OK, let's unpack this. If you were traveling
to Europe any time between, say, 2012 and 2019,
you almost certainly saw them. Oh, you couldn't
miss them. Right. You'd be standing at a gate.
in Newark or Gatwick or maybe Boston, looking
out the window at this sea of mostly white and
gray planes. And then suddenly rolling down the
taxiway, there was this absolute assault on the
senses. The purple comet. Exactly. Yeah. A bright,
unapologetic, neon purple Airbus. And if you
didn't see the plane, you definitely saw the
ads. They were everywhere. Fly to Europe for
$99. London to New York for the price of a nice
dinner. It felt like a glitch in the matrix.
I remember thinking, is this legal? Can I actually
cross the Atlantic Ocean for less than 100 bucks?
For a little while, you absolutely could. But
as we know now, sitting here in early 2026, that
ticket price was an illusion. It was a temporary
gift subsidized by billions of dollars of investor
money that ultimately just evaporated. Today,
we're doing a definitive deep dive into the rise,
the fall, and the very, very strange afterlife
of WW Air. But we aren't just talking about YYW.
We have to talk about the entire Icelandic hub
experiment. We have to. Because, and this is
the elephant in the room, we are recording this
in early 2026. And just a few months ago, in
late 2025, YYW's spiritual successor, the airline
Play, also ceased operations. And that really
is the context that changes everything. It's
the key. If just YOW had failed, we could write
it off as, you know, bad management, Schuber
is flying too close to the sun. A one -off. A
one -off. But now that Play has followed it into
the grave, we have to ask a much bigger question.
Is the business model itself fundamentally broken?
Is the whole idea flawed? We have a massive stack
of sources today. We've got the original financial
reports from YOW's collapse in 2019, the bankruptcy
filings from Play. in 2025, fleet registries,
and some truly wild reporting on what you called
the zombie phase of the company. Our mission
is to understand how a tech entrepreneur tried
to turn a volcanic island in the North Atlantic
into the Dubai of the North, why it failed so
spectacularly, and why the geography of Iceland
might actually be a trap for airlines, not an
advantage. It's a story about hubris, cheap money,
and just the brutal, unforgiving physics of aviation.
So let's start at the very beginning. Who creates
an airline like this? I mean, usually when you
look at airline founders, they are ex -pilots
or they are, you know, logistics guys who spent
30 years at British Airways or Lufthansa. Right.
They are ops people. They live and breathe this
stuff. They care about fuel hedging and crew
rotations and maintenance schedules. But the
founder of WW Air, Schooley Mogenson, was none
of that. He wasn't an airline guy at all. Not
even close. Schooley was a quintessential tech
entrepreneur. He made his fortune in telecoms
and technology. He had had successful exits in
Iceland, across Europe, and in North America.
He was an investor. He looked at the world through
the lens of Silicon Valley. Which is? Disrupt,
scale fast, acquire users at any cost, and then,
you know, figure out the profitability later.
That is a terrifying mindset to bring to aviation.
In software, if you move fast and break things,
you can just release a patch on Tuesday. In aviation,
if you break things, you have 4 ,000 people stranded
in Reykjavik in the middle of a snowstorm. Precisely.
The stakes are just fundamentally different.
But that outsider perspective was also his superpower,
at least initially. He founded WIW Air in November
2011 through his investment vehicle, a company
called Titan. He was the sole owner, the CEO,
and a board member. So he had total control.
Total control. There was no board of grumpy old
aviation veterans to tell him, no, that's insane,
you can't do that. It was his vision, his money,
his show. And what was that vision? I mean, obviously,
Iceland is an island. People need to fly to get
there. But he had much bigger plans than just
ferrying tourists to the Blue Lagoon. He did.
His vision was entirely based on geography. If
you look at a globe, and it's important to look
at a globe, not a flat map, and you draw a line
from London to New York or Paris to Toronto,
that line, the shortest possible route, goes
almost directly over Iceland. It's the perfect
stepping stone. The Great Circle Route. Right.
And Mogensen wasn't the first person to notice
this. We have to give a nod to Loftlayer. The
hippie airline. Yes. Back in the 1960s and 70s,
Loftlayer offered dirt cheap flights across the
Atlantic by stopping in Iceland. They flew these
slow prop planes. It took forever, but it was
affordable for students and backpackers. Mogensen
essentially wanted to reboot the hippie express
for the Instagram generation. They use this very
specific phrase that I find fascinating. The
Dubai of the North. That is a massive ambition.
It is. I mean, think about what Dubai is. It's
a global connector. Emirates Airlines connects
Europe to Asia, Asia to Africa, Africa to the
U .S. Billions of people live within a four,
five, six hour flight of Dubai. Mogensen saw
Kefalovic Airport and wanted to turn it into
that kind of indispensable connector for the
Atlantic. But Dubai has a state -backed airline
with what feels like infinite oil money. And
they have perfect weather year -round. Iceland
has. Puffins and volcanoes. Right. And some of
the most volatile weather on the planet. Absolutely.
But you have to remember the timing. This is
2011. Iceland had just gone through a horrific
financial crisis in 2008. The currency, the krona,
was in the toilet. Which made Iceland incredibly
cheap for tourists. Incredibly cheap. And then...
The universe handed Iceland a gift. In 2010,
you had the eruption of Eyjafjallajökull. The
volcano that shut down all of European airspace
for, what, a week? It shut down the airspace,
but it also put Iceland on every TV screen in
the world for weeks on end. It was the biggest
free marketing campaign in history. Suddenly,
everyone wanted to see this dramatic, volcanic,
otherworldly land. Skuli Mogensen saw that wave
of interest forming and decided he was going
to build a surfboard to ride it. So he launches
the brand. And the brand itself was loud. Wow.
Wow. It was meant to signify the reaction he
wanted people to have, both to the prices and
to Iceland itself. But there's a great little
design Easter egg in the logo if you take the
letters W -O -W and you flip them upside down.
It spells M -O -M? It spells M -O -M. And they
actually leaned into that in their marketing.
They were very clever about it. They started
registering the tail numbers of their planes
to spell out family words. Oh, that's right.
I remember seeing those. T -F -M -O -M. TF Dad,
TF Bureau, TF SIS, even TFJ. Really? Yeah, in
support of Reykjavik Pride. It was all part of
this quirky, friendly, accessible image. It was
a signal. We are not a stuffy, boring legacy
carrier. We're fun. So they launch in late 2011.
Their first flight to Paris is in May 2012. And
almost immediately... They go into acquisition
mode. Right away. In October 2012, just a few
months after their first flight, they bought
Iceland Express. This was their main low -cost
competitor in the Icelandic market. So by swallowing
them, WW instantly became the dominant budget
player in the country. And they got their routes.
They got their routes to Gatwick, to Copenhagen,
Berlin. It was a massive shortcut to building
a network. And the growth numbers from this point
on are just staggering. Looking at the data we
pulled, 400 ,000 passengers in 2013. That's a
respectable start for a new airline. But by 2016,
just three years later, they were carrying 1
.6 million people a year. That's a fourfold increase.
It's exponential growth. That is. tech startup
growth, not normal airline growth. And the only
way you can possibly achieve that kind of growth
is to stimulate demand that didn't exist before.
And you do that with price. You do that with
the ninety nine dollar ticket. OK, let's get
into the mechanics of this, because I feel like
this is where the average traveler gets confused
and frankly, where the magic trick happens. How
does an airline actually sell a ticket for ninety
nine dollars and not go bankrupt immediately?
Or were they just losing money on every single
seat? Well, it's a mix of a few things. It's
loss leaders, it's unbundling, and it's ancillary
revenue. So first, the unbundling. That $99 fare
you saw advertised is for a seat, just the seat.
It does not include a carry -on bag, not even
a small one sometimes. It does not include a
check bag. It does not include a meal. It does
not include a bottle of water. It certainly doesn't
include the ability to choose your seat. So by
the time you add a suitcase and a sandwich...
You're already paying, what, $300, $350? Exactly.
And often, that $99 fare was only available one
way, and only if you booked a return flight that
was much, much more expensive. Or it was only
available on a Tuesday in February. It was a
marketing hug. A brilliant one, because it worked.
It got you onto the website, it filled the planes,
and you have to remember, an airline seat is
the most perishable good in the world. Once that
plane door closes and it pushes back from the
gate, an empty seat is worth zero. Forever. So
getting $99 is infinitely better than getting
zero, provided you have enough other people on
that plane paying full price to cover the fuel
and the crew. So they're filling the planes to
Europe with this model. But Skuli Mogensen wanted
the Dubai model. He needed to connect to North
America. The transatlantic leap. This was the
big move. This happened in 2015. They started
small with Boston and Baltimore. Those are shorter
flights, easier to do with a narrow body plane.
Right. But in 2016, they went big. They launched
Los Angeles and San Francisco. And flying from
Reykjavik to Los Angeles is a haul. That is a
nine or 10 hour flight. It is a very long flight.
And to do that, they had to lease bigger plans.
They brought in the Airbus A330 -300. Okay, here's
where it gets interesting technically. And maybe
a little nerdy. Why does adding a new plane type
matter so much? It matters immensely. I mean,
this is the cardinal rule of low -cost carriers.
If you look at the most successful ones, Southwest,
Ryanair, Wizz Air, they are fanatical about simplicity.
They fly one type of plane. Southwest flies only
the Boeing 737. Wizz Air flies only the Airbus
A320 family. Because then every pilot can fly
every plane. Every flight attendant is trained
for every plane. And every mechanic has the same
set of spare parts in the hangar. Exactly. It's
all about commonality. It keeps your costs brutally
low. When WOWW Air leased those A330s, these
big twin -aisle wide -body jets, they broke that
fundamental rule. Suddenly, they needed a separate
pool of pilots trained and certified just for
the A330. They needed a separate inventory of
spare parts. They needed separate maintenance
schedules and ground equipment. The complexity
of the entire operation doubled overnight, but
their back office infrastructure didn't. And
the utilization of the plane itself becomes a
problem too, right? A huge problem. A wide -body
plane is incredibly expensive to lease. I mean,
you're talking hundreds of thousands of dollars
a month per plane. To make money, that plane
needs... to be in the air 15, 16 hours a day,
every day. Just constantly flying. But if your
entire model is based on funneling people through
a hub in Iceland, the schedule is very constrained.
The flight from LA has to arrive in Keflavik
in the morning, in time for the connecting bank
of flights to Europe. That means if the plane
sits on the ground in Los Angeles for eight hours
waiting for the right departure slot, it's not
making money. It's just burning cash. But Mogensen
didn't stop at the West Coast. He looked even
further. He looked east. And this is where the
Dubai ambition really went off the rails. They
decided to fly to India, to New Delhi. From Iceland.
From Iceland. The idea being that you could fly
from, say, San Francisco to New Delhi via Iceland.
Which, if you look at a globe again, seems to
make some sense. The line is pretty straight.
It goes right over the pole. Geographically,
it's elegant. But operationally, it is a complete
nightmare. I mean, just think about the chain
of events. You have a flight. Leaving San Francisco,
it has to fly nine hours to Keflavik. It lands
in the middle of the North Atlantic winter. You've
got blizzards, high winds, ice. Right. The plane
has to be de -iced, refueled, and turned around
in maybe 90 minutes. Then passengers have to
get off, clear security again, and board another
flight for another nine or ten hours to Delhi.
If that first flight from San Francisco is two
hours late because of headwinds over Canada,
the whole connection is blown. The whole thing
collapses. And unlike Emirates and Dubai, where
if you miss your connection, they've got six
other flights going to your destination that
day, WOW Air didn't. They had one. If you missed
it, you were stuck in Iceland for 24 hours or
more. And guess who has to pay for your hotel
and food? Wow. W .Airdis. In Iceland, which is
one of the most expensive countries on Earth.
So one delay, one small technical issue could
wipe out the entire profit margin for that flight
and probably the next three flights after it.
It was a ridiculously high risk, high complexity
strategy run on a shoestring budget. And they
were doing all of this while constantly churning
their fleet. They weren't just adding new types
of planes. They were swapping them out. Right.
They started with old, cheap -to -lease, 20 -year
-old A320s. But Schooley, with his tech background,
wanted the newest, most efficient technology.
So they started leasing brand new A320neos and
A321neos. Which are great planes. They're fantastic
planes. Incredibly fuel -efficient, quiet, longer
range. But the monthly lease rates are astronomically
higher than for a 15 -year -old plane. So their
fixed costs just exploded. They were hoping that
insane growth would pay for it all. It's the
Porsche problem. They bought the expensive, high
-performance Porsche before they had the steady,
high -paying job to actually afford it. And they
were trying to pay for the Porsche by using it
as a long -haul taxi service to India. That is
a very vivid image. So all of this brings us
to 2017. The expansion is in full swing. The
purple planes are absolutely everywhere. But
behind the scenes, the financials are starting
to look really, really scary. 2017 was the tipping
point. If you look at their annual report for
that year, their revenue increased by 58%, which...
on a chart looks amazing money is just pouring
into the company but they swung from a healthy
profit in 2016 to a significant loss in 2017.
profitless growth yeah the classic tech bubble
symptom exactly they were bringing in more and
more cash but they were spending it even faster
on those expensive leases on fuel for the long
haul routes and on just handling the operational
chaos of their overextended network this is also
when the customer service reputation really started
to tank oh i remember this stories. I mean, they
were all over social media, people stranded for
days, no customer support line to call, just
an email address that nobody ever answered. And
that's because when you run that lean, you have
no buffer. Legacy Airlines have spare planes
and spare crews on standby. Wow, IOW had nothing.
If a plane went tech, had a mechanical failure
in Los Angeles, there was no backup. You just
had to wait until a part could be flown in and
they could fix it. So enter 2018. The walls are
clearly closing in. By late 2018, the situation
was critical. The bond market was getting very
nervous. They were having trouble raising more
debt. And crucially, their suppliers were getting
nervous. Explain why the suppliers matter so
much in this equation. An airline runs on credit.
It's fundamental. You buy jet fuel today. You
pay the supplier in 30 days. You get ground handling
services at an airport. You pay the bill later.
But when suppliers smell fear, when they think
you might be on the verge of bankruptcy, they
change the terms. They demand cash up front.
Exactly. No cash, no fuel. Pay us now or we won't
load the bags. And that drains your liquidity,
your available cash, almost instantly. It's a
run on the bank, basically. So in November 2018,
Scully Mogensen sought a lifeline. He turned
to his biggest rival. To the establishment. To
Icelandair. The legacy carrier that they had
been trying to disrupt. On November 5, 2018,
Icelandair announced they had agreed to buy WOW
Air. And on paper, it made a lot of sense. You
consolidate the market. You stop the brutal price
war. You stabilize the Icelandic tourism economy.
But the deal fell apart incredibly fast. It lasted
less than a month. Icelandair entered the due
diligence phase, which means their accountants
and lawyers went into WIW's headquarters and
opened the books. And what they saw in there
must have absolutely terrified them. Do we know
what they found specifically? We can infer it
from what happened next. They likely found that
the debt was much deeper than had been publicly
reported. They probably found that the lease
return conditions on the aircraft were very messy
and expensive. And I bet they found that the
forward bookings, the number of tickets sold
for future flights, were dangerously soft. On
November 29, Icelandair walked away. They put
out a statement and basically said, no thanks,
we can't touch this. That really should have
been the end of the story right there. But on
the very same day that Icelandair walked, a white
knight appeared. Indigo Partners. And this was
a huge deal. A massive deal. For anyone who doesn't
follow the business of aviation, Indigo Partners
is the gold standard for ultra -low -cost carriers.
This is Bill Frank's private equity firm. They
own Frontier in the U .S., Wizz Air in Europe,
Volaris in Mexico, JetSmart in South America.
They are the absolute experts in making this
model work profitably. So if anyone on Earth
could fix WIW Air, it was them. You'd think so.
But Indigo is ruthless. Their entire model is
based on extreme efficiency and cost control.
They looked at WIW and said, this is a mess.
We need to cut the fat. So the downsizing began.
It was brutal. YOW cut its staff by 360 people
down to about a thousand. They had to shrink
the fleet. They returned four aircraft to the
lessors. Which ones? A mix of A320s and A330s.
They canceled the orders for the brand new A330neos
they were so excited about. They canceled the
route to India. They canceled Los Angeles, San
Francisco. They were desperately trying to shrink
back to the 2015 version of the airline just
flying. buying narrow body planes to the US East
Coast and core European cities. They were chopping
off limbs to try and save the body. And Indigo
spent months looking at the deal. They proposed
buying a 49 % stake. Schooley Mogensen was fighting
for his company's life here. At one point, he
even put millions of his own personal money back
into the company just to keep it afloat during
the negotiations. But in March 2019, Indigo also
pulled out. They did their due diligence and
decided the hole was just too deep to climb out
of. Even the best turnaround artists in the world
looked at the numbers and couldn't see a clear
path to profitability. That is the death knell.
I mean, when the experts in your specific niche
business model say it's unfixable, then it's
unfixable. It is. In a last -ditch effort, WowaW
went back to Icelandera one last time in mid
-March, practically begging. Icelandera took
another quick look and, again, immediately said
no. So we are in late March 2019. The money is
gone. The investors are gone. And the planes
are about to go. This brings us to the final
chaotic collapse. I think people often think
of corporate bankruptcy as, you know, a paperwork
thing that happens in a courtroom. But in aviation,
it's a very physical, very dramatic event. It
really is. It's all about repossession. And you
have to understand, airlines generally don't
own their planes. They lease them from giant
leasing companies like AirCap or GFEs. It's just
like renting an apartment. If you stop paying
your rent, the landlord comes and changes the
locks. And that's what happened on March 24th
and 25th. Yes. A Dwaiwa W airplane that had landed
in Montreal was grounded. Another one in Cuba
was prevented from taking off. Not because they
were broken, but... because the lessors, the
owners of the planes, sent a legal order to the
airport authorities. Do not let this plane take
off. It's our property and the lease is in default.
And WDOW put out a press release blaming technical
failures. Which was, to be blunt, a lie. It was
a financial failure. The pilots were ready to
fly. The plane was perfectly fine, but it had
been seized. They tried one last desperate maneuver.
The bondholder pivot. What was that? It was a
Hail Mary pass. They went to the people who held
their corporate debt, the bondholders, and tried
to convince them to convert that debt into equity
in the company. Basically saying, look, you can
either let us die and you'll get zero cents on
the dollar, or you can become the new owners
of the airline and maybe, just maybe, we survive.
It didn't work. It was far too little, far too
late. The morning of March 28, 2019, the email
went out. The website was updated. YOW Air has
ceased operations. All flights are canceled.
Effective immediately. I want to talk about the
scene at the airports that day. Because this
wasn't an orderly wind down like when an airline
announces it's shutting down in a month. This
was a sudden death. It was absolute chaos. Thousands
of passengers stranded in Gatwick, in Newark,
in Keflavik, in Paris. People showing up for
their honeymoon, for family reunions, for business
trips, only to find out their ticket was a worthless
piece of paper. There is one story that always
sticks with me from that day. The pizza story.
It's the most heartbreaking human detail of the
whole saga. In one of the terminals, I believe
it was Newark or maybe Boston, the WOW Airgate
agents, the ground staff, they knew it was over.
They'd gotten the internal memo. They knew they
were about to be unemployed. Right. But there
were hundreds of angry, confused, scared passengers
waiting to board a flight that was never going
to leave. So what did they do? They ordered pizza.
Maybe with their own money or with the last of
the station's petty cash. We don't know. They
started handing out slices of pizza to all the
stranded passengers. They fed them. And then,
after everyone had eaten, they got on the PA
system and announced that the airline no longer
existed and everyone had to go home. That is
just it's such an incredible moment of grace
under pressure. It reminds you that while Skuli
Mogensen was playing this high stakes game with
billions of dollars, there were real people on
the ground just trying to do their jobs and be
decent to each other. Absolutely. And the fallout
wasn't just for the passengers and the staff.
We have to talk about the economic blast radius
this caused in Iceland itself. Because W .O .W.
wasn't just another company. It was a macroeconomic
engine for the entire country. It was huge. At
its peak, WW Air was carrying more than 25 %
of all visitors to Iceland. Think about that
for a second. One quarter of the entire tourism
industry depended on those purple planes landing
at Keflavik. So when they stopped flying, the
main tap for tourists just turned off overnight.
Instantly. The official statistics are stark.
Tourist visits to Iceland dropped 16 % overall
in the year that followed. Visits from the U
.S., which was W .O .W.'s biggest market, dropped
by 20%. The construction industry in Reykjavik,
which had been building hotels and Airbnbs like
crazy, is suddenly ground to a halt. Unemployment
rose. The Icelandic krona lost value against
the euro and the dollar. It was a classic, painful
case of putting all your economic eggs in one
very volatile purple basket. You'd think that
would be the end of the story. The airline died
a spectacular death. The economy took a massive
hit. Lesson learned. Move on. You would think,
but WW era refused to stay dead. It entered what
I call the zombie phase. This part of the story
is just genuinely bizarre. In late 2019, a few
months after the bankruptcy, a press release
comes out of nowhere. Wow is back. Enter U .S.
Aerospace Associates, a U .S. holding company
led by a woman named Michelle Roosevelt Edwards.
They bought the assets of WOW Air from the bankruptcy
estate. When you say assets, what does that even
mean? Did they buy the planes? No, absolutely
not. The planes were long gone, back to the lessors
who had already repainted them and leased them
out to other airlines. They bought the brand
name, the logo, the uniforms, maybe some old
computers and spare beverage carts from a...
They bought the ghost of the airline. But Michelle
Roosevelt Edwards started making some incredibly
bold claims. Oh, yeah. She held a press conference
in Reykjavik where she claimed they would launch
flakes from Washington Dulles Airport to Iceland
in October 2019. Which was like. A month away.
A month away. So journalists naturally called
the officials at Dulles Airport and the airport
officials said, we have no record of this. No
one has applied for a landing slot. We have no
contract. We don't know who these people are.
Lefts. That is a very bad sign. A very bad sign.
So then she pivoted. She said, OK, we're going
to start with cargo first. We're going to fly
fresh Icelandic fish to restaurants in America.
Did they fly any fish? Not a single cod. Then
came the Wow Italy announcement. She claimed
they were setting up a new European base in Rome
or maybe Sicily. She even gave an interview to
Ravi, the Icelandic national broadcaster, where
she claims they had 10 Airbus A321s ready to
go and that two were already painted in the new
Wow Law W livery. And Rav, being good journalists,
tried to verify this. They did. They tracked
the aircraft registration numbers she hinted
at. The planes didn't exist. Or, rather, they
belonged to completely different airlines and
were flying routes in Asia. She also claimed
to own a massive controlling stake in their rival,
Icelandair, which was easily disproven by just
looking at the public shareholder registry. So
it was a ghost airline. It was all smoke and
mirrors. It was pure vaporware. Eventually, her
own lawyer in Iceland publicly quit, telling
the press that the headquarters was moving out
of the country and there were no staff left.
The whole thing just evaporated. into a cloud
of strange, unfulfilled press releases. But while
the zombie W .O .W. was grabbing all the headlines,
the actual people who used to run W .O .W., the
operations guys, the network planners, the finance
people, were quietly meeting in coffee shops
in Reykjavik. They were, and they looked at the
spectacular failure of W .O .W. and they thought,
the core idea wasn't wrong. The execution was
wrong. The hubris was wrong. If we do it again,
but do it strictly, do it by the book, without
the insane expansion, it will work. And so they
founded a new airline. Originally, and you have
to love this, it was called WB Air. We are back!
A little on the nose, maybe, but they quickly
rebranded it to Play. PLAY, they raised money,
they got certified, and they launched in June
2021, right as the world was cautiously starting
to travel again after COVID. And for a few years,
it really looked like they'd cracked the code.
I remember seeing their planes bright red this
time, not purple. A very different vibe. They
were incredibly disciplined. They flew only the
Airbus A320neo and A321neo, a single, efficient
fleet type. They didn't buy any widebodies. They
didn't fly to India or the West Coast. They stuck
to the core, original mission, to connect the
U .S. East Coast to core European cities via
Iceland. They grew steadily, not exponentially.
They seemed to be the sane version of Girl IW
Air. That's the perfect way to put it, but we
are recording this in February of 2026, and we
have to update the history books. Because play
has gone too? According to the public bankruptcy
filings, play ceased all operations on September
30, 2025. Just five months ago. Citing insurmountable
financial difficulties. They ran out of cash,
just like Rally OW did. So this is the core of
it. We have two major failures in less than a
decade. Rally OW failed in 2019. Play failed
in 2025. Both tried to do the exact same thing.
Both burned through hundreds of... millions of
dollars of investor money and this brings us
to the core question of this entire deep dive
why if play fixed all the obvious mistakes if
they didn't expand too fast if they didn't buy
the wrong planes if they were run by seasoned
professionals why did they still die is it possible
that the hub in the north model just fundamentally
doesn't work in the 2020s. I think the answer
lies in how aviation technology has changed in
just the last five or six years. We have to talk
about a very specific airplane, the Airbus A321XLR.
The extra long range. Exactly. When WOWW started
in 2012, if you wanted to fly from a secondary
city in Europe to a secondary city in the U .S.,
say, from Hamburg to Baltimore, from Lyon to
Boston, you couldn't do it directly with a small,
efficient plane. The narrowbody planes just didn't
have... the range. So stopping in Iceland was
a geographic necessity. It was the only way to
do it cheaply. While W's entire business model
was built on that technological limitation, they
were the bridge. Now, the A321XLR allows airlines
like JetBlue, Aer Lingus, American, United, all
of them to fly those exact same routes directly,
nonstop. You can put a small, fuel efficient,
narrow body plane on a transatlantic route and
just skip the stop in the middle. So the bridge
that Iceland provided is no longer needed. The
planes can just fly right over it. The bridge
is obsolete. Why would a passenger choose to
stop in Keflavik at 5 in the morning, drag their
tired kids through customs, wait two hours in
a crowded terminal, and get on another plane
when they can fly direct for maybe $50 or $100
more? The stopover becomes a bug, not a feature.
At the same time, the legacy carriers, Delta,
United, British Airways, got much, much better
at competing on price. They all introduced their
own basic economy fares to fight the low -cost
carriers. So the price gap between Row W or Play
and a legacy carrier sh— shrank, but the convenience
gap remained enormous. That is a fascinating
irony. The same technological progress that allowed
WW to exist in the first place, these super efficient
twin engine jets, eventually evolved to the point
where it made their Iceland hub model completely
obsolete. The bridge got too long and the planes
got too good. Iceland went from being a necessary
stepping stone to just being a detour. So Scully
Mogensen's dream of creating the Dubai of the
North. Yeah. It was always doomed by physics
and engineering advances. I think so. You see,
Dubai works because it connects huge markets
that cannot be flown directly easily, like London
to Sydney until very recently, or Beijing to
Johannesburg. It sits at a true global crossroads
of billions and billions of people. Iceland,
on the other hand, sits between two very mature,
very wealthy markets, Europe and North America,
that are already perfectly well connected by
thousands of direct flights. It was solving a
problem that technology was about to erase. So
what is the final takeaway here? We've watched
the purple comet rise and crash. We've watched
the red comet play, follow it right into the
ocean. For the business listener, I think it's
a powerful lesson in moats. A geographic advantage
is not always a permanent defensive moat. Technology
can and will bridge your moat. Just because you're
in the middle doesn't mean you are essential.
And for the traveler, for you listening? I think
it's a pretty stark reminder that when you see
a fare that looks truly too good to be true,
like $99 to fly to Europe. you are looking at
a subsidy. You aren't paying the true cost of
that flight. You are flying on a ticket that's
being paid for by venture capitalists and bondholders
who are betting on endless growth. So take the
cheap flight while it exists. Take the flight,
absolutely. But maybe buy the good travel insurance.
Definitely buy the insurance. And have a backup
credit card with a high limit in case you need
to buy a last -minute one -way ticket home on
Iceland Air. Because Iceland Air, the old boring
legacy carrier, is still flying. They are the
survivor. They have a diversified model. They
have business class. They fly cargo. They have
corporate contracts. They have a frequent flyer
program. They are robust. And it seems that to
survive the brutal economics of the North Atlantic,
you need to be robust, not just cheap. Here's
a final thought for you to mull over as we sign
off. We tend to look at maps and see logic. We
see a dot in the middle of an ocean and think,
oh, Iceland is in the middle. It must be a natural
hub. But maps are static and the world is dynamic.
Maybe the Dubai of the north wasn't just a failed
business plan. Maybe it was a geographic trap,
a kind of siren song that lured two different
groups of very smart investors to their doom.
Both of them convinced that this time they could
beat the map. The map, as they say, is not the
territory. Indeed. Thanks for listening to The
Deep Dive. We'll see you next time.