Sunday, 31 March 2019

WOW Air is bankrupt

Iceland-based discount airline WOW Air went bankrupt and ceased operations abruptly last Thursday. All WOW Air planes were grounded wherever they were, and even flights for which passengers were already being checked in were cancelled. Travellers have been stranded in Europe, in North America, and in Iceland.

Iceland's location along the great-circle route between Europe and North America has made it a natural connection and stopover hub for trans-Atlantic air travel. Icelandair remains in business, serving those markets. And of course there have been many successful short-haul discount airlines. But while there have also been many attempts to at long-haul discount airlines, both trans-Atlantic and trans-Pacific, there have been few if any long-term standalone successes.

Having a short-hop airline go out of business is one thing. Having a transoceanic carrier go out of business in the middle of your trip, when you can't get home by train or bus or rental car, is another matter -- not to mention getting stuck on a remote island such as Iceland while changing planes, or on what was planned to be just a short stopover.

Travellers holding WOW Air tickets purchased in Europe may eventually get compensation under European airline consumer protection rules and/or government travel insurance schemes. Travellers who bought their tickets in the USA, for flights originating in the USA, may be able to recover what they paid form credit card companies, but otherwise will probably be out of luck. The USA has far weaker consumer protection rules than many other countries.

My FAQ on Airline Bankruptcies has more on what you need to know about dealing with airlines that are already operating in bankruptcy or arte in danger of going bankrupt. The WOW Air debacle is a reminder that, despite reassuring rhetoric about "reorganization" not really being bankruptcy (really it is) and continuing to operate "normally" and honor tickets while bankrupt (whether that will be allowed is in the hands of the bankruptcy court, which is solely concerned with the interests of other creditors and not with those of ticket holders), you generally should not buy tickets on any airline that is, or is likely to become, bankrupt. If you do, have a Plan B and budget for what you would do if the airline shuts down at any time before or during your trip.

Link | Posted by Edward on Sunday, 31 March 2019, 15:53 ( 3:53 PM) | TrackBack (0)
Comments

Jet Airways -- once the second-largest airline in India, and which formerly operated flights to and from New York and San Francisco -- has also ceased all flights:

https://www.npr.org/2019/04/18/714645183/mounting-debt-forces-hard-landing-for-indias-jet-airways

Jet Airways says this is only a temporary suspension of operations, but it's hard to see how Jet Airways could resume flying, given that many of its planes have been repossessed by leasing companies and other creditors:

https://www.reuters.com/article/us-jet-airways-debt/lessors-rush-to-repossess-more-jet-airways-planes-even-as-emergency-funds-awaited-idUSKCN1RT0IW

Posted by: Edward Hasbrouck, 21 April 2019, 07:04 ( 7:04 AM)
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