The recent collapse of Wow Air has had a devastating effect on Iceland’s economy, reports Bloomberg. On Wednesday, the central bank cut its main interest rate by 50 basis points, to 4%, and outlined a sharp fall in its predictions for GDP growth — forecasting it to contract by 0.4% this year instead of growing 1.8%. The demise of Wow Air has hit Iceland’s previously booming tourism industry hard, and follows a series of budget airline collapses in Europe.
Sad to read this, Iceland is an incredible country but wow air was charging absurdly low ticket prices, maybe subsided by the government to increment tourism, either way it was increíble to travel there a few months ago, I believe Iceland should diversify their economy since excess tourism is damaging their delicate island, jeopardizing the long run sustainability of their tourism dependent economy
If you were doubting the role that airlines, airports, and tourism can have on the economy, the "recent bankruptcy of budget airline Wow Air has delivered such a blow to the Icelandic tourist industry, and the wider economy, that the central bank [...] said that the economy is now set to contract 0.4% [...]. The airline had helped turn tourism into Iceland’s biggest cash cow, fueling a boom that dragged the nation out of its financial collapse more than a decade ago. Its demise in March spelled an abrupt end to that boom." #iceland #economy #tourism #airlines #airports
Aircraft Sales & Marketing | Aviation Consultant
I'll just throw a couple of names out there: Alitalia, Air France, Tarom, Malev, Estonian Airways, Olympic, etc... If an airline disappears because it is inefficient or has a sub-perfect business model.. it happens. If WOW didn't exist in the first place, Iceland wouldn't be negatively impacted by it now. In other words it only created a bubble which now burst. I'm strongly against government intervention, unless there is a strong need for it.