Article on International Budget Airlines

[LiveFreeorDie]

I thought this may be of interest to people. This article discusses some recent and upcoming new options for longer-haul budget airlines.


Hong Kong Start-Up
Brings Budget Fares
To Long-Haul Flights


Travelers who fly long distances have largely been shut out of the cheap fares offered by budget airlines. Now, a Hong Kong-based start-up is taking discounted flights over oceans and continents, launching a Hong Kong-to-London route for as little as $209 one way.

Beginning today, Oasis Hong Kong Airlines will offer four flights a week to London's Gatwick Airport, launching service with a pair of second-hand 747-400 jetliners. It hopes to expand its Hong Kong service to Oakland, Calif., and Chicago within the next year or so.

Other budget airlines around the globe are also winging their way into long-haul territory. Australian budget carrier Jetstar plans to start flying next month from Sydney to Honolulu. Viva Macau, a Macau-based carrier set to make its debut later this year, aims to offer low-cost flights to Europe and the U.S. In Europe, Ryanair this month offered to pay $1.76 billion for Aer Lingus, seeking to combine its own short-haul operations with the long-haul flights of its Irish rival. Budget carriers are one bright spot in an industry that is facing tough times, as rampant competition and stubbornly high fuel prices inflict billions of dollars in losses on airlines.

Oasis is taking aim at Cathay Pacific Airways, which dominates long-haul traffic from Hong Kong. To do so, Oasis is offering promotional one-way economy-class fares of $209 and business-class fares of $927. That compares with Cathay's current fares from Hong Kong to London's Heathrow Airport of about $530 for coach and $3,641 for business class, one way. These fares include airport taxes, fuel surcharges and other fees.

But Oasis' economy class promotional fares are limited: The $209 fare is good for travel through Nov. 30 for people who booked between Oct. 3 and 15. After that -- but only guaranteed for the first year of Oasis' operation -- just 10% of seats in the economy cabin will be available at that promotional price. Other economy-class fares range from about $215 to $590 each way, not including taxes. (Taxes are about $125 from London and $80 from Hong Kong.)

Some potential customers are grumbling about the limited availability of the heavily discounted fares. When Grant Martin first heard about the airline's London-to-Hong Kong offering, he decided to make the trip, even though it meant that he would be in the air longer flying east to Hong Kong from Detroit. But the 25-year-old engineer says that in less than a week, the price had climbed to $468 from $141 one way, not including taxes and fees. "The way things add up, it's pretty much easier to go over the Pacific Ocean instead," he says.

The airline says it has sold 20,000 tickets since they went on sale last month and its flights are about 65% full in November. An Oasis spokeswoman said yesterday that she was unfamiliar with any complaints about discount-fare bookings.

Also, some industry watchers are skeptical of the new long-haul budget routes' profit-making potential. Carriers such as Southwest Airlines, JetBlue Airways and Ryanair have succeeded by sticking to a pretty consistent script, no matter where they operate. They fly short distances to secondary airports and turn their planes around as quickly as possible to make multiple flights each day -- thereby squeezing more daily revenue out of each plane. This approach has kept most budget airlines operating only within a single geographic region.

But Oasis' chief executive and founder, Stephen Miller, notes that aircraft gobble less fuel and suffer less wear and tear while flying at cruising speeds than they do during takeoffs and landings, which makes them more efficient over long distances than on frequent short hops. And while other airlines typically fly their planes up to 12 hours a day, he plans eventually to work each of his 747s for 15 hours or more daily.

Oasis is also trying to coordinate its schedules and operations with those of other budget airlines in Britain and the U.S. If it succeeds, Oasis could wind up forging the first links of a world-wide network of low-cost carriers. "It would be a sort of strategic alliance," says Mr. Miller.

Oasis executives say they have met already with counterparts from Britain's easyJet, which has an extensive network in Europe, to discuss dovetailing their flight schedules and transfers of passengers and baggage at Gatwick, a hub for easyJet. An easyJet spokeswoman declined to confirm such talks.

Oasis is attempting to keep costs low by hiring U.K.-based pilots, to avoid having to pay for expensive expatriates in Hong Kong. It has also outsourced catering, engineering and other support services to minimize costs. But unlike many of its no-frills counterparts, Oasis will provide meals at no extra cost -- passengers can choose between Western and Asian dishes -- as well as free beverages and in-flight entertainment on the 12-hour flight.

Mr. Miller, an aviation industry veteran who successfully started up Hong Kong Dragon Airlines, or Dragon Air, in the 1980s, thinks Cathay Pacific has a weak spot in its lucrative Hong Kong-London route. (Cathay Pacific took over Dragon Air from its major Chinese shareholders in September.) Though Mr. Miller expects Cathay to drop its own ticket prices in response to Oasis' fares, he argues that it won't want to undercut the newcomer, because Cathay's many corporate clients would then demand deep fare cuts on other routes as well.

A Cathay spokeswoman declined to comment other than to say the carrier plans to remain competitive.

Oasis' real target is carriers -- such as Gulf Air and Qatar Airways -- that make their passengers change planes in Dubai, Bangkok and other cities on their way to London. Mr. Miller estimates that some 20% of the passengers flying between Hong Kong and Europe make at least one stop-over. He believes that Oasis can win over these passengers by offering to fly them nonstop for the same price they're paying now for a longer, indirect journey.

Oasis plans to ramp up to seven flights a week to London in late November. For those who need flexibility in their travel plans, this may not be enough to make them switch over from more expensive airlines that offer the convenience of more-frequent flights. But Oasis hopes that executives who are self-employed or who work at small firms may feel less constrained. In Europe, Oasis hopes to add flights soon to Berlin, Cologne and Milan.

"It's what I would call an experiment," says Peter Hilton, an analyst at investment bank Credit Suisse in Hong Kong. "You can't say it won't work, because they're dealing with a market that really hasn't been probed before."

[mermaidnz]

stink. i posted the link to a site i found this airline on the other day. didnt know they only just started up tho.im flying with them next year so freaking cheap!!!

[noke_travel]

i hope this airline makes it. it would be great to see low cost carriers operate worldwide.

oh shit, i just finished typing that post when i heard on bbc that oasis air was denied to fly over russian airspace en route to london. looks like the problems are all ready starting

[freakypete]

yeah it sounds great, not heard anything about whether they are flying now...i have a friend who was meant to be going last weekend, but havent heard from him since. I will let you know what he though if he made it.

[freakypete]

wierd...got a phonecall off my friend about 5 minutes after posting that!

he said it was fine, the flight was an hour and a half longer to avoid russian airspace, but no other problems. you get 2 free meals and free tea/coffee and water, and you get a blanket and pillow and an audio/tv set too (or an optional deluxe pack that you can keep for £20)

not much more you can ask for at that price! definitely makes SE asia a possible future destination, especially of they start flying from Cologne

[mermaidnz]

do you know if theres any other hidden costs?

the 1000HKD fare is 1650hkd incl taxes. is there more takes when landing in gatwick?

[Joker]

According to a quick Google search, they've been approved for flight from HK to Cologne, Berlin, Milan, Oakland, and Chicago.

Being that they only have two 747's in service, it'll be a bit before they can add the routes permanently. However, if they get enough interest from the long-haul business community (where the real money in airlines is), then investors will line up, banks will loan money, and then they can add jets to their fleet. Assuming that happens, then they could very well be the first airline to operate an entire 787 Dreamliner fleet. Betja if that happens Boeing is gonna be banging down their door. Of course, Airbus may just try to do the same if the A380 ever gets off the ground...

As for the potential international alliance of budget airlines, it can't be a bad thing. RyanAir and easyJet's folks, as well as Sir Richard have stated that Southwest is the model for their budget airlines. Its a success story- they all fly 737s, shorter routes to secondary airports, etc etc... you get the point.

I'd love my SWA frequent flyer miles to be used on other airlines... And if the RyanAir/Aer Lingus merger moves ahead... the first thing I ask is if the One World Alliance codeshare still works...

[MeTurk]

Ye seem to pay allot more for flights than we do in Europe, the Aerlingus website is selling one way tickets to New york or for €100 and €150 to LA.

On a side note I think it would be an absolute disaster if Ryanair get their hands on Aerlingus nobody in the country wants to see that happen. It was stupid of the government to float it in the first place but that's our government for ya, a shower of complete mongs the lot of them.

[Joker]

"shower of complete mongs..." LOL I have no idea what that means but it makes me laugh... :D


I have some decent freq flyer miles with American Airlines and I know they're tied to BA, Aer cuniLingus and a few others... if the arrangement stayed the same... w00t!

[MeTurk]

It's not a good thing anyway Joker, it's more or less like being called a dumbass, except worse.