A bicycle with seats

The SCMP had another go at analyzing Oasis Hong Kong Airlines on Sunday, but I think they’re still missing the point by asking “can an airline be both budget and long-haul?”

As I have said before Oasis really have very little in common with budget airlines such as Southwest, Easyjet and Ryanair – the world’s least favourite airline. They haven’t taken out the toilets or reduced legroom to cram in more seats, they do have seatback TVs (even if the films are a bit old), and they do serve complimentary food. They also offer business class (which no other budget airline offers, as far as I know).

Also, if you were planning a budget airline, I don’t think you would start out by operating on one of the most competitive routes in the world (BA, Cathay, Virgin, Qantas & Air New Zealand curently fly direct between Hong Kong and London, with a host of other airlines offering indirect services). Nor would you fly from a high-cost airport such as Chek Lap Kok. That’s certainly not how Ryanair or Easyjet started out.

So I’m sticking with my theory that Oasis is not a budget airline, and that the description of it as the “budget airline with frills” is about as helpful as describing a car as a bicycle with four wheels and seats and a roof and an engine.

Yet the Commercial Director of the company, Kenneth Chad, is quoted in the article as saying that Oasis are “Easyjet meets Emirates”. This is a bit puzzling, as if someone was starting a new supermarket and said that it was “Fortnum & Mason meets Aldi”. I’m sorry, but you really can’t have it both ways. Mr Chad thinks that the key to this puzzle is high utilization, and that long-haul gives higher utilization. This may be true in the sense of the number of flying hours you can get from a plane, but what really matters is how much revenue you can generate per day. Anyway, I am sure that the same thought must have occurred to every other airline, and you have to wonder how Oasis could get significantly better utilization from their fleet than say Virgin or Cathay. With great difficulty, I suspect.

However, Mr Chad rightly points out that Oasis have to get established first. He says that they can then start to worry about utilization later, but I think there is another way of looking at.

As things stand, Oasis are simply operating the planes they purchased from Singapore Airlines in the same configuration as when they bought them (and trying to offer competitive prices). It suits them to be known as the “budget airline with frills”, but I think they must know that this doesn’t really make any sense and that they will have to re-think their business model before too long. Rather than trying to offer the cheapest economy seats, perhaps they could offer a lower-priced ‘premium economy’ service. Or switch to all-business service similar to MAXjet or Eos. Or even, who knows, become a real long-haul budget airline – but I think they’d have to be fairly desperate to try that.

Meanwhile, the official Russian explanation for the problems Oasis had last week (Russia delays flight of Hong Kong Boeing for security reasons) is that:

the application for a flight over the Russian territory submitted by the airline “did not conform to the established form.” Moreover, it was submitted behind schedule, specifically less than “12 hours before the flight”.

However, it seems that Oasis will continue to avoid Russia for the time being. In spite of the initial statement that this would not add anything to the flight time, they have now conceded that it will add an extra hour to the journey.

Ordinary Gweilo

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