Wow Aims To Disrupt Long-haul Market from India

by Neelam Mathews

 - September 25, 2018, 10:09 AM

Indian international air service will get a boost once Iceland’s Wow Air on December 6 starts flying return service with an Airbus A330neo from Delhi to Reykjavík, offering passengers from the subcontinent a connection to any of the LCC’s several existing destinations in the U.S. and Europe. Selling promotional one-way tickets starting at $200, Wow has given rise to concerns about a fare war similar to those being waged among Indian domestic carriers. Most of the airlines involved had planned to fly medium- and long-haul flights to the West this winter, but the resulting losses have raised doubts about their implementation.

While low fares draw passengers, domestic airlines in India must cope with dizzying fuel prices, high taxes, rupee depreciation, and dollar escalation, making their operating costs far higher than those of international carriers.

More than 87 percent of Indian passengers fly to domestic destinations and the rest fly internationally. The U.S. and Canada rank as the fastest growing destinations for Indian travelers, welcoming some 20,000 arrivals a day. Data recently released by the U.S. Department of Commerce’s National Travel & Tourism Office (NTTO) shows that the number of Indians visiting the U.S. increased by 6.5 percent from 2016 to 2017. It noted that 1.29 million Indians traveled to the country in 2017, up from 1.21 million the previous year.

Wow Air’s low fares and 39 routes to the U.S., Europe, and London Gatwick via Iceland threaten to stall plans to fly West of even legacy carriers, including  SIA-Tata Group-owned Vistara.  Having reduced fares to compete with budget airlines on domestic sectors, it might face a similar situation now on international routes. Nevertheless, Vistara expressed confidence in its ability to compete internationally for the long term. “We have put in great effort to develop our international operations plan, taking into consideration industry dynamics,” said a Vistara spokeperson. “Our expansion roadmap is aligned with the delivery schedule of our new aircraft and product readiness.”

Meanwhile, budget market leader IndiGo has obtained slots for Gatwick and Hong Kong ahead of the start of planned medium- and long-haul operations this winter. As a point-to-point carrier, IndiGo will have to address Wow’s ability to offer onward connectivity to Europe. “It is a question of who offers the lowest fares,” said one analyst. “Wow Air via Iceland needs no alliances since it has available slots, infrastructure, and its own flights to Europe and Gatwick that could help it in offering lower fares.”

IndiGo holds to another point of view. It expects to tap its present voluminous regional/domestic traffic flying to London via Delhi once it starts its Gatwick flights. “IndiGo’s international plans involve the A320/321 family of aircraft and focus on new destinations like Kuwait, Abu Dhabi, Hong Kong, and others within six to seven hours flying time,” IndiGo chief strategy officer Willy Boulter told AIN. “We wish Wow well with their new services but their entry has no impact on our plan.”

Wow Air flies to 15 destinations in the U.S. Its latest expansion takes it to Orlando, which starts on December 18 with an Airbus A321 flying three times a week for $99. It launched its first U.S. destination, Boston, in 2015.