Iceland-based WOW Air went suddenly bankrupt at the end of March, leaving thousands of passengers stranded throughout the world. But now we’re seeing how much the airline’s shutdown has impacted Iceland’s economy.
The central bank in Iceland has announced that the previously predicted 1.8 percent increase in the economy will now be a 0.4 percent decrease, stating that the “deterioration in the outlook is due primarily to a contraction in tourism,” alongside a decrease in marine product exports.
Numerous airlines fly in and out of Keflavík International each day including Neos, Lufthansa, Vueling, Wizz Air, Eurowings, EasyJet and even Delta, but WOW and Icelandair are really the only two airlines to heavily rely on stopovers in Iceland for their transatlantic flights.
More than 2.2 million people visited Iceland in 2017, almost double the number that visited only two years prior. This March over 170,000 people arrived into the country via Keflavík, dropping by around 50,000 people in April after WOW disappeared. But experts had been predicting a drop in tourism even before this, reports Skift, with international arrivals slowing from 39 percent growth in 2016 to 24 percent in 2017 — the lowest it had been since 2011, when the tourism boom began.
Foreign visits to Iceland arriving by air, in the last 24 months
It’s become unsurprising to see this sort of event happen — more and more low-budget airlines are shutting down each year because of the low profit margins. With fuel prices increasing, according to the International Air Transport Association (before the large drop in price in 2016), airlines have tried to keep their prices relatively the same, leading to financial issues.
Though the shutdown of WOW is unlikely to do any more damage to the tourism industry in Iceland, the country is facing a surge of tourists, resulting in higher prices (and shorter stays). If Iceland doesn’t take a more protective and proactive stance in regards to tourism, it could lead to a higher decline in visitors to the island.