Swire Group

Budget carriers to expand their horizons

PUBLISHED : Saturday, 27 January, 2007, 12:00am
UPDATED : Saturday, 27 January, 2007, 12:00am

THEY TOOK OFF on a wing, and perhaps even with a prayer, but after a faltering start Hong Kong's new generation of budget airlines is carving a viable niche in the air-travel market and looking forward to expanding.

The most prominent new player, Oasis Hong Kong Airlines, which famously launched non-stop flights to London's Gatwick Airport for just HK$1,000 late last year, is about to start flying the route daily.

The carrier started the service with two Boeing 747-400s and expected to be flying a fleet of six by the end of the year, extending low-cost routes to North American cities, including Oakland (San Francisco) and Chicago.

At the same time, one of the mainland's biggest carriers, Hainan Airlines, owned by China's HNA Group, recently opened the door to the Hong Kong market by acquiring major stakes in both Hong Kong Airlines, which started life as CR Airways, and Hong Kong Express Airways, which flies to destinations such as Hangzhou for as little as HK$500 one way.

No one is talking about the two merging yet, but the synergy seems obvious, given the potential to serve more mainland routes than any other Hong Kong carrier. As Hong Kong Express chief executive Andrew Tse put it: 'The two airlines are clearly coming closer together.'

Hong Kong Airlines started flying 50-seater jets to 'secondary cities' such as Jinan and Nanjing, as well as holiday packages to Laoag and Clark in the Philippines, and holiday charters to Phuket, Langkawi, Danang and Siem Reap. It has since expanded with 70-seater aircraft extending the network to Zhejiang, Changsha, Chongqing, Guilin, Haikou, Hangzhou, Kunming, Sanya, Tianjin and Wuhan.

At present, Hong Kong Express operates to destinations such as Hangzhou, Chengdu and Ningbo in China, with charters to Taichung, Laoag in the northern Philippines and Chiang Mai in Thailand. But it has rights to at least a dozen more Chinese cities and three other Asian destinations, including Ko Samui and Siem Reap. It has also just launched a new arm to its business, Hong Kong Express Holidays, to further develop its package holiday and 'short break' offerings.

'Our products are very similar, mainly serving the China market, and I think it is in the interests of all that we complement each other, rather than compete against each other,' Mr Tse said. 'It would be much less confusing to the public if we were perceived as part of the same family.'

More importantly, their combined networks could serve far more mainland cities than the 20-something covered by established carriers, Dragonair and Cathay Pacific. 'In a few years we will be much bigger than that,' Mr Tse predicted.

Oasis chief executive Stephen Miller may not be in a position to challenge the international network might of Cathay Pacific, but he is confident the 'low fare, long haul' carrier can grow, with fares '30 to 40 per cent cheaper' than established carriers, and the load factor 'beyond start-up expectations' at 70 per cent.

Novelty introductory fares of HK$1,000 one way to London are no longer available, but the carrier still appeals to the budget-conscious, with economy fares ranging from HK$1,500 to a peak of HK$3,000.

Meanwhile, business class, which starts at HK$6,000 and includes all the regular business comforts and 'frills' including alcohol, was appealing to a niche of business travellers who would not normally give themselves the luxury of business-class tickets.

'We believe every businessman should be able to fly business class,' Mr Miller said. 'A lot of businessmen, from small to medium-sized companies and entrepreneurs starting their own companies, cannot afford HK$30,000 for a round-trip business ticket to London, but HK$13,000 is much more acceptable. With one-way tickets they also have the flexibility to change their timetables and itineraries.'

Mr Miller said he hoped the Hong Kong public would 'embrace us as the airline making long-haul travel affordable to all'.

Oasis was also enjoying soaring interest inside Britain.

'We are seeing huge numbers of first-time flyers, especially from Britain,' he said. 'These

are people who never dreamed

of flying to Hong Kong before, and their response has been amazing. Our fares are also more appealing for families flying schoolchildren back and forth during the holidays.'

Oasis has a roll call of 60 pilots and 120 cabin crew, along with 50 managers. Expansion and the creation of new routes this year is expected to significantly boost numbers - and job opportunities.

'We are hiring across the board for expansion and staff numbers will be up by about 40 per cent this year,' Mr Miller said.

Similarly, Hong Kong Airlines is hiring air and ground crew in what it described as a 'new era' in the local civil aviation industry.

'We will be developing new aviation markets and networks, focusing mainly on routes between Hong Kong and the mainland, Taiwan and other major Asian cities,' the company announced. 'In the future, we will be emphasising local training for cabin crew, pilots and maintenance staff. Our main goal is to expand our local team, creating greater employment opportunities for the people of Hong Kong.'