We caught up with the CEO of WOW Air to talk about how they make their fares so affordable and what makes Iceland so interesting to Americans.
Budget-minded travelers rejoiced last week when WOW Air debuted in the San Francisco and Los Angeles markets with US$99 flights to Keflavik International Airport in Reykjavik, Iceland. Promotional pricing sold out quickly, but the airline’s standard rates are still dirt cheap—some as low as US$229 round-trip. We recently caught up with Skuli Mogensen, the airline’s CEO, to chat with him about the carrier’s expansion.
Why did you pick these two California cities as your first markets on the West Coast?
"We were confident with expansions in North America based on the success of our routes in Boston and Washington, D.C. [which launched in 2014]. The feedback on those routes has been phenomenal. And now we’re running at a 90-percent load factor on every flight to North America. We just thought it was time to grow and serve another part of the U.S. market."
Tell us about these promotional fares.
"We came in to the market with fares starting at US$99 dollars direct to Iceland, and US$199 to a number of European destinations with a stopover in Iceland. Even after these promotional fares are over, we will lower fares on these routes by 30 to 40 percent from the norm. That’s one of our goals. Internationally our prices set us apart; while domestic airfares on average have been coming down, international prices have been coming up. That doesn’t make any sense. So we’re trying to change it and make the world a smaller place."
How are you able to undercut pricing on these routes so dramatically?
"First, we started the business with the intention of being a low-cost carrier. We have very little overhead. We never compromise on safety or security. Travelers book directly through the Internet, there’s no intermediary. We leverage technology in every aspect. We have a new fleet that’s more cost-efficient and burns less fuel. We maximize loads. When you take all of this into account, it adds up pretty quickly. My background is technology and telecom. I find it interesting that we can have a small team in Iceland and still challenge the big legacy airlines."
Low-cost airlines usually mean fees on-board. To what extent is that the case with WOW Air?
"That model certainly is becoming the norm for most carriers. The whole industry now is charging for bags. We [charge for those, and we] charge for definite seating and extra legroom."
Explain America’s fascination with Iceland.
"I think it’s all about nature. Iceland is truly a unique experience, from the moment you land. The fact you can drive an hour from the airport and find yourself in the middle of nowhere—that’s remarkable. No lights. No cars. No people. Also, while the country itself is actually quite large, the population is only 330,000. It’s a great combination of volcanos, glaciers, ocean, waterfalls, and lava fields. For me, as an outdoor person, it’s truly spectacular. I also think we have great history and culture, arts and music. It’s an eclectic mixture of these elements."
What about the flying experience is quintessentially Icelandic?
"Our crews are Icelandic; I like to think we have friendliest crew in the sky. Our planes are purple, our uniforms are purple. Not that purple is particularly Icelandic. But it stands out."