Midnight at the oasis

David Jordan | Image: Getty | Published: July 01, 2008

What is it about Vancouver that attracts the eccentric fringe of the airline industry? The question seems only reasonable in the wake of this spring’s collapse of Oasis Hong Kong Airlines. It would be one thing if just one offbeat billionaire’s dreams of a low-cost long-haul airline went up in flames. But the collapse of Oasis came just one year after the sudden demise of Harmony Airways, another low-cost carrier started on the whim of a wealthy entrepreneur who saw a golden opportunity in Vancouver’s ties to Asia.

Harmony was started in November 2002 by reclusive Vancouver billionaire David Ho. Although Harmony initially flew to vacation sunspots such as Mexico and Hawaii, Ho’s eye was on the big prize: China. The airline’s fortunes fizzled when Canada failed to gain China’s “approved-destination” status, and it folded in April 2007. Oasis flamed out in much more spectacular fashion. Launched by Hong Kong pastor Raymond Lee and his wife Priscilla in 2005, with service between Hong Kong and London, England, Oasis touched down in Vancouver in June 2007; within the year, Oasis would go bust, applying for liquidation in April 2008.

“This is the conundrum of the airline business,” explains Joseph D’Cruz, an industry analyst and professor of strategic management at the University of Toronto’s Rotman School of Management. “Even though it’s such a lousy business from an economic and profitability point of view, people continue to enter the industry. The lure of flying blinds people to the economic realities of the airline industry.”

It’s easy enough to understand that boys with money like to play with airplanes. But why Vancouver? Much of it has to do with what would appear, on first blush, to be an obvious business case: a lot of people in Vancouver have business and family ties to Hong Kong and China, which makes the city a natural magnet for the country of 1.3 billion seeking opportunities in North America. And nobody knows this better, goes the thinking, than entrepreneurs with a foot in both Asia and Vancouver. “There’s an irrational line of argument that says that because they are ethnic owners, they will be able to better serve an ethnic population base,” counters D’Cruz. “The actual fundamental economics of airlines have nothing to do with ethnic origins; it has to do with the cost of aircraft and things like that.”

Oasis was founded by arguably the more eccentric of Vancouver’s

recent airline entrepreneurs. Raymond Lee is a pastor at Hong Kong’s Faith Community Church. Having earned an education degree at Harvard, he made his fortune as founder of Oasis Development Enterprises, a Boston-based group of real estate investment and development companies. When Lee arrived in Vancouver in May 2007, handing out free tickets for Oasis’s direct flights between Vancouver and Hong Kong, Priscilla – who wore the title “executive director” – appeared alongside at every stop on the press junket. The airline’s goal, according to the Lees? Fostering world peace through affordable travel. “We’re looking at breaking through many of the logjams caused by high airfares,” Priscilla told Business in Vancouver at the time. “Education, trade, political friendships and international relations – there is so much tension in the world because people don’t understand each other.”

In the name of world peace, Oasis launched its Vancouver-Hong Kong round-trip service at $650, with business class going for $2,800; equivalent flights offered by Air Canada (AC.A-T) and Cathay Pacific were going for about $2,500 and $7,500. At the time, Raymond offered BCBusiness the improbable explanation that Oasis could afford the cut-rate prices thanks to the economies of flying point-to-point, as opposed to traditional airlines’ hub-and-spoke model. Flying exclusively long-haul saves on gas, he explained, much as highway driving is more economical for cars; it also causes less wear on the aircraft. And flying only from one point to another meant that pilots could live at home, saving the airline the expense of housing them for overseas layovers.