A group of airlines have issued rescue fares to help repatriate an estimated 10,000 passengers stranded on both sides of the Atlantic by the collapse of Wow Air.
Aer Lingus, Norwegian, Virgin Atlantic, Icelandair, easyJet and Wizz Air are among carriers offering discounted rates to affected Wow Air passengers.
The Icelandic Transport Authority said: “Passengers are advised to check available flights with other airlines.
“Some airlines may offer flights at a reduced rate, so-called rescue fares, in light of the circumstances.”
Aer Lingus is also offering £199 transatlantic rates for Wow Air passengers who were due to travel from April 12
Wow Air flights due to depart from Montreal, Toronto, Boston, Detroit, New York, and Baltimore were grounded on Wednesday night while aircraft flying to its Reykjavik hub from cities across Europe failed to take off yesterday.
The low-cost carrier collapsed after failing to secure a deal to buy the company despite talking with Icelandair and US airline investor Indigo Partners.
Wow Air chief executive and founder Skuli Mogensen said in a letter to the carrier’s 1,000 employees: “This is probably the hardest thing I have ever done but the reality is that we have run out of time and have unfortunately not been able to secure the funding of the company.
“I will never be able to forgive myself for not taking action sooner.”
Wow Air’s annual passenger carryings grew from 2.8 million in 2017 to 3.5 million in 2018 but the airline suffered increased losses of $33.6 million in the nine months to September last year.
The airline was founded in 2011 by tech and telecoms entrepreneur Mogensen.
It was established to provide low cost flights between Europe and North America via its hub in Iceland.
The first flight was to Paris in May 2012 and it took over the operations of Iceland Express that autumn.
But the airline was forced to half its fleet to 11 aircraft in a restructuring announced before Christmas, described by Mogensen as a “drastic measure” and “the most difficult day in the history of Wow Air”.
The crisis surrounding the low cost carrier came to a head when Indigo Partners cancelled a planned $90 million investment in Wow Air last week.
Wow Air then turned to rival Icelandair in a last-ditch bid for survival but a takeover failed to materialise.
The airline then unsuccessfully appealed to bond holders and other creditors to throw it a financial lifeline via a voluntary restructuring.
A daily Gatwick-Keflavik service was due to be switched to Stansted from March 31.
Surain Adyanthaya, senior vice president of strategy at digital technology firm PROS, said varying market forces including capacity, fuel prices and competition cause a “high-stress environment” for low cost carriers and airlines that do not have the resources to weather turbulent market environments.
“This can cause LCCs to fail – already in 2019 we have seen the demise of Wow, Germania, and Flybmi,” he said.
“Airlines have a limited number of levers to deal with these unpredictable market forces. The most obvious is to increase fares, but this isn’t possible in many price-sensitive leisure markets, like Iceland.
“The next best option is to drop capacity and allow fares to rise as the natural supply-and-demand balance is reset.
“The third is to replace legacy aircraft with more fuel-efficient planes that have rolled out recently. This, however, requires time and money, which some carriers don’t have.
“Some airlines choose to hedge their fuel costs to mitigate the negative impact of price shocks, and thus reduce the likelihood of the associated financial distress. This is a double-edged sword though, that can backfire if fuel prices drop.”
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