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After Wow Air closes, critics see flaws in US regulation

Cummings urges DOT scrutiny to determine if stricter consumer protections needed

WASHINGTON – A purple Airbus jetliner with bright white lettering sat in silence in a dark corner of Newark Liberty International Airport.

Another was parked at Baltimore Washington International Thurgood Marshall Airport.

The idle jetliners are remnants of Wow Air, which closed suddenly a week ago, stranding passengers in the United States and abroad.

The abrupt termination of service raised questions about why U.S. regulators permitted an international airline in a fragile financial state to continue collecting money from unknowing travelers.

“I am troubled that an airline was operating on such close margins that it went out of business literally overnight,” Rep. Elijah Cummings, D-Maryland, the chairman of the House Oversight and Reform Committee, told Capital News Service in a statement. “I certainly urge the Department of Transportation to examine whether stronger consumer protections are needed to ensure that U.S. travelers are not stranded or swindled by low-budget foreign carriers.”

Sen. Chris Van Hollen, D-Maryland, also called for a review of the closure and steps to prevent similar endings by other carriers.

“Stranding passengers at the airport is not only inconvenient — it’s unacceptable,” Van Hollen said. “I’m deeply disappointed in Wow’s lack of notice to its passengers, and I hope our agencies and airports will work to prevent issues like this in the future.”

Despite several indicators that the airline was failing, the Iceland-based carrier was allowed to continue flights to and from the United States without question or investigation up until the night of its sudden closure.

Jol A. Silversmith, a lawyer on airline policy and consumer protections, said the Department of Transportation takes a “hands-off approach” with foreign airlines like Wow Air.

While airlines like Wow initially must prove financial competency to begin landing on U.S. soil, the Department of Transportation will not usually continue to monitor the financial status of the airline, Silversmith told Capital News Service.

The Department of Transportation says on its website that it checks in periodically on the financial fitness of U.S.-based airlines. But the agency says nothing about watching over foreign airlines.

Silversmith said DOT investigations into airline finances are uncommon at best.

A Department of Transportation spokesperson confirmed the department does initially check airlines’ financial fitness but did not address questions about follow-up investigations.

Wow Air displayed multiple warning signs before its eventual closure, none of which apparently prompted a look by the Department of Transportation.

As early as 2014, the company started to lose money, according to the Reykjavik Grapevine, an Icelandic news outlet.

In 2017, the company lost $45 million and soon after went on the prowl for potential buyers. After two failed mergers in 2018, and an additional $184 million lost, the company finally folded as aircraft owners demanded the return of their planes, the Reykjavik Grapevine reported.

Still, Wow Air was allowed to fly in and out of the United States, putting thousands of American customers at risk of being stranded without ever notifying them that operations could end at any hour.

Other low-cost airlines could also be at risk – and there is little likelihood that the Department of Transportation would respond in a different manner, according to Silversmith, who said U.S. regulators favor a competitive market for airlines. Fewer restrictions means more competition, even if some of the companies end up less financially stable than others, he said.

“The takeaway is that low-cost airlines provide a good bargain, but they are often new entrants in the market, without deep pockets, so it is important for people to have travel insurance and alternate plans if something goes wrong,” Silversmith said.

The chairman of the House Transportation and Infrastructure Committee, Rep. Peter DeFazio, D-Oregon, did not respond to a request for comment.

Earlier this week, another low-cost international airline, British carrier Flybe, suspended dozens of its operations in Europe. The airline does not serve the United States.