WOW Air is on the verge of bankruptcy: a plane has just been taken over by its creditors at the Montreal airport! Many flights cancelled.
It is not a surprise… after months of agony – of which we have regularly reported the contours – the situation of WOW Air is now catastrophic and it would not be surprising that it announces its bankruptcy in the next days. (Update: WOW Air has ceased operations).
Update – 28/03/2019 – Bankruptcy
As expected, WOW Air has gone bankrupt and ceased all operations.
Read this article for more details
UPDATE – 03/26/2019 – Creditors give WOW Air time to find an investor
WOW Air announced that it has convinced its bondholders to convert their bonds into shares of the company.
Reference is made to a market announcement of WOW air (“WOW”), dated March 24 2019, regarding WOW air’s advanced discussions with bondholders about voluntary restructuring including an agreement of converting current debt into equity. Bondholders have formally approved to convert their bonds into equity and formal discussions with investors have commenced to fund the company. This is an important milestone in financially restructuring the company and securing the long-term sustainability of WOW air.
In other words, WOW Air has just bought some time to try to find a new investor.
However, the task seems insurmountable:
- Indigo Partners, a fund specializing in the acquisition of distressed companies, has thrown in the towel
- After 2 rounds of negotiations, Icelandair – its Icelandic competitor, also ended the negotiations in the face of WOW Air’s disastrous finances.
03/25/2019 – WOW AIR on the verge of bankruptcy
We had the opportunity to test this company, shortly after the launch of the Montreal – Rekjavik route. If the comfort was basic and the services reduced to the strict minimum, it was a company allowing to go to Europe via Iceland at a reasonable cost.
While WOW Air had reduced its fleet size by 20% and its seat capacity by 25%. In the space of a few days in November 2018and that it had cancelled all its long-haul flights such as to India and many North American destinations, this was not enough to consider a takeover by other investors.
Both its competitor Icelandair and Indigo Partners have thrown in the towel in the face of the abysmal debts of the Icelandic ultra-low-cost airline.
Today, the company has had to cancel a large number of flights… and aircraft are beginning to be taken over by its creditors! Thus, the Airbus A321 registered TF-PRO was taken back from him last night at the Montreal airport, for lack of payment! The company had to send another aircraft, TF-DOG, to operate the flight… but it did not leave!
A flight planned with WOW Air?
If you have a flight planned soon with WOW Air, we strongly advise you to review your plans. You could end up being stuck in Iceland when you make a connection!
Check the flight page on WOW Air, most flights are either cancelled or “postponed”.
WOW Air is not the first ultra-low cost airline to go bankrupt. The last one was Primera AIR which was supposed to fly from Paris to Montreal. Let’s look at your recourse:
The Quebec Consumer Protection Act
In a previous bankruptcy, Charles Tanguay – spokesman for the Office de la protection du consommateur – told La Presse:
The Quebec Consumer Protection Act provides that, in the case of distance commerce, the customer is entitled to a chargeback if he or she has paid by credit card for goods or services not rendered
Several conditions must be met for this law to apply:
- Payment must have been made with a credit card
- From a computer located in Quebec
What are the steps – laborious – to obtain reimbursement?
You have made your reservation via an online agency?
You will have to contact the agency directly to obtain a refund.
You made your reservation directly on the WOW Air website?
Try to contact WOW Air at 1 888 209 3170 about your reservation to obtain a refund: phone, email, social networks …. According to the law, WOW Air has 15 days to make a refund.
Call your credit card issuer
Within 60 days, you must call your credit card issuer to explain the situation: you will not get the service (airline ticket) that you purchased on such and such a date on your credit card.
The issuer is obligated to issue a refund to your credit card. If the issuer explains to you that the bankruptcy of an airline is not provided for in the insurance contract, remind him that your purchase was made from Quebec and that the Quebec consumer protection law applies.
Forecasts for the transatlantic tariffs
WOW Air, with its very aggressive fares – but unsustainable in the long run as demonstrated by its bankruptcy – had forced most transatlantic carriers to review their fare structures for flights between Europe and North America.
Here is an example of the implementation of a FIRST baggage fee on Air Transat:
Thus, most of the passengers have lost in comfort because of the arrival of WOW AirAll airlines (Air Canada, Air France, Air Transat…) have decided to charge for checked baggage as well as various other services – such as meals on board for some – following the example of WOW Air.
Airlines are progressively removing services in order to “virtually” lower fares and appear first in search engines like Skyscanner.
So, the ticket price is certainly low and very enticing, but many fees are added afterwards for those who want a little more comfort like fees of:
- checked baggage
- cabin baggage
- meals on board
- choice of seat
On the other hand, “basic” prices for a transatlantic flight have never been so low: it is now not uncommon to see flights between Montreal and Paris for around CA$450-500 (without luggage, without meals).
WOW Air has turned this market upside down… but what will be left of it all without its presence?
As we stated during the Primera Air bankruptcy, in our opinion, the race for “all optional services” can only be detrimental to the consumer.
It is likely that transatlantic flight fares will rise again… but that the lack of service (luggage, meals…) will remain. A lose-lose solution for all passengers: from the backpacker who was delighted to be able to travel at low cost without luggage and without service… to the families who are now obliged to pay for their first hold baggage.
The upcoming and almost certain demise of WOW Air is a loss for airline competition in transatlantic flights, so there is nothing to celebrate.
This follows the withdrawal of the company Norwegian, which had started flights to the Caribbean (and was considering transatlantic routes to Canada), to finally throw in the towel, also in a catastrophic financial situation…
Other low-cost airlines have entered this market, such as Level, which has the advantage of being supported by the IAG group behind British Airways / Iberia. It remains to be seen whether this will last… or whether it will be replaced by the big players such as British Airways, Air France, Air Canada or Air Transat on transatlantic flights.