Wow Air: Essential advice for passengers as another budget airline closes down

Norwegian, easyJet and Wizz Air are already offering rescue fares to stranded passengers

The Icelandic budget airline Wow Air has closed down, after the founder and chief executive, Skuli Mogensen, failed to secure a rescue for the heavily indebted airline.

It told passengers: “Wow Air has ceased operation. All Wow Air flights have been cancelled.

The business model for the airline was to connect Europe and North America through its hub at Reykjavik. It was in competition with the long-standing incumbent, Icelandair, and another local rival, Primera Air, until that airline went bust in 2018.

The collapse leaves an estimated 5,000 passengers stranded on the wrong side of the Atlantic – Europeans in North America, and vice-versa – as well as around few thousand Europeans who are in Iceland and trying to get home.

Hundreds of thousands more people with future bookings are also seriously out of pocket.

These are the key questions and answers for passengers.

What went wrong?

Most airline collapses involve a combination of adverse factors. In the case of Wow Air there has been aggressive expansion over the past year that competed directly with Icelandair and indirectly with many other airlines, including Norwegian.

Airlines are “cash positive”, and able to limp on for a while using the revenue from forward bookings to support the operation, but eventually – particularly at the end of a long, harsh winter – the game is up. Wow Air may have had a chance of survival as part of an expanded Icelandair had it secured a deal late last year. But the airline held out for a better offer. As its financial position deteriorated, the chances of a rescue faded.

I am stranded abroad as a result of the failure. What are my rights?

Do not spend a fortune on alternative flights unless you are in a real hurry. During the course of the next few hours and days other airlines will come in to offer “rescue fares”. When airlines go bust, others step in with repatriation fares set at around the marginal cost of carrying a passenger – on a transatlantic trip, perhaps £150.

They do not seek to make money out of a bad situation.

The Independent has contacted the leading airlines and will update this page with details as and when they become available.

First was easyJet, which has a fare of £110 including baggage for one-way flights from Iceland. Call +44 (0) 330 365 5030.

Norwegian has a range of options for transatlantic travellers, with 25 per cent off prevailing fares between New York or Boston and Gatwick.

Wizz Air is offering a £75 one-way fare between Reykjavik and Luton.

These offers are until the end of the first week in April.

Be ready with your booking reference and flight number along with departure date, points of origin and destination.

Who will pay for my hotel expenses while I wait for another flight?

You, or if you have an especially robust policy, your travel insurer.

I have a future booking with Wow Air. Will I be given a flight on a different airline?

No. The airline has ended operations, and is not going to book alternative flights for anyone.

How do I get my money back?

If you paid by personal credit or debit card, as most passengers did, you should be able to claim the money back from the card provider.

For credit-card purchases over £100, you can apply under Section 75 of the Consumer Credit Act. For smaller credit-card purchases and debit-card holders, ask for the money under the “chargeback” scheme.

Assuming I get a refund, will I also be able to claim for a more expensive replacement flight?

Credit-card buyers may be able to argue that, under Section 75, your card provider should pay for what you booked, ie a transatlantic flight, but experience suggests that is unlikely to be successful

I have an outstanding claim against Wow Air for compensation. Will it be paid?

If you can show that the claim has been agreed but not paid, then you are an unsecured creditor. When it becomes clear what the arrangements are for administration, you could apply for a share of proceeds. But unfortunately there is unlikely to be anything for unsecured creditors.

When my Wow Air flight was cancelled, I was told to buy a different flight and that the airline would compensate me. What are my rights?

Again, you are an unsecured creditor. Travel insurance may possibly help, but I have never seen a policy that says: “We will cover the cost of alternative flights if your airline fails before it has refunded you.”

I was booked on a package holiday with Wow Air flights. Do I have extra rights?

Yes. If you were one of the very small minority of Wow Air passengers who booked flights as part of a package holiday, put together by a separate travel company along with accommodation, then that firm needs to provide you with an alternative flight. You should not be financially disadvantaged in any way.

Who will go bust next?

I am certainly not going to repeat any rumours circulating in aviation about airlines in difficulties – many of these are groundless and if they are widely circulated they can turn into self-fulfilling prophecies.