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
