WOW Air Expands in the U.S.: Another Thorn in the Side for American, Delta, and United

WOW Air Expands in the U.S.: Another Thorn in the Side for American, Delta, and United

Traditionally, the transatlantic market has been a key profit center for the U.S. legacy carriers. Together with their European joint venture partners, American Airlines (NASDAQ: AAL), Delta Air Lines (NYSE: DAL), and United Continental (NYSE: UAL) have dominated the market. Not surprisingly, this oligopoly situation is good for profit margins.

However, a growing crop of budget carriers -- including no-frills ultra-low cost carriers like WOW Air -- are moving into the transatlantic market. They are already creating visible pricing pressure. Furthermore, budget carriers' transatlantic growth is just getting started. Just last week, WOW Air announced that it will add four new U.S. destinations next spring.

Since 2015, Norwegian and WOW Air have been the two fastest-growing transatlantic budget carriers. Their business models are somewhat different. For example, Norwegian primarily flies widebodies on its transatlantic routes, with point-to-point flights between major cities. Meanwhile, WOW Air primarily uses narrowbodies and routes all flights through its hub in Reykjavik.

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Source: Fool.com