Oasis Hong Kong Airlines, which could become the poster child of the until now untested long-haul/low-cost model, finally got off the ground yesterday, much to the relief of chief executive Stephen Miller.
The carrier, which originally aimed to launch in November 2005, has encountered a series of delays over the last year but the last one was the most surprising and frustrating. Just as its inaugural flight was ready to leave the gate at Hong Kong for London Gatwick on 25 October, its pilots were informed the airline had not been cleared by Russian authorities. Flying non-stop from Hong Kong to London can only be achieved by flying several hours over Russian airspace so Steve Miller had no choice but to delay the inaugural flight.
"We really don't know why. We had a route code and had paid the fee," Miller says, adding passengers waited for four hours as Oasis tried to fix the problem with Russian authorities.
Russian approval was finally received just after midnight, too late to take of that day but allowing Oasis to finally get off the ground the following morning. He says the embarrassing and highly publicised delay on the inaugural flight may not be all that bad because it gave Oasis extra exposure.
"If nobody knew who we were three days ago, they know who we are now," Miller jokes.
"We had a set back on our flight but the reaction has been very good," he adds
But Miller still cannot breathe too easily. The long-haul low-cost model is unproven, which makes Oasis' venture risky to say the least. The London-Hong Kong sector is also extremely competitive, with six carriers operating non-stops between the two cities from 30 October, when Air New Zealand (ANZ) launches a daily service on the route. The other four are all heavy hitters that generally react aggressively to new competition: British Airways, Cathay Pacific, Qantas and Virgin Atlantic.
To stimulate the market, Oasis is offering a ｣75 ($142) one-way air fare from London and a HK$1000 ($129) one-way fare from Hong Kong. Business class fares start at just ｣470 and HK$6,600. It is now operating four weekly frequencies with one Boeing 747-400 seating 278 in economy and 81 in business class but will upgrade the service to daily in late November after it receives its second 747-400.
Miller is not concerned about the competition and he says the initial fares are only short-term promotional. "The competition is evidence of the strong market. It's one of the strongest long-haul markets in the world," he says, pointing out the average load factor is 85%.
He adds Oasis is not targeting BA, Cathay or Virgin passengers and these airlines "have not come back at us with ultra-competitive fares". Oasis is more targeting passengers who have been flying the dozen or so airlines that offer one-stop services between London and Hong Kong at lower fares. Oasis is also pursuing independent businessmen and small companies who are willing to pay a bit more for business-class but believe the current business class fares on major carriers are too pricey.
ANZ chief executive Rob Fyfe, also in London this week ahead of the launch of its London-Hong Kong service, is equally unworried about all the competition. He says most of ANZ's traffic will be carrying on to New Zealand and says it chose a Hong Kong stopover for its second daily London-Auckland service because London-Hong Kong is currently not served by any Star Alliance carrier.
ANZ general manager for Europe Scott Carr points out ANZ will offer one-stop services to Hong Kong with other Star partners to European cities that currently have no direct connections from Hong Kong, such as Brussels. "Our traffic mix will be different," Carr says.