Happy landings for new airline owners The quickest way to become a millionaire is to be a billionaire and buy an airline. The joke brings a wry smile to the face to property developer Raymond Lee Cho-min, who launched Hong Kong's first budget, long-haul passenger airline, Oasis Hong Kong Airlines, in October last year. The business got off to a bad start when the inaugural flight to London was delayed for a day because the Russians revoked flyover rights at the last minute. Since then, Oasis Hong Kong has announced plans for flights to a second long-haul destination, Vancouver, starting next month. We invited founders Mr Lee and his wife Priscilla - together they own 65 per cent of the company - to talk about their business. Q: You are in the process of launching your second destination. Why did you choose Vancouver? Mr Lee: Both London and Vancouver have umbilical cords with Hong Kong as people have many relatives and properties there. With Oasis, they can go not just once, but several times a year to see on their friends and relatives. Q: Six months into your airline's operation, Oasis has experienced three major delays. Do you foresee clear skies ahead for the new route? Mr Lee: We have one of the best on-time records from Hong Kong to Gatwick among 50 airlines. At present we only have one aircraft, but soon we'll have five aircraft. Q: Have you secured all territorial rights before launching the new route? Mr Lee: We did secure all permits, but some of them were revoked [for the inaugural London flight]. Some people suggested we should pay a bribe, but that was out of the question for us - it is against company principles. Eventually we got all the permits without bribery and this time, we have overfly rights from Russia. Q: What did you feel about the first day delay? Mr Lee: At first, I was angry. We thought everything was in place, but many people told us there may be dirty tricks and we were shocked at how accurate the forecast was. But at the same time, there was overwhelming peace inside because things worked out in the end. Q: The Chinese are very superstitious about getting things right first time? Mr Lee: Competitors who hope to play the superstition card will be sorely disappointed. Since our launch, we have been very popular. We have sold 125,000 tickets to date. In the month of April, we have achieved 82-83 per cent load factor. There had been expectations of cash-flow break-even in 12 to 18 months, we achieved that by the end of March. Mrs Lee: We called it a blessing in disguise. Q: You are Christian pastor. What role does your faith play in your business life? Mr Lee: For one thing, a winning attitude. Peter Cappelli of Wharton business school said a winning attitude is the most important factor in the marketplace. My faith has contributed significantly to having an upbeat and winning attitude, turning obstacles into opportunities. Q: Have you achieved your targets for the past six months? Mr Lee: We have met and exceeded every single target we set for ourselves, including even on the hiring front where are known as the happiest airline. One complaint we have had is: how come your flight attendants smile so much? We don't apologise for that. We are proud to train out staff to really smile from their hearts. Q: Where does this smiling come from? Mrs Lee: Nothing can beat us down. When you wake up in the morning, I'm so happy because I'm flying people to see the world, particularly teachers and students who can't afford expensive air fares. Since we began, we have sponsored from our own pockets 400 tickets to eight universities because we believe in helping in a small way education exchanges. Q: As the airline industry, particularly the budget airline business, consolidates, do you feel you have a convincing business plan? Mr Lee: We believe we have an incredible business plan. We are the only long-haul point-to-point value for money carrier so we are very upbeat about our prospects, having reached and exceeded our benchmark. We have already proven our business case in the marketplace. In that way, we are continuing to expand and grow our market share. Q: Why should people travel on Oasis? Mrs Lee: Three words: Value for money. We have services that are comparable, even better than our competitors, but our prices are 20 per cent or 40 per cent lower. That is why 125,000 have voted with their feet. Q: A large portion of your seats are business class seats. It seems Oasis is more of a budget business class carrier than a budget economy class carrier? Mrs Lee: As we look at trends of globalisation, many huge corporations have already slashed their travel budgets in half. A lot of employees say, you ask me to fly, but you stick me at the back so I'm not travelling. To many corporates, Oasis is their 2007 solution. Q: What reaction did you get from other operators such as Cathay Pacific when Oasis announced its intentions? Mrs Lee: They love us. Q: But you are taking up some of their business. Mr Lee: Our business model thrives on creating a bigger pie. That has already been evident in stimulating a 30 per cent traffic increase on the London route. That is also the expectation for the Vancouver route because load factor is so high that most passengers - whether business or pleasure - are underserved. Q: How have travel agencies responded? Mrs Lee: In the beginning many travel agencies told us that they were facing a lot of opposition from [airlines] who didn't want them to sell anyone except them. However, the travel agents now say: Look, we are not going to leave the money on the table. They want it and they want it now. Q: What do you consider the most challenging part in your business? Mr Lee: Achieving the perfect balance of not having too much money or too little money. Having too much capital actually can cause uneconomic decisions to be made. From our standpoint, because we always recognise that fallacy and that danger of over-capitalisation, studying all the options of capital raising, from debt and equity and internal cash-flow generation, we have been working very hard to find the perfect balance. We realise that juggling all these different options is a bit of a challenge. For a while we contemplated an initial public offering but because all of a sudden internal cash has become so strong we have put off that exercise. We have to time it accordingly, going to the capital market at the right time. Mrs Lee: This business is going to make a lot of money, taking care our employees and all our shareholders from the largest to the smallest. At the same time, our mission is to build a very strong profitable business so that the countries we are serving will benefit, especially Hong Kong and China. Q: What's in store for the future? Mr Lee: We intend to be flying to another five to 15 destinations, acquiring another 25 aircraft with 3,000 to 5,000 staff five years from now. Q: Are you still hoping to go public? Mr Lee: There have been so many investment banks and financial partners trying to encourage that. We are open and receptive to those suggestions. One benchmark would be when we have 15 to 16 aircraft - a good industry norm for going public, so we keep that target in mind. But certainly having exposure to the capital market is within our plan. Q: And your final words? Mrs Lee: It is truly an honour to serve you on Oasis. Mr Lee: I don't think I can top that.