Last updated: 03:00 PM ET, Tue January 12 2016

Will $99 Flights to Europe Take Off?

Airlines & Airports | Josh Lew | January 12, 2016

Will $99 Flights to Europe Take Off?

Photo via Wikipedia

Iceland-based WOW Air is turning heads with its $99 fares from San Francisco and Los Angeles to Reykjavik. Tickets are now on sale, although the first transatlantic flight does not take off until June. 

The $99 fares will only get fliers as far as Iceland. However, WOW has a number of routes from its hub there to the rest of Europe. These fares start ay $199, but all taxes are included. Although the language used in WOW’s promotional push says $99 to Europe (which is true, since Iceland is considered part of Europe), trips to the continent will cost around $300. Which is still very cheap. 

A growing market?

WOW rolled out similar head-turning fares when it started service from the East Coast of the U.S. It now flies from Baltimore and Boston to Iceland

The big question is whether these low fares are sustainable. WOW operates under the same ultra-budget model that has brought success to Ryanair in Europe and Allegiant and Spirit in the U.S. $300 will get you from the West Coast to Europe, but you will have to pay more if you want to check a bag or have a sandwich during the flight. 

READ MORE: Another Entry in the Low-Cost Wars?

This business model has worked well for shorter domestic and regional routes. WOW is gambling that it will also be successful for longer journeys. The thing is, most long-haul international flights offered by legacy carriers do not operate under an a la carte pricing strategy. Trans-ocean flights are more expensive, but passengers aren’t charged for checking baggage, and they don’t have to pay extra for meals or beverages. Will fliers be willing to trade these comforts for lower fares when they have to be in the air for more than 10 hours?

Is there enough demand?

WOW Air CEO Skúli Mogensen thinks so. He told USA Today that he is surprised that not many airlines are interested in the low-cost, long-haul niche. “If you look in Europe, the low-cost carriers now have some 30 percent to 40 percent market share. Currently the low-cost model has maybe 2 percent market share in trans-Atlantic airfares. Should it be 30 percent to 40 percent? I don’t know. But it certainly should be 10 percent to 20 percent. I think the low-cost carriers will grab significant share in the next five to 10 years.” 

At least one other carrier, Norwegian Air Shuttle, has found success with a similar business model. Norwegian currently offers transatlantic flights between Europe and the U.S. for as little as $235 one way. The service has proven quite popular and the Oslo-based carrier has hinted that even lower fares could be coming in the near future if the demand continues to rise. 

RELATED: Who Will Challenge Ryanair’s Low-Cost Throne in Europe?

What's the catch with these $99 fares?

What about the fees? On WOW Air, they can certainly add up. The price to check a bag is exorbitant on the Icelandic airline: $76 total if flying from the West Coast and then connecting to London or somewhere on the continent. The carry-on limit is only 11 pounds. Choosing your seat in advance also costs extra. You’ll have to risk sitting in a middle seat for the entire journey if you don’t want to part with $67 to buy the right to select your seats for all legs of the trip. 

Yes, it will be pretty hard to actually get away with paying less than $300 for a journey to Europe on WOW Air. Savvy travelers will have to count the overall cost, including whatever fees they can’t avoid, and then compare that to the price of a full-service flight. Once you count all the fees, flights by WOW and Norwegian might not be as cheap as advertised, but they still may end up being cheaper than the competition.

We will soon see if such ultra-budget services can get a bigger share of the long-haul marketplace.      


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