J343
Topic Author
Posts: 238
Joined: Sun Jan 13, 2008 3:40 am

Long Haul Low Cost Airlines Operations

Sun Apr 28, 2019 10:26 pm

This has just popped in my mind.

Oasis Hong Kong Airlines was a low cost airline based in Hong Kong with services to LGW and YVR using ex-SQ and ex-ANA B744s. I was only 14 when I first flew with them LGW-HKG which was in fact their very last flight before they went into liquidation.

Now my question is: where did they go wrong? Was it the competition between the LON-HKG market with CX, BA, VS, NZ and QF serving the market back then or was it the ridiculously low fare (IIRC, my dad paid £197 each- luckily it was only a one way ticket).? Now, we have Norwegian serving LGW-SIN and such. What exactly went wrong? Was there just no market or demand for low cost long haul operations?

I am no expert in Aviation, I just want some insights as part of my university assignment analysing the global airline market


Thank you all :)
 
Ishrion
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Re: Long Haul Low Cost Airlines Operations

Sun Apr 28, 2019 10:30 pm

How full were their flights? There was most likely a high demand with 6 carriers on the route... even today.
 
Eitilt
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Joined: Fri Feb 05, 2016 4:59 pm

Re: Long Haul Low Cost Airlines Operations

Sun Apr 28, 2019 10:38 pm

I seem to recall that they bought their 747’s which used up a lot of their cash and reduced their financial flexibility to overcome the initial
start up problems.
 
J343
Topic Author
Posts: 238
Joined: Sun Jan 13, 2008 3:40 am

Re: Long Haul Low Cost Airlines Operations

Mon Apr 29, 2019 12:10 am

Ishrion wrote:
How full were their flights? There was most likely a high demand with 6 carriers on the route... even today.


It was quite full from what I can remember. I guess a full flight doesn't necessarily mean immediate profit for an airline. Comparing BA and CXs services between London and Hong Kong, I would say they're mostly full and busy. CX252 being the only exception, I have flown the service at least 4 times and they've been consistently half full. CX250 and CX256 on the other hand are almost always busy. I remember once me and my family were booked on to CX250 but it was overbooked so my dad and brother were moved to the next flight which was CX256.
 
juliuswong
Moderator
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Re: Long Haul Low Cost Airlines Operations

Mon Apr 29, 2019 12:34 am

There are several news articles you may read why Oasis Hong Kong Airlines failed:
https://www.flightglobal.com/news/artic ... ai-210256/
https://www.economist.com/business/2014 ... -come-true
https://www.wsj.com/articles/SB120773816528701461
https://www.scmp.com/article/633097/les ... mise-oasis
https://aviationstrategy.aero/newslette ... ness_model

Summary, wrong aircraft, wrong management, wrong strategy, wrong base. Everything was wrong from the get -go.......
- Life is a journey, travel it well -
 
N415XJ
Posts: 878
Joined: Thu Aug 14, 2014 4:04 pm

Re: Long Haul Low Cost Airlines Operations

Mon Apr 29, 2019 12:44 am

This SCMP article is interesting https://www.scmp.com/article/633097/les ... mise-oasis

The problem with Oasis was the high operational costs required to fly long-haul flights, especially at a time of soaring fuel prices. Though often billed as a budget airline, it was more accurately described as a value airline. Its tickets were offered at a discount, but some of them were by no means cheap. For example, it ran a fully fledged business-class section. And unlike most budget airlines, Oasis provided full services for economy-class passengers such as booking, ticketing, meals and baggage handling. Most budget airlines make passengers pay extra. The add-on services made Oasis attractive, and helped it gain market share in a short time. But they also incurred costs that made them unsustainable.


Which fits in with the lack of serious sources describing the airline as an 'LCC' in the technical sense. In fact, many articles seem to go out of their way to dance around the term. The 'Low Cost' part of LCC doesn't mean low costs for passengers, it means low operating costs as an airline. So, if they weren't structured as a true LCC (such as Ryaniair or Southwest), combined with the fact they offered full service and either rock bottom or 'normal' ticket prices with comparatively fuel hungry 747s on extremely competitive routes on the eve of the 2007/8 financial collapse, it's easy to get a basic idea of what went wrong.
 
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aemoreira1981
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Re: Long Haul Low Cost Airlines Operations

Mon Apr 29, 2019 2:12 am

Also, the Boeing 747-400 is an expensive plane to fly. By contrast, if Oasis Hong Kong tried today, they would probably be using the Boeing 787-9, which is used by Chinese operators to second-tier destinations or from second-tier Chinese cities. At 254.5t MTOW, that is much lighter than the Boeing 747-400 and easier to fill at around the 275-325 seat point...and also a better cargo hauler than the B744,

Also at the time that Oasis Hong Kong was using the Boeing 747-400, competitor Cathay Pacific was going all-in on the Boeing 777-300ER, a more efficient plane.
 
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hongkongflyer
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Re: Long Haul Low Cost Airlines Operations

Mon Apr 29, 2019 2:58 am

aemoreira1981 wrote:
Also, the Boeing 747-400 is an expensive plane to fly. By contrast, if Oasis Hong Kong tried today, they would probably be using the Boeing 787-9, which is used by Chinese operators to second-tier destinations or from second-tier Chinese cities. At 254.5t MTOW, that is much lighter than the Boeing 747-400 and easier to fill at around the 275-325 seat point...and also a better cargo hauler than the B744,

Also at the time that Oasis Hong Kong was using the Boeing 747-400, competitor Cathay Pacific was going all-in on the Boeing 777-300ER, a more efficient plane.


They originally planned to lease planes, but due to delays and certain situation, they had to purchase 747 which increase their costs.
The LGW route itself was profitable or sustainable, it was the YVR route that send them to liquidation.
 
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spinkid
Posts: 1866
Joined: Fri Jul 20, 2001 5:59 am

Re: Long Haul Low Cost Airlines Operations

Mon Apr 29, 2019 5:32 am

I believe SkyGreece used 747s that led to their quick ending.as wel
 
juliuswong
Moderator
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Re: Long Haul Low Cost Airlines Operations

Mon Apr 29, 2019 6:02 am

spinkid wrote:
I believe SkyGreece used 747s that led to their quick ending.as wel

SkyGreece (circa 2012) used B767-300ER though.
- Life is a journey, travel it well -

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