Cathay Pacific

Oasis set to challenge carriers on UK route

PUBLISHED : Saturday, 26 August, 2006, 12:00am
UPDATED : Saturday, 26 August, 2006, 12:00am

Budget carrier Oasis Hong Kong Airlines will begin selling tickets to London next month as it moves to become the fifth carrier offering direct flights on the increasingly crowded route.

Oasis, held by property mogul Raymond Lee Cho-min and his wife Priscilla, planned to draw business away from airlines such as Gulf Air and Emirates serving the Hong Kong-London route via the Middle East by matching their prices, chief executive Steve Miller said.

London is served 10 times a day from Hong Kong by heavyweights Cathay Pacific Airways, British Airways, Qantas Airways and Virgin Atlantic. Aside from Oasis, they will be joined on the sector by Air New Zealand on October 28.

'The whole vision of Oasis was derived from the huge increase in one and two-stop carriers feeding off the Hong Kong market,' Mr Miller said. 'Stage one is to move that market from those carriers.'

Non-direct services form 20 to 25 per cent of the market.

Oasis last month promised HK$1,000 one-way tickets to London before taxes beginning in October. Twenty seats on each flight would be offered at the discount price with the rest of the economy class round-trip fares averaging about HK$4,000 before tax, in line with one-stop rivals, Mr Miller said.

Fuel surcharges and landing and passenger taxes will lift round-trip fares by HK$1,570 per voyage.

Mr Miller said he did not expect Oasis' entry to have an impact on the direct route to London where passenger growth was healthy. Arrivals by air from Britain grew 7.8 per cent in the first seven months to 279,694 but competition is growing.

Insiders say Cathay has yet to fill its fourth daily service, launched in December last year, and Virgin this month put off moving to double its daily flight planned for November.

'We have seen the Hong Kong-London route go from three carriers and six daily flights over the past few years to six carriers and almost 11 daily flights by year-end,' said Peter Negline, the head of regional transport research at JP Morgan.

'Oasis represents only a small part of this incremental capacity. Still, each new entrant typically causes a disproportionate increase in competitive pressures.'

Oasis will begin serving Oakland, California, this year and may apply for the rights to another North American destination. Mr Miller said Oasis targeted a fleet of five Boeing 747-400s by year-end.