WOW Air Plane Sales Show The Danger Of ULCCs

Well, this isn’t good. It’s been a turbulent year for WOW Air, the Icelandic ultra-low cost carrier carrier. After the losses got too big to handle, it announced that Iceland Air would be buying it. And when that didn’t work out, Indigo Partners, led by airline veteran Bill Franke, stepped in. Now, the airline is cutting back its growth significantly.

50% off Airline Tickets (And The Airline)

reykjavic, iceland

Iceland will have fewer flights in the new year                                                                    Photo Credit: Creative Commons

Last week, after announcing a 50% off sale on tickets, WOW announced that it would be cutting its fleet in half, as well.* The company will take its 20 planes down to 11, as it prepares for another difficult year. Sadly, it needs the money just to continue operations going forward. While no flights will be cut in December or January, there will eventually be an announcement as to which ones are being grounded.

Here’s the problem: Passengers who booked tickets on WOW will have no real recourse if it’s their flight that gets axed. They’ll get their money back from their credit card companies, but that’s it. They’re on their own for any other costs related to their vacation, and new tickets will likely cost more than they would have at the original time of booking.

That’s not to say that you should never book on a ULCC. Network carriers can go bankrupt as well, which we have seen at almost every global carrier in the US in the past 20 years. But the newer discount carriers tend to operate with less of a cushion on their balance sheets. One good ice storm or spike in fuel prices can be enough to spell the end of a poorly capitalized company. Fortunately, you don’t have to be a financial expert to determine your airline’s fate. Bankruptcies are rare, and liquidations even more so, but a Google search can generally answer any questions you may have about your potential carrier.

 


*I first saw this article on Flyertalk.

 

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