some people said OASIS HK might shut down tomorrow
Join Date: Oct 2005
Location: 45 yards from a tropical beach
Posts: 1,103
Likes: 0
Received 0 Likes
on
0 Posts
White Knight, or perhaps a grey one
Kitusune,
Fair analysis, except for the salaries. The staff as you say have been paid up to 31 March. That means they have been paid on time as normal.
Now, Hainan Airlines were negotiating a deal to buy Oasis until they discovered that the Reverend Lee had used his Oasis shares, of which he held 60%, as collateral for a personal loan. They backed out and KPMG has been appointed as liquidator. Hainan (with George Soros an established investor) could presumably buy Oasis for a much lower price than was being sought last week.
Oasis is, by all accounts, an airline with top staff, equipment and morale. Add to that their AOC, Route licences to UK, Canada and Australia, plus the slots at Hong Kong International, surely any reasonable offer to the liquidators must have great appeal to a company wanting to get a foot in the door in Hong Kong.
With four 744s flying two sectors per day, the quoted loss of one million $HK per day is less than $500 per passenger. Just increase the fares by ~ $800 per passenger and the new company would be in profit. The fares would still be way lower than the majors.
I think that Oasis could yet recover, to the chagrin of some other Hong Kong operators. Let's hope so for all the guys and gals who made it what it was.
Cheers,
Neppie
Fair analysis, except for the salaries. The staff as you say have been paid up to 31 March. That means they have been paid on time as normal.
Now, Hainan Airlines were negotiating a deal to buy Oasis until they discovered that the Reverend Lee had used his Oasis shares, of which he held 60%, as collateral for a personal loan. They backed out and KPMG has been appointed as liquidator. Hainan (with George Soros an established investor) could presumably buy Oasis for a much lower price than was being sought last week.
Oasis is, by all accounts, an airline with top staff, equipment and morale. Add to that their AOC, Route licences to UK, Canada and Australia, plus the slots at Hong Kong International, surely any reasonable offer to the liquidators must have great appeal to a company wanting to get a foot in the door in Hong Kong.
With four 744s flying two sectors per day, the quoted loss of one million $HK per day is less than $500 per passenger. Just increase the fares by ~ $800 per passenger and the new company would be in profit. The fares would still be way lower than the majors.
I think that Oasis could yet recover, to the chagrin of some other Hong Kong operators. Let's hope so for all the guys and gals who made it what it was.
Cheers,
Neppie
Join Date: Jun 2001
Location: Ozmate
Posts: 376
Likes: 0
Received 0 Likes
on
0 Posts
Neppie,
My thoughts as well.
Although the fat lady has well and truly warmed up her vocal chords,she has not yet broken into song.
I am led to believe there are a few "White Knights" keeping their powder dry for the moment. When the dust settles there may be some interesting developments.
My thoughts as well.
Although the fat lady has well and truly warmed up her vocal chords,she has not yet broken into song.
I am led to believe there are a few "White Knights" keeping their powder dry for the moment. When the dust settles there may be some interesting developments.
Guest
Posts: n/a
If
If I had a stake in a struggling airline, I'd be tempted to double fares. I may lose half my loads to Price Buster Air, but my gross stays the same. The loads increase at the cheapos, and their ability to provide dissipates. Ultimately, my pax are the ones who value safety, less drama, and wear shoes and clothing. No government ReRegulation needed. Free market prevails, as it always does, when courageous leaders and employees make a stand. (Speculators destroy everything they touch, Mr. Soros?)
Thread Starter
Join Date: May 2007
Location: Canada
Posts: 105
Likes: 0
Received 0 Likes
on
0 Posts
it might have made sense for oasis to charge only $300 for a one way economy ticket, but $999 for one way business class(with a 10 year old seat too) was rather strange. even $2000 for a one way business class seat would be reasonable, IF the seat was newer.
Join Date: Jan 2006
Location: England
Posts: 601
Likes: 0
Received 0 Likes
on
0 Posts
Continuing to pay the crews is a masterstroke, and shows that KPMG knows that if the crews go, the chance of recruiting and maintaining currency in new staff will be impossible. Once again, at the risk of antagonizing those already in a desperate situation, which is NOT my purpose:
No matter who the white knight is (even Mr Soros, who is not known for wasting his dosh), you have to question if the long haul (remembering that not so long ago YVR ~ HKG and HKG ~ LGW used to be called ULTRA long haul) low cost carrier model is viable.
I suggest that the balance is that your prices have to be low enough to ensure that pax will sit for 12 hours in a REAL economy seat with NO frills, and will pay cash for everything else. For this to work you need to pack 'em in down the back, so the J/EY balance, if there is to be a J class, is very very tight. 600 EY pax in a -400 at b*gger all each might just do it....(You have to remember that you could travel LHR-HKG-LHR for £388 with BA over the last couple of years).
This model has worked on short and medium haul for SouthWest and that tosser O'Leary, but long haul?
The brains at CX (all of whom work for Swines and are NOT based anywhere near HKG) insist that this model is just not workable... and so far this has proved correct.
I also suggest that any white knight will be pursuing completely different aims with a HKG AOC than low cost long haul, but only time will tell.
No matter who the white knight is (even Mr Soros, who is not known for wasting his dosh), you have to question if the long haul (remembering that not so long ago YVR ~ HKG and HKG ~ LGW used to be called ULTRA long haul) low cost carrier model is viable.
I suggest that the balance is that your prices have to be low enough to ensure that pax will sit for 12 hours in a REAL economy seat with NO frills, and will pay cash for everything else. For this to work you need to pack 'em in down the back, so the J/EY balance, if there is to be a J class, is very very tight. 600 EY pax in a -400 at b*gger all each might just do it....(You have to remember that you could travel LHR-HKG-LHR for £388 with BA over the last couple of years).
This model has worked on short and medium haul for SouthWest and that tosser O'Leary, but long haul?
The brains at CX (all of whom work for Swines and are NOT based anywhere near HKG) insist that this model is just not workable... and so far this has proved correct.
I also suggest that any white knight will be pursuing completely different aims with a HKG AOC than low cost long haul, but only time will tell.
Join Date: Jul 2001
Location: Here and There
Posts: 167
Likes: 0
Received 0 Likes
on
0 Posts
Well if the price is right, a clever buyer might eventually surface. Oasis has definitely some great assets to offer at a bargain price. With some ingredients and change of direction - ie. away from the Low Cost, the Airline can prosper and provide a much needed competitor in HKG.
I guess the minds are currently assessing the Oasis' value and taking into consideration the outstanding debt, etc. A potential buyer can not have any serious negotiations without knowing the numbers.
New Airline of the Year 2007 in its first year of operation shows that there is some definite commitment and spirit amongst the employees, which is the companies greatest asset.
It would be a shame to waste it..
One way or another, let us hope this ordeal has some sort of closure to it soon.
I guess the minds are currently assessing the Oasis' value and taking into consideration the outstanding debt, etc. A potential buyer can not have any serious negotiations without knowing the numbers.
New Airline of the Year 2007 in its first year of operation shows that there is some definite commitment and spirit amongst the employees, which is the companies greatest asset.
It would be a shame to waste it..
One way or another, let us hope this ordeal has some sort of closure to it soon.
Thread Starter
Join Date: May 2007
Location: Canada
Posts: 105
Likes: 0
Received 0 Likes
on
0 Posts
http://www.canada.com/vancouversun/n...d-4a7410953355
Customers stormed into M's Travel offices in Richmond on Wednesday seeking answers after Oasis Hong Kong Airlines abruptly announced it was in liquidation and had cancelled all flights. Other agencies specializing in tours and tickets to the China region reported the same response as Vancouver-based executives for the failed airline directed all communication to closed offices and switched off cellphone contact numbers in Hong Kong.
"Of course, it has been non-stop," said M's Travel president Philip Mak. One client at M's Landsdowne location, a university student, had just been in to book her ticket the day before. In January, she booked one ticket for use in July and bought another ticket on Tuesday, sinking a total of $4,600 in what are now useless tickets.
Last summer, Oasis ignited a frenzy of travel from Vancouver to Hong Kong, offering one-way airfares as low as $200. Airports in both cities soon reported significantly higher traffic on the route, by more than 50 per cent on some counts.
The cheap prices not only brought a new set of travelers, but encouraged repeat trip-takers, including some who were going back and forth two or three times in as many months. Metro Vancouver retailers and restaurants catering to Chinese clientele actually attributed a slump in sales to what they called the Oasis phenomenon.
At Silkway Travel, a travel agency with Hong Kong roots and eight branches across Metro Vancouver, president Paulus Ng admitted "that because we have the most branches and serve the most people in this market, we will be one of the hardest hit."
Even though sales had been brisk, Ng said that from the beginning, he had concerns about Oasis's very low fares. "We actually had a dedicated person in our accounting department who only handled Oasis payments, because we had to push to keep the accounts updated. If they owed us, we had to chase them. Our last cheque was two weeks ago and covered [commissions made on tickets sold] to mid-February."
"So, [Oasis] owes us a significant amount," said Ng, declining to be more specific.
It is estimated that there are tens of thousands of passengers, perhaps as many as 30,000, in Hong Kong, London and Vancouver who have been left stranded by the Oasis shutdown.
KPMG, the consulting firm overseeing Oasis' liquidation, said that flights to London from Hong Kong in the next few days had all been fully booked. Out of Vancouver, however, the last Oasis flight on Tuesday night was only about 20 per cent full, according to Ng's clients.
Nevertheless, Ng thinks that among his clientele alone, there are about 1,500 round-trip tickets from Vancouver to Hong Kong that have been paid for in full.
In Hong Kong, the government's secretary for transportation and housing, Eva Cheng, said that Oasis filed for liquidation after talks with a possible investor broke down.
Oasis had not disclosed the extent of the airline's losses, but in an open letter released Wednesday night in Hong Kong, the company's founders Raymond and Priscilla Lee said that Oasis's original business plan was based on aircraft rental, not purchase.
However, "as we faced opposition from our competitors for almost six months, our rental aircraft were then snatched away by other competition, and we have had to purchase aircraft instead of renting them. This placed a huge strain on the group's financial resources.
"The hike of the oil prices has also affected us severely. As a newly started airline, we have found it next to impossible to obtain a credit facility from financial institutions to carry out fuel-hedging programs. We only managed to hedge once successfully. As oil prices sharply increased, the fuel costs took up the majority of our budget. . . . On top of all this, we also faced relentless competitive response from every direction, aiming to crush us for good."
At the urging of the Hong Kong government for help for stranded passengers, Cathay Pacific Airway is offering a special one-way economy class fare of $320.
To qualify, customers must be booked and ticketed by Oasis for travel to Hong Kong between now and April 23. At the same time, Air Canada is offering a more general, special one-way airfare of $299. In Vancouver, customers can try Oasis at 1-888-983-0808. Customers in Hong Kong who hold return tickets back to Vancouver can also try calling Oasis's hotline number at 852-3628-0628.
Customers stormed into M's Travel offices in Richmond on Wednesday seeking answers after Oasis Hong Kong Airlines abruptly announced it was in liquidation and had cancelled all flights. Other agencies specializing in tours and tickets to the China region reported the same response as Vancouver-based executives for the failed airline directed all communication to closed offices and switched off cellphone contact numbers in Hong Kong.
"Of course, it has been non-stop," said M's Travel president Philip Mak. One client at M's Landsdowne location, a university student, had just been in to book her ticket the day before. In January, she booked one ticket for use in July and bought another ticket on Tuesday, sinking a total of $4,600 in what are now useless tickets.
Last summer, Oasis ignited a frenzy of travel from Vancouver to Hong Kong, offering one-way airfares as low as $200. Airports in both cities soon reported significantly higher traffic on the route, by more than 50 per cent on some counts.
The cheap prices not only brought a new set of travelers, but encouraged repeat trip-takers, including some who were going back and forth two or three times in as many months. Metro Vancouver retailers and restaurants catering to Chinese clientele actually attributed a slump in sales to what they called the Oasis phenomenon.
At Silkway Travel, a travel agency with Hong Kong roots and eight branches across Metro Vancouver, president Paulus Ng admitted "that because we have the most branches and serve the most people in this market, we will be one of the hardest hit."
Even though sales had been brisk, Ng said that from the beginning, he had concerns about Oasis's very low fares. "We actually had a dedicated person in our accounting department who only handled Oasis payments, because we had to push to keep the accounts updated. If they owed us, we had to chase them. Our last cheque was two weeks ago and covered [commissions made on tickets sold] to mid-February."
"So, [Oasis] owes us a significant amount," said Ng, declining to be more specific.
It is estimated that there are tens of thousands of passengers, perhaps as many as 30,000, in Hong Kong, London and Vancouver who have been left stranded by the Oasis shutdown.
KPMG, the consulting firm overseeing Oasis' liquidation, said that flights to London from Hong Kong in the next few days had all been fully booked. Out of Vancouver, however, the last Oasis flight on Tuesday night was only about 20 per cent full, according to Ng's clients.
Nevertheless, Ng thinks that among his clientele alone, there are about 1,500 round-trip tickets from Vancouver to Hong Kong that have been paid for in full.
In Hong Kong, the government's secretary for transportation and housing, Eva Cheng, said that Oasis filed for liquidation after talks with a possible investor broke down.
Oasis had not disclosed the extent of the airline's losses, but in an open letter released Wednesday night in Hong Kong, the company's founders Raymond and Priscilla Lee said that Oasis's original business plan was based on aircraft rental, not purchase.
However, "as we faced opposition from our competitors for almost six months, our rental aircraft were then snatched away by other competition, and we have had to purchase aircraft instead of renting them. This placed a huge strain on the group's financial resources.
"The hike of the oil prices has also affected us severely. As a newly started airline, we have found it next to impossible to obtain a credit facility from financial institutions to carry out fuel-hedging programs. We only managed to hedge once successfully. As oil prices sharply increased, the fuel costs took up the majority of our budget. . . . On top of all this, we also faced relentless competitive response from every direction, aiming to crush us for good."
At the urging of the Hong Kong government for help for stranded passengers, Cathay Pacific Airway is offering a special one-way economy class fare of $320.
To qualify, customers must be booked and ticketed by Oasis for travel to Hong Kong between now and April 23. At the same time, Air Canada is offering a more general, special one-way airfare of $299. In Vancouver, customers can try Oasis at 1-888-983-0808. Customers in Hong Kong who hold return tickets back to Vancouver can also try calling Oasis's hotline number at 852-3628-0628.
Join Date: Jun 2003
Location: Hong Kong
Posts: 47
Likes: 0
Received 0 Likes
on
0 Posts
unfortunately a HK AOC is'nt worth very much
despite the usual ramblings of entrenched monopoly the truth of the matter is that the so called home carrier in HK account for only 30% of movements into and out of HK.
the LCC model does not work well in HK at the moment and through no fault of the government or the incumbent airline
there's no domestic market, no secondary airports, no glut of experience aviation personnel, so all that is left for any new entrant is the same fuel prices, same landing fees, same route charges, and same high labout cost
now, when you take these options and charge low fares, well, it becomes a recipe for disaster
no businessmen, worth his salt, will entertain such a business plan and it seems the Rev was blinkered into a "good thing" with a wing and a prayer
well, the wing has stalled but the prayer continues
best of luck to all staff
despite the usual ramblings of entrenched monopoly the truth of the matter is that the so called home carrier in HK account for only 30% of movements into and out of HK.
the LCC model does not work well in HK at the moment and through no fault of the government or the incumbent airline
there's no domestic market, no secondary airports, no glut of experience aviation personnel, so all that is left for any new entrant is the same fuel prices, same landing fees, same route charges, and same high labout cost
now, when you take these options and charge low fares, well, it becomes a recipe for disaster
no businessmen, worth his salt, will entertain such a business plan and it seems the Rev was blinkered into a "good thing" with a wing and a prayer
well, the wing has stalled but the prayer continues
best of luck to all staff
Join Date: Jan 2006
Location: England
Posts: 601
Likes: 0
Received 0 Likes
on
0 Posts
Dragonair...down the tubes (twice)
Air Hong Kong....down the tubes
Oasis.....down the tubes.....
Yep, you're right, an entrenched monopoly doesn't have any effect on competitors
Air Hong Kong....down the tubes
Oasis.....down the tubes.....
Yep, you're right, an entrenched monopoly doesn't have any effect on competitors
Join Date: Jul 2007
Location: hong kong
Posts: 20
Likes: 0
Received 0 Likes
on
0 Posts
True enough, CX has an entrenched position.
But KA and Air Hong Kong both ended up being acquired by CX at a time when they were struggling (especially AHK, I think). Cathay didn't want to risk somebody else picking up the businesses and then making a go of them in their own backyard. They paid up to maintain that protected position.
I am not sure if the context now allows for a similar escape route for Oasis, with fuel prices, the economic cycle and various other elements making them a difficult sell.
So it would need either somebody suitably over-optimistic or an airline realist with the deepest pockets and a readiness to tough it out. No doubt SQ is not too happy with the Air China/CX maneouverings around China Eastern; Oasis might offer an opportunity to stir up some trouble in their rivals' backyard. On the other hand, it would be expensive and SQ has a shocking track record in buying stakes in other airlines.
Otherwise, perhaps EK might take a look? It clearly has the funds and the ambition, although a HKG based entity would seem to detract from its aim to set up Dubai as the global aviation crossroads.
Also, there may be regulatory constraints in all of this. If a bigger player did come in, CX would go ballistic. The fact is that Oasis was ideal for them; a "competitor" on a couple of routes that was never going to do too much damage but could be held out as evidence of a level playing field.
But KA and Air Hong Kong both ended up being acquired by CX at a time when they were struggling (especially AHK, I think). Cathay didn't want to risk somebody else picking up the businesses and then making a go of them in their own backyard. They paid up to maintain that protected position.
I am not sure if the context now allows for a similar escape route for Oasis, with fuel prices, the economic cycle and various other elements making them a difficult sell.
So it would need either somebody suitably over-optimistic or an airline realist with the deepest pockets and a readiness to tough it out. No doubt SQ is not too happy with the Air China/CX maneouverings around China Eastern; Oasis might offer an opportunity to stir up some trouble in their rivals' backyard. On the other hand, it would be expensive and SQ has a shocking track record in buying stakes in other airlines.
Otherwise, perhaps EK might take a look? It clearly has the funds and the ambition, although a HKG based entity would seem to detract from its aim to set up Dubai as the global aviation crossroads.
Also, there may be regulatory constraints in all of this. If a bigger player did come in, CX would go ballistic. The fact is that Oasis was ideal for them; a "competitor" on a couple of routes that was never going to do too much damage but could be held out as evidence of a level playing field.
Join Date: Sep 2004
Location: uk
Posts: 21
Likes: 0
Received 0 Likes
on
0 Posts
Scrap the low cost longhaul plan..waste of time.
Needs someone with very deep pockets (like Branson) to set Oasis up as a good quality product to Cathay, where lets face it the customer is not entirely happy.
Best way forward is to make Oasis the airline that Virgin is to BA....a viable alternative to the green monster!
Needs someone with very deep pockets (like Branson) to set Oasis up as a good quality product to Cathay, where lets face it the customer is not entirely happy.
Best way forward is to make Oasis the airline that Virgin is to BA....a viable alternative to the green monster!
Thread Starter
Join Date: May 2007
Location: Canada
Posts: 105
Likes: 0
Received 0 Likes
on
0 Posts
why would air canada offer unlimited flights to HK for $1088 until june 15 AFTER OASIS already shut down. it doesnt make sense.
http://img410.imageshack.us/img410/4...ghtpassgi2.jpg
http://img410.imageshack.us/img410/4...ghtpassgi2.jpg
Join Date: Aug 2000
Location: .
Posts: 686
Likes: 0
Received 0 Likes
on
0 Posts
"Hey is that Air Canada eh? I ringing up aboot them $1088 tickets eh. I wanna go to Hong Kong on the 25th April eh"
I am sorry sir, we have completely sold out of the discounted seats on that flight, the best I can offer you is...
I am sorry sir, we have completely sold out of the discounted seats on that flight, the best I can offer you is...
To the best of my knowledge the Oasis aircraft ,particlarly the first 2, are owned by Oasis Growth and Investment Limited which is the Rev Lee's HK based investment company and from whence the "Oasis" in the airline's name originates and are "loaned or leased" to the airline.
Again, to the best of my knowledge CX bought both AHK and KA to prevent mainland Chnese airlines from acquiring them and getting a foothold in HK. Similarly the deal with CNAC acquiring a large shareholding in KA in the mid 90's was partly aimed at stopping CNAC from starting up a HK based operation which they were planning. It also helped pay for the move to CLK. I think CX was quite happy to let both AHK and KA go bust and pick up the attractive pieces later if it wasn't for the threat of mainland interests getting hold of a HK carrier.
Again, to the best of my knowledge CX bought both AHK and KA to prevent mainland Chnese airlines from acquiring them and getting a foothold in HK. Similarly the deal with CNAC acquiring a large shareholding in KA in the mid 90's was partly aimed at stopping CNAC from starting up a HK based operation which they were planning. It also helped pay for the move to CLK. I think CX was quite happy to let both AHK and KA go bust and pick up the attractive pieces later if it wasn't for the threat of mainland interests getting hold of a HK carrier.
Join Date: Jan 2006
Location: England
Posts: 601
Likes: 0
Received 0 Likes
on
0 Posts
CV880, all perfectly correct, and of course why KA picked up PEK and SHA (the two most lucrative routes at the time except for CX751). Given this history I think this story may run and run......at least the guys and gals are being paid while they work this out, (according to several drunken conversations in the Slashers last night)......
