Subscribe to our free daily newsletters
  Space Industry and Business News  

Subscribe to our free daily newsletters

Oil spike, cost of planes led to Oasis collapse: founders

by Staff Writers
Hong Kong (AFP) April 10, 2008
Soaring fuel costs and a decision to buy aircraft instead of renting them led to the demise of budget Hong Kong airline Oasis, the company's founders said in an open letter published Thursday.

Raymond and Priscilla Lee apologised to the thousands of stranded passengers, company employees and to investors after the airline went into liquidation 18 months after it tried to shake-up the airline industry.

The Lees said the high oil price -- a tonne of jet oil has risen more than 60 percent in the past year to around 1,060 dollars, according to International Air Transport Association figures -- was a key factor.

"The hike of the oil prices has also affected us severely," they said in the letter published in several Hong Kong newspapers.

"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 programmes. We only managed to hedge once successfully.

"As oil prices sharply increased, the fuel costs took up the majority of our budget," dealers said.

They said that the original business plan was based on renting aircraft, rather than buying them, and required just 25 million US dollars to achieve profitability.

"However, during our... licence application process, 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," the couple said in the statement.

"This placed a huge strain on the group's financial resources.

The airline's move into liquidation Wednesday follows the collapse of three budget carriers in the United States in the last two weeks, as the increase in oil prices squashes already-thin margins.

Adrian Lowe, an aviation analyst with brokerage CLSA, said unless budget operators have strong financial backing, they will struggle.

"Oasis didn't get the scale up and running in time," Lowe told AFP.

"A lot of these companies need financial support, and Oasis were looking for funding. In this environment, they are not the only airline that is having difficulty."

Stephen Miller, the company's chief executive who announced the company was stopping flights and moving into liquidation at a short press conference on Wednesday, said the business model had achieved strong demand.

"What we did not achieve was ramping up fast enough to get a critical mass of aircraft and destinations," Miller said, according to the Wall Street Journal.

Oasis launched in October 2006, offering one-way Hong Kong to London pre-tax fares of 1,000 Hong Kong dollars (128 US).

It later added a link to the western Canadian city of Vancouver, but it failed in attempts to set up routes to California.

A rescue package from HNA Group, the parent company of Hainan Airlines, was foiled at the last minute, a report in the South China Morning Post said.

It collapsed when it was discovered that Raymond Lee, who is also a pastor in Hong Kong, had already pledged his shares in the carrier as collateral for a personal loan.

"You can say that he derailed the airline," the paper quoted an unnamed source as saying.

A spokeswoman with HNA Group, who declined to be named, told AFP she was unaware of the reported talks with Oasis.

Around 30,000 passengers were facing having to purchase new tickets, and 700 staff were waiting to hear their fate, reports said.

Cathay Pacific, which put on special flights to accommodate stranded Oasis passengers, said on Thursday one flight had already sold out.

British Airways has also offered special fares for struggling passengers, including schoolchildren who need to return to Britain at the end of the Easter holidays.

Related Links
Aerospace News at

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

Airbus boss says aviation unfairly targeted over climate change
Auckland (AFP) April 9, 2008
The aviation industry is being unfairly targeted over climate change and future reductions in aircraft emissions should be based on technological innovation rather than regulation, Airbus chief Tom Enders said Wednesday.

  • Microsoft threatens proxy battle against Yahoo
  • Google sees wireless Internet on unused television airwaves
  • Japan marks funeral for second-generation phones
  • Apple iPhone aiming to dethrone BlackBerry

  • Russia To Conduct 28 Space Launches From Baikonur In 2008
  • Vietnam delays launch of first satellite
  • Zenit Rocket To Orbit Israeli Satellite In Late April
  • Successful Qualification Firing Test For Zefiro 23

  • Oil spike, cost of planes led to Oasis collapse: founders
  • Airbus boss says aviation unfairly targeted over climate change
  • World grapples with aviation's climate change footprint
  • Europe's EADS finds sweet home in Alabama despite uproar

  • Thompson Files: Seeing JSTARS
  • Raytheon To Lead Team Pursuing The USAF Global Broadcast Service
  • Boeing And TEAM TSAT Confirm Readiness Of Advanced Satellite Electronics
  • General Dynamics Awarded Army Contract For WIN-T Satellite Communications Terminals

  • Ball Aerospace GFO Satellite Begins Eleventh Year On Orbit
  • Newly Discovered Superinsulators Promise To Transform Materials Research, Electronics Design
  • Chemists work on bamboo fabric development
  • Saab Signs GIRAFFE AMB Multi Mission Radar Contract

  • NASA names science directorate deputy
  • Northrop Grumman Names Terri Zinkiewicz VP Sector Controller For Its Space Technology Sector
  • Northrop Grumman Appoints Scott Winship To VP And Program Manager - Navy Unmanned Combat Air System
  • NASA Names John Shannon New Space Shuttle Manager

  • General Dynamics AIS Completes Testing For GeoEye's Next-Gen Earth Imaging Satellite
  • Project Explores Using NASA Earth Science Data For Enhanced Utility Load Forecasting
  • Harris Ground System For GOES-R Weather Satellite On Display
  • India to launch remote sensing satellite this month

  • ObjectFX Releases New Spatial Rules 3.0 Spatiotemporal Engine
  • Outside View: Problems with GLONASS
  • iTRAK Messenger Adds Email Capability To Tracking System
  • Pet Tracks - America's First Quick, Reliable, Inexpensive Pet Recovery Service

  • The content herein, unless otherwise known to be public domain, are Copyright Space.TV Corporation. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space.TV Corp on any Web page published or hosted by Space.TV Corp. Privacy Statement