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Skuli Mogensen, founder and CEO WOW air, Iceland' s only ultra low-cost airline, announced Thursday that the airline will begin service to Iceland from Toronto and Montreal in May, 2016.

Hand-out/WOW air

An Icelandic low-cost carrier is out to create some turbulence in the Canadian market with plans to offer deeply discounted fares on transatlantic flights out of Toronto and Montreal.

WOW air, founded by serial entrepreneur Skuli Mogensen, is launching two new routes from Montreal and Toronto to the Icelandic capital of Reykjavik, starting at $99 one-way.

The upstart airline is the latest Europe-based company to offer low-cost fares on long-haul routes across the Atlantic as the continent's budget carriers extend their territory outside home base.

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WOW, founded by Mr. Mogensen in 2011, says it has already had success with the launch in early 2015 of transatlantic services from Boston and Washington, D.C.

There is ample room for low-cost entrants in the transatlantic space, Mr. Mogensen said in an interview Thursday.

"Transatlantic is really ruled by a handful of very large legacy carriers with their alliances and cartels," he said. "They will will not give it up freely. They just don't have the structure and strategies to allow them to compete against pure play, low-cost carriers."

WOW's flights out of Toronto's Pearson airport and Montreal's Pierre Elliott Trudeau airport are set to begin next May.

The catch is that passengers wanting to go on to other cities such as London or Paris will have to wait "about an hour" in Reykjavik and pay an additional $149 one-way for an additional flight to their final destination.

Asked about the pricing structure, Mr. Mogensen said the $99 fare "depends on the season, on the load."

"If you're flexible on departure dates and book in advance you should always be able to find cheap fares. $99 or below $200 should always be available in any given week," he said.

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"When we announced our U.S. routes last year, we promised that it was just the beginning of our growth into North America," said Mr. Mogensen, who spent several years in Montreal as head of tech company OZ Communications Inc., which was eventually sold to Nokia.

"These great Canadian cities [Toronto and Montreal] will become our newest destinations but I look forward to announcing even more in the not-too-distant future."

The Canada-to-Iceland routes will use WOW's existing fleet of new Airbus A321s, seating 200, while A320s will serve on the flights from Reykjavik to London, Paris, Berlin, Copenhagen, Amsterdam and Dublin.

Both Montreal and Toronto services are to be year-round, with departures four times a week, the company said Thursday.

Passengers will be allowed one "free" carry-on bag, but it must weigh no more than 5 kilograms. There are extra fees for additional carry-ons, checked bags, in-flight meals and other items.

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