The bubble bursts for Oasis
Hong Kong's airline market faces further shake-up following the demise of long-haul, low-cost start-up Oasis Hong Kong
Hong Kong has been hit by its first-ever failure of a passenger airline, with the collapse of 17-month-old Oasis Hong Kong Airlines. The failure may be a precursor to further change in Hong Kong's aviation sector, as two other passenger carriers look to merge their operations.
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Oasis, a long-haul budget carrier, halted all operations in early April and entered into liquidation. Its ch airman and majority owner, Raymond Lee (seen left in happier times with his wife and executive director of the airline), is hoping a buyer can be found to salvage the airline, which was operating Boeing 747-400s from Hong Kong to London Gatwick and Vancouver.
"It is our wish and goal during this period when our company's assets are being preserved and our debts are being restructured that the right financial/strategic 'white knight' will come along to bring this company to new heights in the very near future," Lee wrote in an open letter to the Hong Kong public.
Industry sources say China's Hainan Airlines was negotiating to buy a sizeable stake in Oasis in the months before its collapse but the talks failed. Hainan already owns 45% stakes in two other Hong Kong-based airlines, Hong Kong Airlines and Hong Kong Express, and there is speculation it may still bid for the assets of Oasis and try to merge them with its two other associate carriers.
Hong Kong Airlines and Hong Kong Express are already sharing sales and support functions as part of a two-phased plan that could eventually see their operations merged.
Hong Kong Express president Ronnie Choi told Airline Business before the collapse of Oasis that the two carriers are now sharing "back end resources" such as ground services, in addition to sharing administrative functions such as revenue accounting and marketing and sales activities.
He says the two are continuing to trade as separate companies although the ultimate intention is to merge them under the Hong Kong Airlines name. "It is possible that at some point in time when the local shareholdings are sorted out" that there will be a full merger, he says. "That is the aim. It is a two-phased arrangement." Both carriers started as regional jet operators but now operate 737-800s, and have been aggressively growing their fleets and route networks.
Hong Kong's air transport market had already been undergoing major change, following the 2006 acquisition by main carrier Cathay Pacific Airways of the Chinese territory's second-largest airline, Dragonair.
Source: Airline Business
