OASIS HONGKONG AIRLINES:

The First Long-Haul, Low-Cost

Airliner in Asia
Romy Rinaldi (29113031)
Bimo Ramadhan (29113093)
Made Rai Laksmi (29113146)
Naafi (29113536)

With flight connecting to over 40 cities in the Chinese

Maindland.

In 2005, over 78 scheduled airlines served the

Hongkong International Airport, providing about 5300
scheduled passenger and all cargo flight each week
between hongkong and more than 140 destination.

In response, Hong Kong had been extending its airports

market reach to serve the Pearl River Delta cities and
Hong Kong International Airport.

The Airlines Industry

in Hong Kong

Six
Airlines
Services
in Hong
Kong:

Cathay Pacific Airways

Hong Kong Dragon Airlines
Air Hong Kong
CR Airways
Hong Kong Express Airways
Oasis Hong Kong Airlines

Airlines in Hong Kong

Was founded by exDragonair CEO Stephen

Miller with principal
investment from property
developer Raymond Lee
and his wife Priscilla.

The idea of Oasis: Longhaul, low-fare carrier

Offered two classes of

service: Economy and
business class

Had competitive pricing

compared with the others

Oasis Hong Kong Airlines

Finding the right

aircraft at the right
price.

In 2005-2006, Boeing 747-400 was in high

demand
Fuel prices has increase

Problem Identification

EXTERNAL ENVIRONMENT ANALYSIS

General Environment, PEST, Porters 5 Forces, SWOT,
Competitor Analysis

Demographic
Global
Technological
Economical

Socio-cultural
Political/
Legal
Physical
Environment

Demographic

Economical

Political

offer long range

overhaul with
standardize service
Offer 2 flight class,
and low cost
carrier only on
economy class
The pioneer of long
haul carrier service
in Asia

Lacks of
commercial
transport fleet
Unstable oil price
Hong kong adopts a
capitalist and
liberal economic
system
Inflation rate 0.3
(2005) and 0.9
(2006)

Free trade
economic zone
Low-tax system
Adheres to
understand
economic liberal
and capitalist

General Environment >

Legal

Socio-cultural

Technological

Worldwide
deregulation
following United
States
International air
traffics are
regulated by
bilateral air
service agreement
between countries
Different
regulation in
different countries

Average
expenditure during
holidays HK$9,320
Nielsen (2005)
Mixture of western
and eastern
culture
Civil Servant got
perks to send their
children to study
abroad

E-Business
becomes main
core in Hong Kong
flight industry
High internet
penetration 59%
(2005)
Many airline
companies
planned to replace
Boeing with
Airbus

General Environment >>

Global
Worldwide competitive
pressure triggered series
of privatization of flag
carriers in Europe and
Asian countries
Hong Kongs
International airport
becomes 5th busiest in
the world
Airline
IndustryTraditional
Carriers VS Low-Cost
Carriers

Physical
Environment
Noise control more
quiet than the others
Using GTL (Gas to
Liquids) that contains no
sulphur

General Environment >>>

PEST ANALYSIS
Politics

Economics

Social

Deregulation of blue sky policy

Influence by oil price that effect on the ticket price,

plane, price, and price that related to Airport
Make people easy can travel
Change of life Style

Advance Technology in Aviation Industry which mean

Technological
a lot of big plane and can take long-haul

Rivalry
Threat
among
of competing
New Entrants
firms
Threat
Bargaining
of
substitute
power
of
product
Suppliers
Bargaining power of buyers

A lot of competitors that can

The regulation make the new

adjust the budget with the buyers

airline easy to enter the market

High

really attracting the investors to

invest (High)

Threat of
New Entrants

Bargaining
Power of
Buyer

Rivalry Among
Existing Competitors
High

Threat of
Substitutes
High
There are only land and sea
transportation which take long
time to reach destinations

Bargaining
Power of
Suppliers

High

There are only two suppliers for

commercial plane such as Airbus
and Boeing

SWOT ANALYSIS
Strength
The Capital support
by the Big Investor.
The Ability to run the
company.
Offering a low price
compare to the
Competiitor.

Opportunity
No One Offer longhoul flight with cheap
price during that
time

Weakness
Have a little fleet
Not yet buy new
aircraft because have
to wait

Threat
Competition between
airline that serve
long-haul flight.

COMPETITOR ANALYSIS
Competitor
Strength

Best Airlines with regular and frequent updates of seats, entertainment systems, meal
option and other in-flight amenities (Cathay Pacific)
Premium Class Seat (Hong Kong Dragon Airlines)
The Big Cargo Airways (Air Hong Kong)

Demand

Low Price of Flight Services

Many Destination in domestic or International

Weakness

Not so many choice of flight destination

Not so many international route
Playing just in high cost carrier

Oasis Hong
Kong
Strength

Low Cost Carier

Long-haul Flights
Many route in domestic or international flight
Still have space for cargo service

INTERNAL ENVIRONMENT ANALYSIS

Resources, Capabilities & Core Competencies, Value Chain
Analysis

Financial Resources

Have funding investment from Raymond Lee and his wife Priscilla
(property developer), Allan Wong (chairman and CEO of VTech Holdings),
Offered low-cost carrier

Operating long-haul flights would give Oasis a low operating unit cost

Use secondary airports such as Gatwick (instead of Heathrow) and Oakland

(instead of San Francisco).

Oasis offered standard upgraded meals with complementary drinks and

lounge access (would be available at an additional cost)

Oasis adopted traditional carriers model and relied on brick-and-mortar

travel agents to sell tickets.

Technological
Resources

Have two Boeing 747-400s were configured for 81 business-class seats

and 278 economy-class seats.

Human Resources

Had roughly 700 crew members in total by 2008

Innovation

Oasis as the only long-haul, low-fare airline operating out of Hong

Reputational

Kong
Oasis had competitive price compared with the other airline for both
economy class and business class

tangible
sources

Physical Resources

Tangible
Resources

and Richard K. Lee (founder of Trinity Textiles)

Tangible

Valuable

Rare

Resources
Financial

Costly-to- Nonsubstitutable Competitive consequences

imitate

Yes

Yes

No

No

Temporary

competitive

advantage
Physical

Yes

Yes

Yes

Yes

Sustainable

competitive

advantage
Technological

Yes

No

No

Intangible

Valuable

Rare

Costly-to- Nonsubstitutable Competitive consequences

Resources
Human

No

imitate
Yes

Yes

No

No

Resources
Innovation

Competitive parity

Temporary

competitive

advantage
Yes

Yes

Yes

Yes

Sustainable

competitive

advantage
Reputational

Yes

No

No

No

Capability & Core

Competencies

Competitive parity

Oasis Value Chain

Analysis

Value Chain Primary Activities

1. Inbound Logistics:
Oasis provide some advantages such as snacks, drinks, TV
appropriate with different class of passengers
2. Operations:
Oasis offered daily service to London and six flights a week to
Vancouver
3. Outbound Logistics:
Adopted traditional carriers model and relied on brick-and-mortar
travel agents to sell tickets
4. Marketing & Sales:
100 free flights Hong Kong London at first launched

Value Chain Support Activities

1. Procurement:
Had purchased two Boeing 747-400s from Singapore Airlines
2. Technological Development:
2 Boeing 747-412
3 Boeing 747-481
3. Human Resource Management:
Had roughly 700 crew in total by 2008
4. Firm Infrastructure:
The airline operated on two routes, from Hong Kong to London
Gatwick Airport & Vancouver International Airport

CONCLUSIONS & RECOMMENDATIONS

*
*
*

Airline

Oasis has its competitive pricing (sold only

one-way tickets)
Oasis has high average aircraft utilization &
efficiency low operating cost
Oasis could save airport landing & parking
fees because of using secondary airport
(major hubs of leading low-cost carrier)
Oasis

Cathay
Pacific

British
Airways

Virgin Atlantic

Hong Kong London HK$1,000

(economy class)

HK$5,880
HK$9,550

HK$2,250 HK$4,525

HK$5,532 HK$17,263

Hong Kong London HK$6,000

(business class)

HK$44,952

HK$21,350

HK$44,897 HK$46,813

Conclusions

*
*

Participate in oil hedging to safeguard against potential fuel price

increase
Buy another possible alternative aircraft besides Boeing 747-400
Aircraft

Vintage

2005 (in million US$)

Airbus A340-600
Boeing 777-300ER

2002
2003

102 111
117 132

Embark on the next phases of expansion with rented aircraft

Rental Cost per Month (in US$ thousands)

*
*

Vintage

2005

1989-1995

360-490

1996-2002

470-865

Buy the brand new aircraft

Increase capacity and add new service sooner

Recommendations

Saving
operating
cost is by
doing fuel
hedging
(option
no.1)

Maintain the low-cost fares being offered to passengers and

sustain business profitability

Choose
renting
the
Boeing
747-400
(option
number 3)

A lease arrangement may be more flexible than purchase of

an aircraft.

Reduces the vulnerability to major market fluctuations and

may minimize long-term fuel prices during some periods
Potentially eliminate the need to seek supplemental funding
due to price fluctuations.

Shorter-term commitments without the risks & responsibilities

of aircraft ownership

Best Solutions