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WOW Air’s ultra-low fares to Iceland and beyond are a boon for budget-minded travelers, and while they’ve helped push Europe ticket prices down across the board, they’re also eating away at legacy carrier bottom lines — especially at home in Iceland.

Icelandair first began flying passengers in 1938 and now operates service to almost 50 destinations from Reykjavik’s Keflavik International Airport (KEF). WOW Air, meanwhile, is a newcomer, having recently celebrated its five-year anniversary. Its fleet is already 17 strong, however, and with 33 destinations and many more on the way, the carrier’s clearly keeping Icelandair executives on their toes.

Wednesday, Icelandair took a major first step to compete with WOW’s significantly lower pricing, with a new coach product called Economy Light. It isn’t a separate class of service, but sounds like a less restrictive version of the Basic Economy booking option we’ve seen in the US. Icelandair’s announcement stops short of stating that Economy Light fares will be cheaper than the coach rates currently on the market, but if the airline wants to compete with WOW, something’s really gotta give…

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The airline describes the new Economy Light booking class:

This option is designed for travelers taking a short weekend getaway or a quick business trip abroad. The new fare is also perfect when traveling with family members that don’t require additional luggage such as children or couples who can pack together. These passengers will enjoy the same quality of service from Icelandair including in-flight entertainment, non-alcoholic beverages, gate-to-gate wi-fi access and comfortable, spacious seats.

So, essentially, Light fares simply exclude a checked bag — one 50-pound bag is included with Economy Standard and Economy Flex fares. Once on board, Economy Light passengers receive the same service as everyone else. Starting ticket change rates are higher, though, at $275, compared with $200 for Standard and $75 for Flex. Economy Light fares still include a free stopover of up to seven days, and Light fares are eligible for mileage accrual at the same rate as Standard tickets.

I haven’t been able to find Economy Light fares just yet, however, so it isn’t clear just how much less expensive these tickets will be.

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