The true story behind the Oasis Hong Kong launch failure and omens for low-cost long-haul airlines

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 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.

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%.

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The above article in an extract from Airline Business deputy editor Brendan Sobie's view on the long-haul low-cost market. To read the full blog, click here.

Source: FlightGlobal.com