The Skift Airline Innovation Report is our weekly newsletter on the business of airline innovation. We look closely at the technological, financial, and design trends at airlines and airports.
Brian Sumers writes and curates the newsletter, and we send it on Wednesdays. You can find previous issues of the newsletter here.
Often, when I ask an airline executive about a possible merger, I get a non-answer, or a lukewarm denial. It’s part of the corporate dance.
But I recently asked Wow Air’s CEO, Skuli Mogensen, whether he would be open to merging with Iceland’s other airline, Icelandair. The carriers have different models — Icelandair is full-service — and different corporate cultures. But they share the same hub, and while Iceland is a hot tourist destination with a favorable North Atlantic geographic position, Reykjavik may not need two international airlines flying similar routes.
“It’s an obvious question,” Mogensen told me at the Aviation Festival in London. “Clearly we could rationalize the network and leverage the situation a lot better — a no-brainer. Will it ever happen? I am not sure.”
Wow Air probably needs some change to improve its fortune. While customers often like it for its cheap one-stop transatlantic fares, if not its customer service, Wow is losing money, according to data leaked from a presentation to prospective investors. Mogensen told me he’s hopeful a proposed bond offering could raise $50 to $100 million, bridging the gap until the carrier’s planned initial public offering, probably within two years.
But that could be wishful thinking. It might make more sense for another airline to acquire Wow, particularly since some other carriers see it as a nuisance and may be willing to pay a premium to put it out of business. Though Icelandair seems like a logical option, a few European airlines may also be interested. Several find Wow irritating and want to bulk up their long-haul, low-cost offerings.
What do you think? Let me know via email or Twitter.
Stories of the Week
Onetime Disruptor Wow Air Is Ready for a Reinvention: For a few years after it starting flying in 2012, established airlines mostly left Wow Air alone. Icelandair didn’t seem to view it as much of a threat, and U.S. and European legacy carriers had little interest in matching its unbundled product or fares. But Wow Air is bigger now, and its competitors have been taking notice.
American CEO on Gulf Carrier Pact: ‘Someone Is Cheating Already’: This one doesn’t make much sense. At an industry event last week in Washington, D.C., American Airlines CEO Doug Parker obliquely criticized Air Italy, an airline owned 49 percent by Qatar Airways. Parker noted the three largest Gulf carriers had pledged not to add more nonstop flights between Europe and the United States, and he suggested Air Italy’s expansion amounts to cheating. But Qatar Airways owns 20 percent of International Airlines Group, British Airways’ parent, and Parker doesn’t mind BA’s transatlantic flights.
Budget Carrier AirAsia Is Trying to Become a Lifestyle Booking Site: Skift Executive Editor Dennis Schaal flew to Malaysia to bring readers this story about how Air Asia plans “a lifestyle brand with online-travel-agency-like features.” Schaal, who knows more about online travel agencies than just about any journalist, is skeptical. “The dual operations — running an airline and an online-travel-agency-like operation — seem like a big stretch,” he wrote in the Skift Take.
10 Years Later: How the Travel Industry Came Back From the Financial Crisis: This is an impressive story from Seth Borko, Skift’s senior research analyst. Borko examines how all segments of the travel industry, including airlines, have recovered over the past decade.
Video: Sabre CEO Believes Airlines Can Get More Creative With Fees: If you work in the industry, you know most airlines have a love-hate relationship with global distribution systems like Sabre. The company’s CEO, Sean Menke, has an airline background — he was CEO at Frontier Airlines — and he has been working to change Sabre’s relationship with its airline clients. Menke spoke at Skift Tech Forum in June, and we have video from his discussion with Skift Travel Tech Editor Sean O’Neill.
Singapore’s Changi Airport Blazes a Trail by Embracing Automation: When passengers fly in and out of Changi’s Terminal 4, they witness a whole terminal built to test the airport robots of the future. It’s good practice for the mammoth terminal coming to the airport by next decade’s end. Bloomberg has the scoop.
Airlines Take Biofuels More Seriously as Part of an Environment Push: Kudos to airlines for trying to use biofuels, but carriers are a long way from being environmentally sustainable businesses. The industry is responsible for roughly 2 percent of annual global carbon emissions, Bloomberg’s Justin Bachman explains in this story.
Airlines’ Latest Customer Shakedown? Making You Bid for a Seat Upgrade: Let me channel my inner Scott Kirby. You may remember I interviewed United’s president last month, and he told me some airlines charge more for certain seats because they’re more valuable to customers. Passengers may not like it, but the rationale makes sense. So I find this article from Vox to be a little lazy. It’s not a “shakedown” for airlines to sell their most coveted seats at a premium. It’s just business.
Don’t Crowd the Gate: United Rolls Out a New Boarding Process: Will this be better than the previous one? Probably not, but an airline must go through the motions of trying to be more efficient every few years, right? USA Today has details.
Skift Senior Aviation Business Editor Brian Sumers [firstname.lastname@example.org] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send him an email or tweet him.