Oasis Airlines - Don’t Look Back in Anger

A rash of low cost airlines have crashed out of existence in recent weeks as new carriers struggle to break into markets and cope with the added turbulence of steep rises in fuel costs and a weakening of global economic growth. The latest casulty is Oasis Hong Kong Airlines which collapsed into financial liquidation yesterday and suffered the same fate as Skybus, Aloha Airlines, ATA and Maxjet Airways.

It was always going to be tough for Oasis Airlines to compete effectively with the likes of Cathay Pacific, British Airways and Virgin Atlantic flying long haul to Asian destinations out of Gatwick who have effectively sown up the business class revenues. Industry experts claimed that the airline had too little in the way of start-up capital and that its cost base was little difference from the major established carriers. One criticism was that Oasis devoted 25% of its seating capacity to business passengers reducing the total number of seats available. Seat prices from London to Hong Kong starting at £65 were simply uneconomic and some reports estimate that the business built up operating losses in excess of 1 billion Hong Kong dollars during its short existence.

Fast economic growth in Asian emerging market countries will mean that market demand for airline travel will continue to grow strongly in the years ahead, no doubt there will be other new entrants into the market looking to establish a foothold.