On March 28th, the low-cost Icelandic airline announced that it is ceasing its operations.
WOW Air immediately grounded its fleet, leaving thousands of air passengers stranded at Keflavik Airport.
The airline, which was rated as one of one of the poorest performers worldwide, made zero arrangement for their passengers, leaving them stranded and finding a way to their destination on their own.
Although the news of the bankruptcy has been out for a couple of days, little light has been shed on the reason why the Icelandic carrier has gone out of business.
WOW Air had received thousands of claims from ClaimCompass
When it first commenced operations in 2012, the Icelandic airline delighted US travelers with flights to Europe for less than $100.
Yet, on-time performance was rather poor. In 2018, 34.35% of their flights arrived at least 15 minutes late or more - and for a large portion of these, it was way more indeed.
As a result, the Icelandic low cost carrier faced an ever growing amount of claims for compensation under the EU Regulation 261/2004.
In 2018 alone, ClaimCompass received over 100,000 claims against WOW Air, which according to EU Regulation 261/2004 ranged between 250€ and 600€ and amounted for a total of approximately €38.8M.
Unable to face the ever-increasing financial pressure and optimize flight performance, WOW Air was forced to file for bankruptcy.
"We owed passengers over €100M in flight disruption compensation. Although we did our best to accommodate as many of these claims as we could, we failed."
Skuli Mogensen, WOW Air's founder and CEO
Failed investment and the nosedive
WOW Air was in talks with Icelandair, their Icelandic rival, about a potential merger.
This was somewhat of a reaction to the questionable decision to acquire new Airbus aircraft, moving farther away from the low-cost model. Compromising the homogeneity of its fleet turned out to be catastrophic.
"One of the mistakes that I made, that Wow made in the last 18 months, was that we were moving away from the low-cost model," Mogensen stated.
WOW Air had been in talks with its rival hoping to raise some funds to stay afloat. A big portion of the money was supposed to cover the growing pile of compensation claims.
Failing to honor the compensation claims would've resulted in a storm of lawsuits, which could have only accelerated the inevitable bankruptcy.
Passengers Won't Get their Compensation
While some airlines like the Lufthansa Group stepped in and offered a 25% discount on ticket prices to passengers who had purchased a WOW Air ticket, no airline is volunteering to pay their flight compensation on behalf of the Icelandic low cost.
Unfortunately for passengers who had already submitted a compensation claim against WOW Air, it's highly unlikely that they will ever see their money.
Why is that?
Roughly speaking, every other creditor will get priority over the passengers and the proceeds from the liquidation will go to investors and suppliers first.
Those who have purchased insurance should check their policy as soon as possible. Passengers are also advised to contact their credit card provider, as some of them may include protection in these circumstances.
Passenger Rights are no Joke
While this post is our little April Fools prank, passenger rights are no joke and our team is working on tens of thousands of claims as we speak.
Disclaimer: This post was created for April Fools purposes. Any resemblance to real and accurate news is purely coincidental.