businessman that got carried away with dreams of conquering the whole Nordic aviation market.


I also agree with this 100% where I blame Icelandair is for stringing them along for so long until they were past the point of no return when no one could help them. I contend the Icelandair had no intention of ever helping them out but rather getting in the way of other possible solutions. Icelandair's intent was to put WOW Air out of business. When Icelandair announced the buyout they should have put their money where there mouth was right then and there. Two things either FI seen value in them or wanted to put them out of business to step up so boldly and announce a take over of their operations and with the end result we now see what their true intent was.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
arcticcruiser
Posts: 381
Joined: Tue Aug 22, 2017 2:16 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 7:29 pm

klm617 wrote:
SRQKEF wrote:
klm617 wrote:

Yes and WOW Air perpetuated that service AA wasn't flying to KEF until WOW Air entered DFW you can twist your logic any way you want to suit your agenda but those are the facts FI didn't create the environment for those airlines to start fly to KEF WOW Air created those opportunities. I know you love Icelandair and want to attribute all of the good fortunes of KEF to them but the fact of the matter is that until WOW started operations there nothing really was going on. Even Delta only went year round after WOW started operations there because the US3 were feeling the pressure. I can't follow the logic of anyone wanting to see a company go under that benefitted so many.


If you really think this is how the world works, good for you. I obviously never wanted the company to go under, but I sure as hell didn’t want it to keep operating in an unsustainable manner and dragging a responsible airline that has a much much larger impact on the Icelandic economy down with them. No matter how great it was being able to go to LAX/SFO for sub 200$, that kind of thing just isn’t possible in the long term. I was rooting for WOW to make it until the end, just as a sustainable operation of a reasonable size that could peacefully co-exist along with other airlines in the market. Unfortunately it was too little too late.

And no, KEF’s growth isn’t because of FI but it’s most definitely not because of WOW either. It’s because of the emergence of Iceland as a major tourism market. You do have a point that AA did probably start service here from DFW to defend its home turf because both Icelandic carriers suddenly added it, but it seems it’s doing well enough to keep flying even with FI out of there as well. Aside from that, AC and UA most definitely didn’t start flying here because of WOW and in fact AC started YUL/YYZ-KEF before WOW even went TATL. DL’s initial service may have been a response to FI increasing flights from JFK/BOS to CDG/AMS via KEF, but nevertheless it has been a huge success since.


You are correct WOW Air was not sustainable flying people from LAX and SFO for $200 RT but it was at $750 which is still below the curve and that's where the WOW Air business plan was flawed by continuing to dump low fare seats in an already over saturated market where they had no pricing power and then to add insult to injury adding unsustainable markets just because an airport threw money at them. But operating their narrow body fleets into markets that they had pricing power and a market void to fill was surely a sustainable business model. If they had been given a chance in their present form they could have easily moved on and been profitable. Don't you think it was rather cruel that they were left to fonder on during the weakest months of the year for travel only to be put out of business just before the peak travel season when they could have turned themselves around.


Waiter! I´ll have 2 shots of what klm617 is having!

If anything has emerged post WOW air’s demise, it is that WOW was already beyond rescue last September. Any fleet reductions (repo’s mostly) were too little too late.
 
LAXdude1023
Posts: 5872
Joined: Thu Sep 07, 2006 3:16 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 7:30 pm

klm617 wrote:
SRQKEF wrote:
klm617 wrote:

You are correct WOW Air was not sustainable flying people from LAX and SFO for $200 RT but it was at $750 which is still below the curve and that's where the WOW Air business plan was flawed by continuing to dump low fare seats in an already over saturated market where they had no pricing power and then to add insult to injury adding unsustainable markets just because an airport threw money at them. But operating their narrow body fleets into markets that they had pricing power and a market void to fill was surely a sustainable business model. If they had been given a chance in their present form they could have easily moved on and been profitable. Don't you think it was rather cruel that they were left to fonder on during the weakest months of the year for travel only to be put out of business just before the peak travel season when they could have turned themselves around.


It was cruel for their staff how things ended, and I feel for them. However, they weren't "put out of business" by anyone but themselves. It isn't the duty of anyone, neither the Icelandic public or private companies such as Icelandair, to pay for the mistakes of an overambitious businessman that got carried away with dreams of conquering the whole Nordic aviation market.


I also agree with this 100% where I blame Icelandair is for stringing them along for so long until they were past the point of no return when no one could help them. I contend the Icelandair had no intention of ever helping them out but rather getting in the way of other possible solutions. Icelandair's intent was to put WOW Air out of business. When Icelandair announced the buyout they should have put their money where there mouth was right then and there. Two things either FI seen value in them or wanted to put them out of business to step up so boldly and announce a take over of their operations and with the end result we now see what their true intent was.


Can’t blame Icelandair for WOWs bad management. WOW went to Icelandair for salvation. Icelandair looked at the P&L and rightfully said no way. Why should FI have had to buy a money bleeding airline that would have taken them both down?
"I dance and laugh among the rotten"
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 10:05 pm

arcticcruiser wrote:
klm617 wrote:
SRQKEF wrote:

If you really think this is how the world works, good for you. I obviously never wanted the company to go under, but I sure as hell didn’t want it to keep operating in an unsustainable manner and dragging a responsible airline that has a much much larger impact on the Icelandic economy down with them. No matter how great it was being able to go to LAX/SFO for sub 200$, that kind of thing just isn’t possible in the long term. I was rooting for WOW to make it until the end, just as a sustainable operation of a reasonable size that could peacefully co-exist along with other airlines in the market. Unfortunately it was too little too late.

And no, KEF’s growth isn’t because of FI but it’s most definitely not because of WOW either. It’s because of the emergence of Iceland as a major tourism market. You do have a point that AA did probably start service here from DFW to defend its home turf because both Icelandic carriers suddenly added it, but it seems it’s doing well enough to keep flying even with FI out of there as well. Aside from that, AC and UA most definitely didn’t start flying here because of WOW and in fact AC started YUL/YYZ-KEF before WOW even went TATL. DL’s initial service may have been a response to FI increasing flights from JFK/BOS to CDG/AMS via KEF, but nevertheless it has been a huge success since.


You are correct WOW Air was not sustainable flying people from LAX and SFO for $200 RT but it was at $750 which is still below the curve and that's where the WOW Air business plan was flawed by continuing to dump low fare seats in an already over saturated market where they had no pricing power and then to add insult to injury adding unsustainable markets just because an airport threw money at them. But operating their narrow body fleets into markets that they had pricing power and a market void to fill was surely a sustainable business model. If they had been given a chance in their present form they could have easily moved on and been profitable. Don't you think it was rather cruel that they were left to fonder on during the weakest months of the year for travel only to be put out of business just before the peak travel season when they could have turned themselves around.


Waiter! I´ll have 2 shots of what klm617 is having!

If anything has emerged post WOW air’s demise, it is that WOW was already beyond rescue last September. Any fleet reductions (repo’s mostly) were too little too late.


It's called reality not clouded by the social conditioning of the corporate world that puts profits before people so the wealthy can get wealthier and the less fortunate should just live without because everything becomes unaffordable. That only those flush with cash should be allowed to travel to exotic places and have nice things that companies like WOW Air made it possible for.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
winginit
Posts: 2555
Joined: Sat Feb 23, 2013 9:23 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 10:38 pm

klm617 wrote:
SRQKEF wrote:
klm617 wrote:

You are correct WOW Air was not sustainable flying people from LAX and SFO for $200 RT but it was at $750 which is still below the curve and that's where the WOW Air business plan was flawed by continuing to dump low fare seats in an already over saturated market where they had no pricing power and then to add insult to injury adding unsustainable markets just because an airport threw money at them. But operating their narrow body fleets into markets that they had pricing power and a market void to fill was surely a sustainable business model. If they had been given a chance in their present form they could have easily moved on and been profitable. Don't you think it was rather cruel that they were left to fonder on during the weakest months of the year for travel only to be put out of business just before the peak travel season when they could have turned themselves around.


It was cruel for their staff how things ended, and I feel for them. However, they weren't "put out of business" by anyone but themselves. It isn't the duty of anyone, neither the Icelandic public or private companies such as Icelandair, to pay for the mistakes of an overambitious businessman that got carried away with dreams of conquering the whole Nordic aviation market.


I also agree with this 100% where I blame Icelandair is for stringing them along for so long until they were past the point of no return when no one could help them. I contend the Icelandair had no intention of ever helping them out but rather getting in the way of other possible solutions. Icelandair's intent was to put WOW Air out of business. When Icelandair announced the buyout they should have put their money where there mouth was right then and there. Two things either FI seen value in them or wanted to put them out of business to step up so boldly and announce a take over of their operations and with the end result we now see what their true intent was.


You obviously don't have to answer, but I'm genuinely curious as to what line of work you participated in throughout your career that gave you the idea that we should expect competing corporations to care about one another as opposed to doing everything possible to put one another out of business for the benefit of shareholders. This is how capitalism works. Period.
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 10:50 pm

winginit wrote:
klm617 wrote:
SRQKEF wrote:

It was cruel for their staff how things ended, and I feel for them. However, they weren't "put out of business" by anyone but themselves. It isn't the duty of anyone, neither the Icelandic public or private companies such as Icelandair, to pay for the mistakes of an overambitious businessman that got carried away with dreams of conquering the whole Nordic aviation market.


I also agree with this 100% where I blame Icelandair is for stringing them along for so long until they were past the point of no return when no one could help them. I contend the Icelandair had no intention of ever helping them out but rather getting in the way of other possible solutions. Icelandair's intent was to put WOW Air out of business. When Icelandair announced the buyout they should have put their money where there mouth was right then and there. Two things either FI seen value in them or wanted to put them out of business to step up so boldly and announce a take over of their operations and with the end result we now see what their true intent was.


You obviously don't have to answer, but I'm genuinely curious as to what line of work you participated in throughout your career that gave you the idea that we should expect competing corporations to care about one another as opposed to doing everything possible to put one another out of business for the benefit of shareholders. This is how capitalism works. Period.


That's not how capitalism works. Capitalism in it's inception was you put your best product out there with the hopes that your product is better and good enough to make a decent return on your investment and that you price by supply and demand capitalism is not you buying out or putting all the competition out of business so you can rape the market for as much as you can because the customer has no other choice to come to you and pay your price or due without.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
winginit
Posts: 2555
Joined: Sat Feb 23, 2013 9:23 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 11:39 pm

klm617 wrote:
winginit wrote:
klm617 wrote:

I also agree with this 100% where I blame Icelandair is for stringing them along for so long until they were past the point of no return when no one could help them. I contend the Icelandair had no intention of ever helping them out but rather getting in the way of other possible solutions. Icelandair's intent was to put WOW Air out of business. When Icelandair announced the buyout they should have put their money where there mouth was right then and there. Two things either FI seen value in them or wanted to put them out of business to step up so boldly and announce a take over of their operations and with the end result we now see what their true intent was.


You obviously don't have to answer, but I'm genuinely curious as to what line of work you participated in throughout your career that gave you the idea that we should expect competing corporations to care about one another as opposed to doing everything possible to put one another out of business for the benefit of shareholders. This is how capitalism works. Period.


That's not how capitalism works. Capitalism in it's inception was you put your best product out there with the hopes that your product is better and good enough to make a decent return on your investment and that you price by supply and demand capitalism is not you buying out or putting all the competition out of business so you can rape the market for as much as you can because the customer has no other choice to come to you and pay your price or due without.


It's inception is irrelevant sadly. What you've described in your last sentence is exactly how capitalism works in practice today. Surely you know that.
 
Lapplander800
Posts: 94
Joined: Sat Jun 30, 2018 4:56 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 11:42 pm

klm617 wrote:

I also agree with this 100% where I blame Icelandair is for stringing them along for so long until they were past the point of no return when no one could help them. I contend the Icelandair had no intention of ever helping them out but rather getting in the way of other possible solutions. Icelandair's intent was to put WOW Air out of business. When Icelandair announced the buyout they should have put their money where there mouth was right then and there. Two things either FI seen value in them or wanted to put them out of business to step up so boldly and announce a take over of their operations and with the end result we now see what their true intent was.


How is a 24 day ( 11.5.18 to 11.29.18) due diligence period "stringing them along"? The second last ditch attempt was 3-4 days. Who would buy a failing airline without looking at the books?

Now, if you are mixing Icelandair Group up with Indigo Partners which, allegedly, were in negotiations to buy WOW for 3 months from the end of November into early March then yes that is quite a long period (1 month longer than it took them to buy Frontier... Due diligence...), but what was their incentive? Were they paid by Icelandair to string WOW along perhaps?

Indigo might have been wishful thinking though...
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Fri May 24, 2019 11:51 pm

winginit wrote:
klm617 wrote:
winginit wrote:

You obviously don't have to answer, but I'm genuinely curious as to what line of work you participated in throughout your career that gave you the idea that we should expect competing corporations to care about one another as opposed to doing everything possible to put one another out of business for the benefit of shareholders. This is how capitalism works. Period.


That's not how capitalism works. Capitalism in it's inception was you put your best product out there with the hopes that your product is better and good enough to make a decent return on your investment and that you price by supply and demand capitalism is not you buying out or putting all the competition out of business so you can rape the market for as much as you can because the customer has no other choice to come to you and pay your price or due without.


It's inception is irrelevant sadly. What you've described in your last sentence is exactly how capitalism works in practice today. Surely you know that.


That's not Capitalism my friend sorry that's dictatorship and price fixing of a different form. You can attaché any name you want to the way business is done today but that doesn't make it capitalism.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
SCQ83
Posts: 5388
Joined: Wed Oct 03, 2012 8:32 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 5:49 am

SRQKEF wrote:
You really believe DL, AA, UA and AC all started daily flights here just because of WOW? :rotfl:

DL has flown here every summer since 2011 and are now year round for a few years, so that’s one airline that WOW didn’t “convince” to start KEF. Aside from that, I can’t even follow your logic. So you think people are travelling to Iceland in much larger numbers because of a different airline than the one their travelling with that has little to no recognition, not because the destination itself is trending? :roll:


I can see his logic. Icelandair has been there forever and Iceland was already popular, but it was with WOW when the Icelandic tourism entered in "turbo-boost" mode. It was also with WOW when every random newspaper or TV station in Dallas or Kansas featured those "our airport has now USD 99 flights to Europe" pieces. And then all those articles about how "Iceland is overcrowded now" which ironically help to boost tourism even more.

It is interesting that the real boom in tourism in Iceland happened when WOW started operations: https://en.wikipedia.org/wiki/Tourism_in_Iceland

WOW helped tremendously to boost the tourism in Iceland and the popularity of the country specially in the US. And that popularity made more carriers like AA or UA interested to fly to Iceland.

This happens also in a similar way with Ryanair in some regional airports in Continental Airport (for instance some Polish airports). Ryanair takes some airport and makes it popular because of their gazillion low-cost routes with 10 euro flights. Tourism develops in this city (new hotels, restaurants, attractions, press reviews...) because of the new influx of tourists. The destination is now on the radar and legacy carriers take a different look at it and decide to jump on the wagon and start a route.

Now let's see if all those foreign carriers to Iceland are sustainable in the medium term. If I am not mistaken BA already decreased frequencies to LHR a while ago.
 
Bobloblaw
Posts: 2406
Joined: Fri Jan 13, 2012 1:15 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 9:53 am

klm617 wrote:
Bricktop wrote:
SRQKEF wrote:

Agreed on all points. The ignorance towards facts by some posters is quite staggering really.

A little hometown sophistry going on here, at least with my very small sample of departures tomorrow, Saturday May 25.
Air Baltic                 1   1.4%
Air Greenland         1   1.4%
British Airways        1   1.4%
Delta Air Lines      2   2.9%
easyJet         2   2.9%
Finnair         1   1.4%
Icelandair      50   71.4%
Lufthansa      2   2.9%
Norwegian Air Int   1   1.4%
S7 Airlines      1   1.4%
SAS            2   2.9%
Transavia France   1   1.4%
Wizz Air         5   7.1%
            70   


13 airlines sounds great, but FI has >70% of the market. 10 times as many flights as its nearest "competitor" and all the rest are onesies and twosies.
Destinations where more than one airline serves are 7. CPH, FRA, HEL, LHR, MSP, JFK, and OSL, all served by FI and only one other. The only destination which gets 2 departures on an airline which is not FI is FRA with 2 flights by LH. Competitive my posterior. Kindly spare us the "yeah but other places.." line. It was greatly in FI's interest to string WOW along until they withered. I don't blame them one bit, and probably would have done the same in my role of non-armchair CEO, so lets not pretend that they are lilywhite and not back to a virtual fortress situation.

But the point mjoelnir makes is a good one (choking sound from me). The decline is in transfers, which has very little value to the economy compared to visitors. Unless that is, what was argued in the EK profits thread, that good numbers of those transfers took advantage of stopovers. If I was going to Europe via Iceland, I would certainly take advantage of the opportunity, if only to hoist a beer with the Hammer himself.


Thank you for pointing out what most don't get here. When the CEO of WOW Air realized what FI was trying to do he pulled out and went to indigo but by then FI had already damaged WOW Air beyond saving. We all know the key to running a profitable airlines is by killing the competition that is a fact proven over and over again in this industry.

Your last sentence is about 99% incorrect.
 
User avatar
SRQKEF
Posts: 1877
Joined: Fri Jun 17, 2011 7:10 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 11:09 am

SCQ83 wrote:
SRQKEF wrote:
You really believe DL, AA, UA and AC all started daily flights here just because of WOW? :rotfl:

DL has flown here every summer since 2011 and are now year round for a few years, so that’s one airline that WOW didn’t “convince” to start KEF. Aside from that, I can’t even follow your logic. So you think people are travelling to Iceland in much larger numbers because of a different airline than the one their travelling with that has little to no recognition, not because the destination itself is trending? :roll:


I can see his logic. Icelandair has been there forever and Iceland was already popular, but it was with WOW when the Icelandic tourism entered in "turbo-boost" mode. It was also with WOW when every random newspaper or TV station in Dallas or Kansas featured those "our airport has now USD 99 flights to Europe" pieces. And then all those articles about how "Iceland is overcrowded now" which ironically help to boost tourism even more.

It is interesting that the real boom in tourism in Iceland happened when WOW started operations: https://en.wikipedia.org/wiki/Tourism_in_Iceland

WOW helped tremendously to boost the tourism in Iceland and the popularity of the country specially in the US. And that popularity made more carriers like AA or UA interested to fly to Iceland.

This happens also in a similar way with Ryanair in some regional airports in Continental Airport (for instance some Polish airports). Ryanair takes some airport and makes it popular because of their gazillion low-cost routes with 10 euro flights. Tourism develops in this city (new hotels, restaurants, attractions, press reviews...) because of the new influx of tourists. The destination is now on the radar and legacy carriers take a different look at it and decide to jump on the wagon and start a route.

Now let's see if all those foreign carriers to Iceland are sustainable in the medium term. If I am not mistaken BA already decreased frequencies to LHR a while ago.


While I see your point, that doesn't mean that keeping WOW alive would've helped the economy. Unfortunately, it was too far gone.

And no, BA has actually increased service to an all time high next winter with 17x weekly frequencies to LHR and 3x more to LCY. U2 has however cut STN, which is the only notable reduction in service to LON and means FI again has most frequencies on KEF-LON.
Nothing compares to taking off in an empty 757 with full thrust!
 
kyrone
Posts: 151
Joined: Thu Mar 31, 2011 1:56 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 1:47 pm

Is there still any talk of the former management team starting another airline? If I recall, right after the collapse, they planned to start this summer ( which was doubtful IMO )! Any news on the subject?
 
LAXdude1023
Posts: 5872
Joined: Thu Sep 07, 2006 3:16 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 1:53 pm

klm617 wrote:
winginit wrote:
klm617 wrote:

That's not how capitalism works. Capitalism in it's inception was you put your best product out there with the hopes that your product is better and good enough to make a decent return on your investment and that you price by supply and demand capitalism is not you buying out or putting all the competition out of business so you can rape the market for as much as you can because the customer has no other choice to come to you and pay your price or due without.


It's inception is irrelevant sadly. What you've described in your last sentence is exactly how capitalism works in practice today. Surely you know that.


That's not Capitalism my friend sorry that's dictatorship and price fixing of a different form. You can attaché any name you want to the way business is done today but that doesn't make it capitalism.


This is capitalism: "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."

This is a dictatorship: "government by a dictator."

THEY ARE LITERALLY THE OPPOSITE OF EACH OTHER. You cant have a capitalist dictatorship in any form. It doesnt exist.

In reading your post history, what you really seem to be advocating for is a full blown return to the days of regulation. Where the government controls what prices the airlines can charge and what routes they can fly. Here is what you dont get: they airlines dont own you or their competition jack squat. Why should FI have helped WOW? Corporations are not charities. WOW was poorly managed and suffered because of it. End of story. It was not FI's job to come in and rescue them.
"I dance and laugh among the rotten"
 
kyrone
Posts: 151
Joined: Thu Mar 31, 2011 1:56 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 2:01 pm

LAXdude1023 wrote:
klm617 wrote:
[quote="
Why should FI have helped WOW? Corporations are not charities. WOW was poorly managed and suffered because of it. End of story. It was not FI's job to come in and rescue them.


Or to absorb their mountain of debt....
 
User avatar
hvusslax
Posts: 385
Joined: Sat Aug 15, 2015 7:35 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 2:32 pm

kyrone wrote:
Is there still any talk of the former management team starting another airline? If I recall, right after the collapse, they planned to start this summer ( which was doubtful IMO )! Any news on the subject?


Everything went silent on those plans pretty soon and Skúli Mogensen has all but disappeared from the media.

There was a second initiative by a hotel owner in Iceland to start a new LCC but that one has also fizzled out.

As much as I would like there to be a second home airline in Iceland to keep Icelandair honest, I think the market just isn't there.
 
klm617
Posts: 4447
Joined: Sat Jul 04, 2015 8:57 pm

Re: Bloomberg: Wow Air Collapse is Crashing the Icelandic Economy

Sat May 25, 2019 3:18 pm

LAXdude1023 wrote:
klm617 wrote:
winginit wrote:

It's inception is irrelevant sadly. What you've described in your last sentence is exactly how capitalism works in practice today. Surely you know that.


That's not Capitalism my friend sorry that's dictatorship and price fixing of a different form. You can attaché any name you want to the way business is done today but that doesn't make it capitalism.


This is capitalism: "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."

This is a dictatorship: "government by a dictator."

THEY ARE LITERALLY THE OPPOSITE OF EACH OTHER. You cant have a capitalist dictatorship in any form. It doesnt exist.

In reading your post history, what you really seem to be advocating for is a full blown return to the days of regulation. Where the government controls what prices the airlines can charge and what routes they can fly. Here is what you dont get: they airlines dont own you or their competition jack squat. Why should FI have helped WOW? Corporations are not charities. WOW was poorly managed and suffered because of it. End of story. It was not FI's job to come in and rescue them.


Can we please put this corporations are not charities BS to rest. I don't call them criminals for manipulating and exploiting a captive market to maximize the amount of money they can milk out of them. No I do not believe the airline industry should be regulated by the government or the airlines themselves. There should be a happy medium where everyone benefits not a market where just one entity wins because of lack of competition. You're not old enough to remember when the market had the luxury of choice where if you did like what one competitor was doing you could chose another well in the airline world in the USA that's not the case because the market is void of competition. Now Icelander's are Faced with the same issue they have no choice it's basically for the most part Icelandair or nothing. I never said that Icelandair should own the debt of WOW Air what I said was that if they had no intent of stepping up they should have kept their nose out and let the chips fall where they may. And before you jump on that band wagon of there was too much competition before consolidation that's not true either it was bad management that ran most airlines into the ground and Southwest proves that point because while growing through the deregulation years they stilled turned a profit every year.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...

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