Low-cost airlines can still fly high
Updated: 2008-04-22 07:28
We all have a soft spot for budget airlines. They offer us a choice, which is rare in an industry ruled by intricate sets of inter-government agreements that tend to favor the few dominant players, many of which are government-owned.
For years, we in Hong Kong have been wondering why it should cost us nearly $300 to fly to Taiwan, which is only a little more than an hour away. We fret about the high price of air tickets for the 45-minute flight to the Philippines. Those who have children studying in England must learn to factor in the high cost of flying them home for the summer break on top of the school fees and living expenses.
We thought we saw a ray of hope when Oasis Airlines opened its doors some two years ago offering attractive discount fares on its long-haul flights to London and Vancouver. But the budget airline, the first in Hong Kong, came to a crashing end earlier this month with no white knight in shining armor coming to the rescue.
The demise of Oasis has been exhaustively reported and analyzed in the local press. In an open letter, the chairman of the ill-fated airline company blamed soaring fuel prices, among other things, for the decision to pull the plug.
But this is by no means an indication that there is no room in the marketplace for budget airlines. Most other budget airlines in Asia have been flying high. Shanghai-based Spring Airlines, for instance, reportedly turned a profit only a few years after it began operations.
Since its debut some two years ago, Oasis sold more than 300,000 tickets on the two routes it operated, Hong Kong/London and Hong Kong/Vancouver. Prices of its economy and business class tickets were significantly lower than those charged by Cathay Pacific, Hong Kong's flag carrier, and British Airways. Despite its lower fares, Oasis offered a level of service and tracked a record of safety and punctuality that had won it the best new airline award in a global industry survey last year.
Following the closure of Oasis, some industry analysts have suggested that the short-lived budget airline was haunted by a flawed business model from its conception. Other than such issues as capitalization and choice of routes, they argued, the airline should have taken a more stringent approach to controlling costs, such as doing away with free in-flight service and lowering the allowable weight of free check-in luggage, just like almost all other budget airlines.
It is not sure to what extent would Hong Kong air passengers accept the trade-off between perks and fares. Oasis apparently believed that the idea of paying for in-flight meals and entertainment would turn off Hong Kong flyers. I am not so sure.
Recently, I flew Spring Airlines, widely seen as a highly successful Shanghai-based budget carrier, from Chongqing to Shanghai. The seat was a bit cramped and nothing was served other than a bottle of water during the two-hour flight. But at a fare of less than 400 yuan, which was nearly half of that of the regular airlines, there was really no reason for complaints. Besides, prices for food and drinks sold on board the plane were reasonable. I bought a cup of instant coffee for five yuan.
What airline passengers in Hong Kong or any other market want is not another airline making the claim of superior service. There are plenty of those around. They want to have a choice of airlines offering tickets at different price points. Budget airlines certainly have a place in the marketplace as well as in our hearts.
E-mail: jamesleung@chinadaily.com.cn
(China Daily 04/22/2008 page8)
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