Long-haul budget carrier Oasis Airlines suspended all flights on April 9 2008, after announcing it was going into liquidation. Chief executive Steve Miller announced the move the day before saying that a Hong Kong court had appointed KPMG to act as liquidator. Local newspaper Economic Daily had reported that the company was struggling with debts of up to HKD1bn (US$128.2mn). Oasis was launched in October 2006, as a pioneer of long-haul budget air travel, offering one-way tickets between Hong Kong and London at HKD1,000 (US$128). It followed that with a Hong Kong-Vancouver service.

It was using four Boeing 747-400s to operate the two routes. Cathay Pacific, the dominant Hong Kong based airline said it was not interested in acquiring Oasis. Cathay chief executive Tony Tyler told reporters that the airline抯 fate underlines the tough and competitive nature of the airline business, particularly at a time of record fuel prices and global economic uncertainty. Despite the tougher times expected in the passenger business, in our latest Hong Kong Freight Transport Report BMI predicts that Hong Kong air freight will grow at an average annual rate of 5.6% over the next five years. All the evidence indicates that the powerful economic boom in mainland China will continue to create a complex mix of opportunities and threats for Hong Kong.

In general, as the Special Administrative Region (SAR) repositions itself, we believe it will be the higher-value/lower-bulk transport modes that are most resilient. So we remain relatively confident about prospects for airfreight, particularly for regional trade in electronics, IT products and express/parcel delivery. The territory retains some extremely important advantages. In BMI抯 freight transport rating, Hong Kong scores a total of 77.3 (out of a potential maximum of 100), with particular strength in both the regulatory and competitive environments and a satisfactory showing in the ratings for long-term economic risk and infrastructure growth. This will continue to make it an attractive place for the freight industry, more so if it can begin to grapple with its higher costs, relative to the mainland.

According to our latest estimates, transport and communications GDP rose by 7.3% in 2007, one percentage point faster than overall GDP, which we estimate to have increased by 6.3%. For the 2008- 2012 forecast period we expect the transport and communications sector to continue outpacing the economy as a whole, although by a smaller margin. It will achieve average annual growth of 6.0%, versus 5.6% for overall GDP. The total value of transport and communications GDP will rise to US$32.4bn in nominal terms by 2012, representing 11.0% of Hong Kong抯 GDP. We continue to trim sea-borne freight forecasts to take account of the growing competitive threat from rival ports, particularly those in Mainland China, with lower labour costs, such as Shanghai and Shenzhen. We expect throughput to grow by an annual average of 4.2%, down from the 8.0% figure over the preceding five years. Rail freight, always relatively marginal in Hong Kong, will grow at 6.1%, an increase on the rate over the preceding five years.