Overview - Oasis Hong Kong

Oasis Hong Kong: The Asian low cost, long haul pioneer

Oasis Hong Kong Airlines successfully launched its maiden flight to London (Gatwick) on 26-Oct-06, with a four times weekly service, ushering in a new era of long-haul budget travel in the Asia Pacific region. Its B747-300 aircraft are configured for 81 business and 278 economy passengers and the carrier offers free onboard entertainment and meal service.

Its first scheduled service on 25-Oct-06 to London (Gatwick) was unfortunately cancelled – in the full gaze of local media - when Russia refused to grant overflight approval. Oasis took delivery of its second B747-400 in Nov-06 and increased the Gatwick frequency to daily on 25-Nov-06. Destinations in Europe, including Milan, Cologne/Bonn and Berlin, are to be added later.

It is also targeting several new routes. In early 2007, the carrier confirmed plans to launch Hong Kong-Oakland (near San Francisco) service in Jun-07. Destinations in Europe, including Milan, Cologne/Bonn and Berlin, are to be added later.

A LCC friendly environment?

Oasis entry coincided with a new LCC-friendly charges incentives package on offer by Airport Authority Hong Kong for the development of new routes, effective 01-Jan-07. Under the package, which seeks to encourage greater use of Hong Kong International Airport (HKIA) by LCCs, aerobridge fees are charged separately (previously included in the landing charge), while a one-hour minimum parking fee was dropped in favour of charges based only on 15-minute intervals. In addition, a landing charge rebate of 75% was given to airlines launching new routes during the first six months, and a 25% rebate in the second six months.

According to CEO, Steve Miller, passenger load factor was over 70% in its first month and nearly 40,000 customers have already booked flights with the airline. Oasis plans to acquire up to five aircraft a year. It plans a fleet of 25 aircraft by 2010.

Will the Oasis model survive the competition?

Oasis not only has to prove a model which is previously untested, it has to do it side by side with very stiff competition.

It has plenty of competition on the London route in particular (served by four carriers as Oasis started). Air New Zealand simultaneously launched Hong Kong-London (Heathrow) service in Oct-06, relying on feed from other partners in the Star Alliance, which has no carrier operating on the route. Its most aggressive competitor, Cathay Pacific, benefits from its long-standing system feed and from the recent takeover of Dragonair and its Mainland China route network, as well as a cross-shareholding with Air China. Cathay Pacific makes no secret of its antagonism to new entrants on its patch, has shown a readiness to match most of the initiatives of its competition, while generally providing a higher level of service.

Being based in Hong Kong, perhaps the worlds most effective airline hub, Oasis is intensely aware of the value of connections and traffic feed. This is reflected in its route decisions: We select destinations that offer easy onward connections. London Gatwick and Berlin, for instance, are hubs for leading low-cost airlines that fly to most major European destinations. In addition, Oakland International Airport, which serves San Francisco, is served by low-fare flights to other cities in the United States.

Despite CEO Millers strong cargo background – he started in the airline business with Cargolux – Oasis is not relying on cargo as a significant revenue earner, unlike near neighbour long haul startup Viva! Macau.

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