The loss of WOW Air, the LCC, is taking a toll on Iceland’s air traffic. Through June 2019 movements at Keflavik, the primary airport, is down 14.6% YTD compared to last year. Passenger traffic is down even more at -20.3% YTD but the June numbers are down nearly 28%.
The loss of the airline is clearly impacting the traffic flow at Keflavik. This comes on top of the loss of jobs with the airline’s demise. In April the impact was seen as limited and not hurting Iceland’s banking sector. Icelandair, the other local airline, has struggled with its MAX fleet grounding. This led to pilot layoffs which seemed odd since one would have expected the airline to be doing better without an LCC competitor.
WOW’s demise is not just aviation-focused – WOW Air had 1,100 employees. Iceland attracts more tourists per year than it has residents. Tourism accounts for 8.5% of Iceland’s economy which employs 30,000 people. The total population of Iceland is 300,000 – 10% of the population is employed by tourism. To say tourism is a fundamental part of the economy is an understatement. The loss of WOW could reduce GDP by 2.7% this year. Iceland’s (overpriced) currency dropped 1.4% after the WOW Air shutdown. 2019 is a tough year for Icelanders.