Non-Subscriber Extract
Carriers in it for the long haul
By Alison Tucker
03 August 2007
While cheap-and-cheerful, low-cost airlines have eaten successfully into the market share of traditional carriers on short-haul operations, implementation of the low-cost business model on long-haul routes has proved more of a challenge.
Laker Airways, the world's first long-haul, no-frills airline, which offered cut-rate tickets for travel between the US, Canada and the UK, went spectacularly bankrupt in 1982.
People Express Airlines, which was launched in 1981, was merged out of existence in 1987 after becoming saddled with debt.
Spanish long-haul, low-cost carrier Air Madrid collapsed in January 2007 with crushing debts, less than three years after the airline's launch.
But times are changing. And despite a less-than-encouraging past, the long-haul, low-cost concept is being revisited this time successfully and it is fast becoming the latest bandwagon that startup operators are eagerly jumping on.
The pioneer of the new brace of airlines focusing on the low-cost, long-haul idea was Zoom Airlines. Founded in Canada in 2002 by a group of travel industry executives headed by Chairman Hugh Boyle, Zoom Airlines now flies from eight Canadian cities to five UK airports and into Paris. In June 2007, the airline launched a Gatwick-New York service for GBP129 (USD265) one-way. According to Boyle, Zoom makes a profit on GBP150 million of annual turnover.
In October last year, Oasis Hong Kong Airlines took on British Airways and Cathay Pacific when the carrier launched full-service operations between Hong Kong and London Gatwick with one-way fares starting as low as GBP75, excluding taxes.
In June 2007, Oasis Hong Kong introduced flights between Vancouver and Hong Kong and the carrier has plans to extend services from Hong Kong to other European destinations, as well as to San Francisco's Oakland International Airport.
At present, the airline operates five second-hand B-747-400s but has plans to buy "between five and six aircraft every year for the next five to six years". Oasis Hong Kong Airlines is obviously thinking big.
And the airline has every reason to be optimistic. According to Ken Chad, commercial director, the average load factor on Oasis flights is 90 per cent. In less than a year of operation, the airline is profitable. "We forecast cashflow breakeven in 12 to 18 months and we broke even in five months," says Chad.