Icelandair Group has entirely bought out the low-cost carrier, WOW Air, in a move that has shocked the airline industry to the core.
For a while now, the financial stability of Iceland’s second largest airline, WOW Air, has been uncertain… up in the air, if you will.
With many market analysts having long predicted the company’s downfall, the airline’s major rival, Icelandair, has finally stepped up, acquiring the entire share capital in the company.
However, reaching conclusions so quickly regarding the acquisition has been called premature by some, as the deal is subject to shareholder approval and the approval of the Competition Authority, a regulatory body whose decision will take approximately three weeks.
So what does this mean for travellers planning their dream holiday to Iceland over the next few years?
Well, both WOW Air and Icelandair will continue operating under their own brand names, meaning that, superficially at least, not a huge amount will change. Still, should the acquisition go ahead as planned, this could mean that airfares to Iceland may rise in the future, thus creating an incentive for would-be travellers to book their trips here sooner rather than later.
With both companies headquartered at Keflavík International Airport, passengers will for now experience business as usual, which will gather a collective sigh of relief for those planning a trip to the land of ice and fire in the near future. In the corporate world, however, this acquisition has caused quite the stir.
WOW Air’s Troubled Upbringing
Skúli Mogensen founded WOW Air in 2011 with just two aircraft, pulling in customers with dirt cheap prices, while drawing criticism for charging fees on almost all aspects of the flight, from one’s choice of seat to bottled water and even added legroom—something of a cruel irony for a man who stands at a towering 6′2.
Allegations of poor customer service would continue for the next half-decade, culminating in the company ranking last in a survey of 72 international airlines, the study taking into account TripAdvisor reviews, on-time arrivals, and claims processing.
Regardless, the company soared throughout this period; WOW Air acquired Iceland Express in 2012, saw its millionth passenger in 2014 and, only a year later, began expanding its operations to North America, doubling its passenger capacity in the space of just twelve months.
For these achievements, Skúli won Icelandic businessman of the year in both 2011 and 2016. Nevertheless, such recognition has not been enough to overturn WOW Air’s dwindling reputation.
Clear Skies Ahead?
While brand recognition is strong, Icelandair’s service is undoubtedly superior, creating a hopeful optimism that under the latter’s direction, both airlines can now go from strength to strength, further empowering Iceland’s fruitful tourism sector.
This is extremely good news for future passengers to-and-from Iceland, who can perhaps now expect more focused attention on in-flight amenities and customer satisfaction.
Following the acquisition, Icelandair Group now boasts a 3.8% market share of transatlantic air travel. Both companies have stated this monumental sale will create opportunities for new markets, as well as increasing competition among international airlines.
For now, however, both the marketplace and prospective passengers must wait to see just how these changes will materialise for the betterment of Iceland’s two major airlines.