January 15, 2018 / 5:04 PM / 2 years ago

The Wow factor in Iceland's role as global transit hub

(Reuters) - Icelandic transatlantic budget carrier Wow Air will fly Asian routes later this year, in an expansion that will further boost Iceland’s credentials as a global transit hub thanks to its “superior location”, the company’s founder and CEO said.

FILE PHOTO: Skuli Mogensen, CEO of WOW air, poses with cabin crew members during a delivery ceremony of his first Airbus A321neo, during the 52nd Paris Air Show at Le Bourget Airport near Paris, France June 21, 2017. REUTERS/Pascal Rossignol

Iceland has grown in strength as a transit hub for flights across Europe and North America in the past couple of years, and tourism to the island is booming, helped partly by the advent of low-cost carrier Wow, which started operations in 2012.

Passenger numbers to Iceland’s Keflavik International Airport rose 28 percent in 2017 to 8.76 million, with the number of transit passengers jumping 38 percent.

“I think Iceland has a superior location that is hard to compete with, I do not see anyone else building an island in the middle of the Atlantic Ocean,” Skuli Mogensen told Reuters in a telephone interview in which he also drew parallels with Dubai.

“Dubai did not exist 30 years ago. It is now a 100 million passenger a year airport,” he said, referring to the rise of the city in the United Arab Emirates as a hub for transfer traffic, especially between Europe and Asia.

Wow has focused on low-cost travel across the Atlantic. It uses smaller single-aisle planes to fly between Iceland and many destinations in the United States and Europe, helping to keep costs down as they do not need as many seats to fill them up.

Wow’s fleet currently comprises 14 Airbus A320 family aircraft and three widebody A330 planes. It plans to increase the overall size of the fleet to 24 by the end of 2018.


Wow has added to a revival of budget transatlantic travel, driven by Norwegian Air Shuttle (NWC.OL), that has prompted traditional long-haul players such as British Airways parent IAG (ICAG.L), Air France-KLM (AIRF.PA) and Delta (DAL.N) to set up new operations or change pricing structures.

“I think we like to say that we attract the smart traveler, meaning people who want to get value for money and not pay ridiculously high prices for legacy airlines or older aircraft and mediocre service “ said Mogensen, who is sole owner of Wow.

Wow sees “plenty of room for growth” expanding into Asia, though he declined to name planned future destinations.

Mogensen said Wow’s strategy was to “go further and deeper” into the United States and offer flights to places where passengers were unlikely to find routes directly from Europe.

Wow has added five flights to the Mid-West - Cleveland, Detroit, St. Louis, Dallas and Cincinati - that are due to start up in April or May, he said.

Wow mainly competes with Norwegian Air on low-cost transatlantic routes from the Nordic countries. It has been operating on these routes since 2015.

Norwegian Air has a little over half of the market share in the fast-growing, low-cost, long-haul transatlantic market, while Wow controls a quarter, according to data from OAG flightview.

Reporting by Tommy Lund and Thyagaraju Adinarayan in Gdynia with additional reporting by Victoria Bryan; Editing by Gareth Jones

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