Oil spike, aircraft cost bring down Hong Kong budget airline

HONG KONG, April 10, 2008 (AFP) - Soaring fuel costs and a decision to buy aircraft instead of renting them led to the demise of budget Hong Kong airline Oasis, the company's founders said in an open letter published Thursday.
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Raymond and Priscilla Lee apologised to the thousands of stranded passengers, company employees and to investors after the airline went into liquidation 18 months after it tried to shake-up the airline industry.
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The Lees said the high price in oil -- a tonne of jet oil has risen more 60 percent in the past year to around 1,060 dollars, according to International Air Transport Association figures -- was also a key factor.

"The hike of the oil prices has also affected us severely," they said in the letter published in several Hong Kong newspapers.

"As a newly started airline, we have found it next to impossible to obtain a credit facility from financial institutions to carry out fuel-hedging programmes.
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"As oil prices sharply increased, the fuel costs took up the majority of our budget," dealers said.

They said that the original business plan was based on renting aircraft, rather than buying them and required just 25 million US dollars to

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