Man Kit

 http://www.xanga.com/NightKero

The Church of Christ in China
Hoh Fuk Tong Evening College
2007-2008 Form 5 Economics Final Project

Dear Sir,

In Febrary 2005, OASIS HONG KONG AIRLINES Company's foundation reflected the approaching of the long-haul budget century over the world. And the couple who founded the budget carrier believe a mix of excellent customer service, a dose of goodwill and maximum efficiency will help their business soar. About 350,000 passengers have flown Oasis and flights are more than 80 percent full on their two routes to Vancouver and London from Hong Kong, said Priscilla and Raymond Lee.Raymond Lee is a pastor in a local church, moreover he is a practicing Christian. He has offered cheap flights for teachers and slashed fares for the elderly - even below their banner Hong Kong - London pre-taxes fare of HK$1,000.Quickly, The first setback raised in the maiden voyage, a flight to London, with stop Moscow, experienced a 30-hour delay when Russia suddenly withdraw permission for Oasis to use its airspace. But he bore up against this frustration. He compensated more than a million HK dollars which he decided in order to mend their goodwill. They have also improved fuel efficiency and the long-haul, point-to-point model actually reduces their maintenance costs.Raymond Lee says their model has succeeded because they make their planes work harder, with less time on the ground, but working safe. In the early, Oasis even just had 1 flight to ran the business totally. Thus that the competitors always laugh at Oasis "Few in the sky, nothing on the ground." Despite that, Raymond Lee, as a chief president of Oasis, he still having a lot of ambition, he was eyeing new routes in that time - and the announcement for two new ones are due shortly - but a planned link between Hong Kong and Oakland, California, has not opened as expected."It is with great regret that Oasis announces that today the airline has voluntarily applied to the Hong Kong court to appoint a provisional liquidator." Oasis chief evecutive Stephen Miller told a hastily arranged press conference in 10 April 2008. The late Oasis founder Raymond Lee, last night blamed two major crises for the failure of the airline - having to buy aircraft and soaring fuel costs.

Collapse's reason 1 : Cruel Competition

"When this airline began, chief executive Stephen Miller's business plan was based on aircraft rental, and not purchase. The original business plan required only US$25 million to achieve profitability." he said. "However, during our Air Transport Licensing Authority license 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. This placed a huge strain on the group's financial resources."

Collapse's reason 2: Strategy Failure

As the Oasis develop plan, created the long-distance airline made the company in the heavy strain. Develop the short-distance airline would soothe its tight finance. For the American instance, several budget airline companies are develop the short and local haul business at the infant stage and enlarge their field successfully.

Collapse's reason 3: Fatal Oil Price & Economic Climate

*More clear chart PDF File: http://www.badongo.com/file/8774001 

In the following months, oil price hikes have also affected Oasis severely. As a newly started airline, they have found it next to impossoble to obtain credit facilities from financial institutions to carry out fuel-hedging programs. As oil prices sharply increased, the fuel costs took up the majority of their budget, and to lead to the little boundary profit decrease to massive deficit.At the economics explanation, Oasis lie down the price under the Market Balance(Demand = Supply), raise the underproduction situation. When the oil price increased mortally, supply dropping off, the curve line would left move, so it must expanded the underproduction, and the Oasis Sales Income Amount would come up the reduction (P1 X Q1 - P1 X Q2).

Conclusion

In an open letter signed by Raymond Lee and his wife Priscilla, he called on Hong Kong's seven million people to pray with them for a "White Knight" to come to rescue of Oasis in the near future. Lee said he and his wife are saddened at having let down many "precious" passengers from Hong Kong and around the world, as well as co-workers and partners. In my opinion, I'm so sad for this new cause the founder Raymond Lee's couple are the great enterprisers, they have braveness to fight the cruel competition. They have ambition to strive and fulfill their promises and dream - "At least take up every Hong Kong citizens to go through and traveling the world." Finally, through they are the Christians as me, I would pray for them and hope our God would rescue them can go through this tight condition as quickly as possible.