Simon Calder: The Man Who Pays His Way

Start an airline? You must be brilliant at business - or bonkers
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The Independent Online

You want to start a new airline? Instead, consult the Save & Spend section of today's Independent and find a safe interest-bearing account for your surplus cash. Failing that, you could always stuff the mattress with used £20 notes. Either investment strategy is likely to prove more successful than flying people around the planet.

Sir Richard Branson is fond of posing the question "What's the best way to become a millionaire?" - and following up with the answer "Start off as a billionaire and launch an airline". The Virgin founder is one of very few to have done the opposite. You may not be in the happy position of having an existing brand to leverage, as Branson did. So, if you are determined to see your name on the side of a plane, let me introduce you to South America: a dozen nations in search of a scheduled link from the world's leading aviation hub, London.

The only one of the continent's 13 nations with a direct connection from the UK capital to its own is Argentina. The tens of thousands of British tourists heading each year for the magnificent Inca creations in Peru have to change planes even to reach Lima; and travellers seeking excitement in Ecuador or Chile would relish non-stop flights.

I would rather stake my savings on the horse Puerto Rico in this afternoon's St Leger at York than sink a penny into aviation. If you are undeterred, though, do us all a favour and provide flights to somewhere sultry, sexy and presently disconnected - like Puerto Rico. Just don't start up a link between London and Hong Kong next month.

Hang on. That is exactly what Oasis Hong Kong Airlines is proposing. It promises "a comfortable seat, seat-back TV entertainment and hot meal service" five times a week from Gatwick to Hong Kong. And how much? "You can expect year-round fares 30 to 50 per cent lower than those currently offered by other airlines." That implies £300 return or less except for Christmas/New Year and summer peak.

London-Hong Kong is one of the most competitive routes in the world: British Airways, Cathay Pacific, Qantas and Virgin Atlantic, four world-class airlines, already have about 50 flights a week between them. Next month Air New Zealand joins the Far East party with a daily link from Heathrow.

In principle, the more competitors, the merrier: experience shows that fares fall and standards rise when upstarts start up. Yet there are many London-Hong Kong travellers who will not fly on Oasis: the executives whose companies have deals with global alliances such as Oneworld, or with airlines with global reach such as Virgin Atlantic. Neither is Oasis likely to grab a share of the tens of thousands of passengers who stop in Hong Kong on their way to Australasia or around the globe; for that, an airline needs connecting flights like Cathay Pacific or Air New Zealand, or good partners like BA and Qantas. People heading to Hong Kong on packages are unlikely to fly on Oasis, because most deals were sewn up months ago. Which leaves travellers heading for southern China, Hong Kong Chinese resident in Britain, and small businesses that can't get a decent deal out of the major airlines.

I hope I am wrong, and that the new carrier can fill 2,000 seats each week, each way - and turn a profit. What does Oasis Hong Kong Airlines have on its side? The mediocre track record of people like me when forecasting the fortunes of new airlines. Twenty-two years ago the aviation industry scoffed at Richard Branson; 11 years ago the life expectancy of a funny little airline started by Stelios was estimated in weeks - yet easyJet has transformed aviation. It's a pity you and I didn't use any spare cash to buy shares in it.