MIAMI — Skuli Mogensen is the founder and CEO of Iceland’s Wow Air, a low-cost carrier that began flying in October 2012. Before starting Wow Air, Mogensen spent 20 years as an entrepreneur and investor, in the technology, media and telecom Industry in North America and Europe. He co-founded and was the CEO of OZ Communications, a mobile software company, while still attending the University of Iceland. He grew OZ to more than 200 employees and sold over 100 million copies of its messaging software to all the major handset manufacturers and mobile operators before selling OZ to Nokia in 2008. In 2010, he led a group of investors to resurrect MP Bank after the total collapse of the Banking sector in Iceland, and currently serves as vice chairman of MP Bank.
Wow Air began flights out of Boston-Logan International Airport on March 27, and out of Boston-Logan International Airport on March 27, using Airbus A321s for both flights.
Mogensen spoke to Airways about how he got into the airline business, why he went the low-cost carrier route as his business model and future opportunities in the North American market.
Airways: How and Why Did you Get into the Airline Business?
Skuli Mogensen: The short answer is my background is in technology and telecommunications. I sold my main business to Nokia in 2008 and tried to semi-retire. But I was not good at it. I got bored and wanted a new challenge. I saw there were no low-cost carriers flying into Iceland and no one doing low-fare trans-Atlantic flights. I thought this could be interesting and fun to do. And people thought it was a crazy thing to do, and that made me want to do it more.
Why Do you Think Wow Air was Needed?
Icelandair had a monopoly situation with Iceland, especially with service to North America. That airline is a legacy with high costs and is expensive to fly. I saw a great opportunity to lower fares and build a good business. I saw there were greater opportunities to offer low-cost trans-Atlantic flights. I saw a need and a market and based the airline on that.
Why Did you Decide to Go with the Low-Cost Carrier Model for Wow?
I looked at different carriers. I also spent 150 days a year over 20 years and saw the various airline business models from personal experience. Once I started looking at the financials for airlines, the perception is that the business is fragile and high risk. But there are a handful of low-cost carriers that have been consistently profitable and continue to grow. That growth has come at the expense of legacy carriers in Europe, which has been reflected with some of them in decline. Some have had to restructure and some have just disappeared. I clearly wanted to copy a proven, successful business with margins much higher than legacy carriers ever see.
How Have you Adapted to Competing with Icelandair?
We are not really modeling them or copying them in any way, shape or form. I don’t pay attention to how they react to us. For the first few years, they tried to ignore us, and that was fine with me. We have lowered fares in Iceland on average between 30 and 50 percent on the most popular routes. Consumers have gotten the greatest benefit of this, because Icelandair is lowering fares on the routes we compete on. But I don’t think they can come down as low as us.
If a U.S. Customer Asks you Why they Should Fly Wow Air, What Would you Tell them?
We aim to deliver on a promise of offering the best possible price with a great product, with brand-new aircraft, the best on-time performance and very friendly flight crews. It doesn’t cost anything to smile. We also encourage travelers to do their research and check Trip Advisor to see what others say about us. We’re proud that despite being a low-cost carrier, we get overwhelmingly positive responses from our customers.
What other Areas of the U.S. Do you Think are Appealing as Potential Wow Cities?
The way we see it, we’re just getting started in the United States. There are 50 million passengers who fly between North America and Europe, and half of them have to make a stop to get to their final destination, so that’s an addressable market. Plus there are cities that are not served by a low-cost carrier. I see a huge opportunity to significantly lower fares on trans-Atlantic flights. We will announce further details this fall for our new destinations in North America and Europe in 2016.
What Do you Think the Airline Will Look Like in the Future?
We would be thrilled if we can be on the forefront of realizing a true low-cost carrier model across the Atlantic. Our goal is to be the leader in the low-cost carrier trans-Atlantic market and capture a significant market share. If you look at the growth of low-cost carriers in North America and Europe, we could have 30 to 40 aircraft in the next five years.