A Hong Kong startup airline aims to depart from the standard budget carrier model by operating exclusively on long-haul routes.

Oasis Hong Kong Airlines, launched by a husband-and-wife team of property investors, plans to make its maiden flight from Hong Kong to London's Gatwick Airport in June as Hong Kong's first low-fare carrier.

"The low-cost long-haul model has numerous advantages," said part-time pastor Raymond Lee, who founded Oasis with his wife Priscilla. Oasis recently won approval from the city's Air Transport Licensing Authority to operate scheduled flights to London, Milan, Cologne, Berlin, Oakland and Chicago.

The carrier hopes to win an air operator's certificate (AOC) from the Civil Aviation Department in the next few months.

It expects to raise about HKD$10 billion (USD$1.29 billion) in an initial public offering in mid-2007 to fund expansion, Lee said.

The airline plans initially to lease five Boeing 747-400 jets and has a five year plan to expand its fleet to 25 aircraft, serving between 12 and 15 destinations. It will take on other planned startups as well as established players such as Hong Kong's largest airline, Cathay Pacific Airways.

On its London route, Oasis will compete with Cathay, British Airways and Virgin Atlantic, all of which will offer more frequent flights than Oasis.

Lee said full-service carriers have bloated cost structures, while his expenses can be kept low by flying long distances and maximizing flying hours of big aircraft with low per-passenger costs.

"We'll keep a very lean and mean organization, and we'll outsource everything we can," Lee said.

Oasis plans to broaden its potential revenue stream by carrying freight, which is not a priority for short-haul low-cost airlines such as Ryanair and easyJet.

Oasis will not be alone. Qantas' Jetstar arm and Viva Macau, controlled by businessman Raymond Ho, the younger brother of Macau's Chief Executive Edmund Ho, also hope to launch low-cost long-haul flights.

The Lees, who own 60 percent of Oasis, and others, are investing HKD$800 million (USD$102.56 million) in the airline. Allan Wong, chief executive of Hong Kong consumer electronics maker Vtech Holdings holds a 15 percent stake.

Oasis aims to price round-trip tickets starting as low as HKD$1,000 (USD$128), although customers looking for such a bargain would have to book months in advance, said Oasis Chief Executive Stephan Miller, a founder and former chief executive of the city's second largest airline, Dragonair.

Oasis expects its fares to average 40 to 50 percent below those of full service counterparts. It aims to attract a new market of passengers flying long-haul for the first time."

Fares starting from HKD$1,000 will be highly stimulative," said Lee, who also plans to offer budget business class service.

A recent survey by brokerage CLSA found many potential passengers would upgrade to a lower-frills business class seat at the right price."

Based on our survey there is a niche for Oasis. Whether this niche is big enough for both Cathay and Oasis, only time will tell," CLSA analyst Kevin O'Connor wrote.

Existing carriers are expected to fight back.

"The incumbent airlines undoubtedly will lower many of their fares to the same level Oasis does, and the customers will most likely make the rational choice to fly with the known commodities, with their established safety histories and frequent flier programs," said Richard Pinkham, a Singapore-based consultant with the Centre for Asia Pacific Aviation.

He also noted a global shortage of pilots, meaning Oasis could face high salaries, missing out on a source of cost savings historically enjoyed by budget airlines. It also faces the same high jet fuel prices and costly Hong Kong airport fees as its rivals, he said.