Harmony Airways eyes China
Wants a Vancouver-Macau route by 2006
PETER KENNEDY
16 December 2004
Breaking News from globeandmail.com

VANCOUVER -- Harmony Airways, the upstart airline headed by Vancouver entrepreneur David Ho, is gearing up to use high-profile political connections to enter the Chinese market.After naming former British Columbia finance minister Gary Collins as its new chief executive officer yesterday, Harmony hopes to be flying passengers between Macau and Vancouver by early 2006.

"The world is getting smaller and people are travelling more," said Mr. Ho during a splashy news conference at the Vancouver airport. "The opportunities down the road are going to be tremendous." A Vancouver entrepreneur with an interest in exotic cars, Mr. Ho is known as Dr. Ho in B.C. after receiving an honorary degree from the University of Richmond in Virginia. His grandfather made his fortune selling cigarettes in China.

A frequent air traveller with extensive business interests in Hong Kong, Mr. Ho launched what was previously known as HMY Airlines two years ago to offer flights from Canada to Las Vegas and Mexico. His initial plan was to fill a void left in the market by the collapse of Canada 3000 Inc., which went bankrupt in November, 2001.

But after recently changing its name to Harmony, the company has expanded its service to include Honolulu, Maui and Toronto.

"We consider ourselves to be a boutique airline that aims to develop routes and services as we see fit for the Vancouver market," said company spokeswoman Marie McDonnell.

Harmony currently uses three leased Boeing 757s, one of which was parked outside the departure lounge that was used to host yesterday's news conference.

But Mr. Ho clearly has much bigger plans, and believes he now has the business and political connections to make them happen.

Now that it has hired Mr. Collins, Harmony is hoping to secure rights to fly to China next year, a move that would require an agreement between China and the Canadian government. It would also put Harmony in a position to compete with major airlines such as Cathay Pacific and Air Canada.

Mr. Collins, a 41-year-old former commercial pilot, has agreed to take on the job after spending 13 years in politics.

"Flying has always been one of my major passions," said Mr. Collins, who recently helped political ally B.C. Premier Gordon Campbell balance the provincial books.

If it can secure regulatory approval from Ottawa, Harmony's immediate goal is to fly into regions that are not well served by the North American airline industry.

I don't know if there is enough traffic from Macau to justify a direct flight to Vancouver. It would also seem that the China/Hong Kong market is pretty well served at the moment.

There is already a lot of competition on the Hong Kong - Vancouver route. Cathay Pacific has 3 flights a day while Air Canada also flies direct from YVR. The Macau route will be a niche market and passengers will need to transfer by ferry into Hong Kong.

Seeking Harmony in eastern skies: Former B.C. finance minister Gary Collins aims to make upstart airline Canada's Asia Pacific link
John Greenwood
9 May 2005
National Post

VANCOUVER - As finance minister for the British Columbia Liberals for three and a half years, Gary Collins fixed the province's out-of-control taxes and helped lay the foundations for the current economic boom.

Today he is chief executive of Harmony Airways, a tiny airline with just three planes serving a handful of mostly holiday destinations.

While the new job may seem like a step down to some, the man credited with eliminating British Columbia's deficit says that's not the case. According to Mr. Collins, who resigned from Cabinet to take the new job in December, the fledgling airline, operated by HMY Airways Inc., is on track to become a growing international player.

Harmony was launched in 2002 by David Ho, a Vancouver businessman and heir to a Hong Kong tobacco fortune. Mr. Ho, whose diverse holdings include a luxury car dealership, a real estate development firm and a security company, decided to launch the airline after getting stuck in Hawaii for 18 hours because his flight was delayed.

While the airline industry struggles to emerge from a brutal downturn, Mr. Ho figures there's room in the market for Harmony. Which is fair enough, but Mr. Ho doesn't see his airline as one more carrier. He's aiming to build it into a player in the same league as such legendary names as Cathay Pacific and Singapore Airlines.

Observers are skeptical. The past few years have witnessed the failure of a raft of small-but-experienced Canadian airline companies, including most recently Jetsgo, Roots Air, Greyhound Air and Canada 3000. Critics wonder how Mr. Ho can expect to succeed when so many others had failed. And how could he do it with three Boeing 757s?

Despite predictions Harmony would not survive this long, it has. Indeed, Mr. Ho has proved a canny manager, picking up top staff from failed competitors. Deep pockets have also helped. Now the company is in growth mode.

"Harmony is extremely well-positioned to become Canada's Asia Pacific carrier," Mr. Collins said.

One reason for his optimism is a recent agreement between Canada and China to triple the number of flights between the two countries. The April 19 deal is expected to give Canadian airlines a foothold in the world's fastest-growing aviation market. Analysts predict the number of Chinese tourists travelling abroad will soar to 100 million by 2010.

"That's a huge market and we can serve it very effectively," Mr. Collins said.

But one of the biggest hurdles in this industry is bureaucracy -- it's one thing to lust after a market, but quite another to secure the necessary government approvals to actually carry passengers.

Harmony is in the process of applying to Transport Canada for rights to new Chinese routes. It's asking for seven flights a week starting in 2006 and another seven in 2008.

But Mr. Collins admits that competition for those routes will be tough and success is hardly a slam dunk.

His resignation as Finance Minister took many observers by surprise.

Indeed, it was even been suggested that he might be a successor to Mr. Campbell, the next premier of British Columbia. But Mr. Collins, who worked as a pilot before entering politics, explained that at the age of 41 he wanted a career change.

From his 13 years with the Liberals, he brings to his new job a wealth of knowledge about how bureaucracies work and -- even more important -- political connections, both in Victoria and Ottawa.

Mr. Ho will provide expertise in the Chinese market. With the help of his family and business connections, the Hong Kong-born entrepreneur hopes provide a boost for Harmony when it comes to operating in Asia.

"North American companies can spend decades trying to figure out how to do business in Asia. We don't have that problem," said Mr. Collins.

Once Harmony gets its routes, it will have to buy new planes, since the 757s aren't capable of the trip.

The Vancouver-based company is "well into negotiations" with Airbus and Boeing regarding the purchase of a new fleet, Mr. Collins said.

But he declined to talk about what kind of planes or how many the company is looking to buy. That will depend on the routes that Harmony gets (he hopes to know the answer by the end of the summer).

One thing is certain, the former finance minister is there to make the airline grow. "I didn't come here to run a three- airplane airline," he said.

jgreenwood@nationalpost.com

End of tycoon's flight of fancy
Hong Kong-born billionaire David Ho tried to take on the big carriers but couldn't compete
22 April 2007
South China Morning Post

Hong Kong-born billionaire David Ho did not stick around in the wake of the recent shutdown of his Canadian airline, which he launched with great fanfare only four years ago following a bad experience in the air. Instead, a week after Harmony Airways' fleet was grounded for corporate restructuring, the airline's Vancouver-based owner set off on a cruise, his senior personal assistant said.

Where a man goes after such a highly publicised setback his assistant did not say, but she noted that, as a result of the trip, Mr Ho would be out of reach for days - and out of the public eye.

So, as most of the 350 employees at Harmony Airways received layoff notices and the remaining staff settled customer refunds and contemplated the carrier's uncertain future, the famously secretive businessman quietly retreated into a private world.

Mr Ho did not appear at a press conference to announce that Harmony Airways was ending its scheduled service. Instead, that task was given to Peter Buecking, a member of the airline's advisory team, who explained the small carrier's business model was not working, since operating costs and pricing limitations in the market prevented the airline from expanding to an efficient size.

Since Harmony is a privately owned company, it does not release financial results, but Mr Ho made a statement stressing that the airline was not bankrupt. "This is not a creditor protection arrangement, and this is not a company dissolution," he explained.

"Harmony, as a company, will look at new opportunities and business models," he added, noting charter flights might be an option.

How Harmony will restructure itself is unclear. But Mr Ho's original vision for a full-service carrier, created to outdo the level of customer service offered by other airlines, is on hold indefinitely. Harmony's last scheduled flight was on April 9.

One of his early documented business deals in Canada was his purchase of bottling plant operator Gray Beverage in the late 1980s.

He sold the company a decade later to Pepsi-Cola Canada for an undisclosed amount, though some estimates put it in the hundreds of millions of dollars.

In 1990, he took over ownership of Vancouver's prestigious University Golf Club, even though, as the club's general manager verified last week, Mr Ho doesn't play the game. Also in the early 1990s, Mr Ho purchased - for a staggeringly low price - a luxury vehicle dealership, MCL Motor Cars, which sells Porsches, Jaguars, Land Rovers, Aston Martins and Bentleys to Vancouver's elite.

The man who sold MCL to Mr Ho, Vancouver real estate investor Robert Lee, declined to speak about the transaction and his relationship with Mr Ho last week, but he confirmed that Mr Ho had bought the dealership for C$1 (HK$7), plus the cost of inventory.

Despite Mr Ho's multiple business ventures, it was only in 2002 when he announced his intention to start up his own airline - an unprecedented feat for an individual financier in the risky Canadian sector - that people began to take notice of Mr Ho's wealth and clout.

Perhaps more surprising than Mr Ho's bold entry into the airline business was how he came to that decision.

As Mr Ho recounted in an interview last year, he and his young daughter, Kristen, were stranded on the Hawaiian island of Maui for 18 hours when their return flight to Canada was delayed.

Employees of the airline would not provide any explanation for the lengthy delay, adding to Mr Ho's frustration.

"What are you going to do about it?" Mr Ho recalled his daughter asking.

His response was to launch Harmony. On February 28, 2002, with no planes to speak of, Mr Ho gathered media and members of the business elite together to declare his plan. At the time, the Canadian industry was reeling from the collapse of the country's second-largest carrier, Canada 3000, which declared bankruptcy in November 2001. That airline's demise left about 1,500 employees out of work and thousands of passengers stranded.

Many other carriers have tried and failed in the Canadian marketplace, among them Canadian Airlines, Greyhound Air, Roots Air and Jetsgo.

Even the country's largest domestic and international airline, Air Canada, filed for bankruptcy protection in 2003, before emerging 11/2 years later. But amid the turmoil in the industry, and with a fleet of only four planes, Harmony Airways became a household name.

Mr Ho's airline actually started out as MY Airways, named using the initials of his mother, Rosita May-ying.

That name was later changed to HMY Airways, before it eventually became Harmony Airways.

The carrier focused on the leisure market, offering flights to holiday destinations such as Hawaii and Mexico.

Its inaugural flight, on November 22, 2002, was from Vancouver to Mazatlan, Mexico. As it grew, Harmony also offered flights between Vancouver and Toronto, Las Vegas and Palm Springs.

For a brief period, it also added flights to New York and San Francisco but later dropped those routes.

In 2005, the small airline announced its most ambitious plan yet - a service to China - after receiving government permission to operate code-share flights. Code-sharing would allow it to book passengers on a partner airline.

Those plans, however, failed to take off as Beijing delayed granting Canada approved destination status. The special status, which is still pending, is expected to bring a massive influx of Chinese tourists to the country.

From the outset, Harmony's unusual start-up and its offering of full-service flights - when most airlines were paring down to no-frills models - set the carrier apart from its competitors.

If that were not enough, Harmony officials also brought in some big names to help boost its profile.

Hong Kong actor Jackie Chan, who local media reported was a childhood friend of Mr Ho's, became a spokesman for the airline. Esteemed Vancouver chef Bruno Marti, and later the celebrated Iron Chef America TV show competitor Rob Feenie were enlisted to create Harmony's in-flight menus, contributing to the airline's reputation for top-notch service.

Still, airline industry expert Marc-David Seidel, a professor at the University of British Columbia's Sauder School of Business, said Harmony's shutdown did not come as a surprise.

"They had been struggling with kind of a mixed strategy," Professor Seidel said. Although the business was doing well with its Hawaii routes, Harmony's growth plan was "a little bit without focus", he said.

"They continued to do leisure segment, they tried to become an international carrier in terms of the China routes that they were approved for, and they also tried to become a business carrier," he said. "For a small carrier that has only four planes, it's a bit difficult to do all those things simultaneously."

Professor Seidel added that Mr Ho's massive pocketbook might have allowed Harmony's troubles to carry on longer than they should have.

"Having funds can be both a blessing and a curse," he said. "Having the funds makes it much easier because you don't have to raise them, but it can also create the mindset where they're not as cost focused."

But since Harmony did not go bankrupt, strand passengers or stop paying its bills, Professor Seidel said he believed there was a good chance it could be revived in future. "Hopefully they'll be coming back," he said.

Perhaps, wherever he may be, Mr Ho is planning just that.

lol... The beginning and end of an airline in five posts! :lol:

lol... The beginning and end of an airline in five posts! :lol:
:lol: lol first i read its birth then 5 posts later...its sad death
RIP harmony, were his planes always flying empty? i remember reading an article about his airline back a year ago in an airliner magazine (dont remember the name) i was happy to see a new canadian airline but its gone :(

perhaps people are weary of Charter flights - especially since his routes were already covered by regular airlines

Vancouver mogul David Ho had high hopes for Harmony Airways—gourmet meals, roomy seats, even cheap tickets.
Then, his expansion into China stalled and fuel prices soared
21 June 2007
The Globe and Mail

Back in 2001—a bad time for aviation, no matter how you look at it—Vancouver tycoon David Ho had an annoying experience: He was stranded for 18 hours at a Hawaiian airport, with little explanation or assistance from his carrier. Another mogul might have taken that as a cue to buy a Gulfstream. But Ho, heir to a Hong Kong tobacco fortune, had a loftier idea: He would start his own airline, one famous for its generous legroom, gourmet food and low prices.

Harmony Airways started flying in November, 2002, with two Boeing 757s (it eventually got two more). The flight plan: Link Vancouver with vacation hotspots like Vegas and Hawaii, then expand into China. “It was a rare thing: a full-service, locally owned airline designed to make travelling fun again,” says Harmony spokesman Norman Stowe (the only person from the company who'd talk to us). “There was a real sense of excitement. It was very small, and the owner was a real person, not an anonymous corporation.”

Customers were impressed by Harmony's perks, including free glasses of B.C. wine and a menu designed by chef Bruno Marti (and later by B.C.'s ubiquitous Rob Feenie). In December, 2004, MLA Gary Collins, a former pilot, resigned as B.C.'s Finance Minister to take the controls at Harmony.

Then came the turbulence. The price of fuel began to climb (it more than doubled during Harmony's four years in business, says Stowe). And in an ominous sign, similarly sized Canadian carriers like JetsGo and CanJet began dropping like flies. Even worse, Harmony's ballyhooed expansion into China stalled, thanks to government delays on both sides of the Pacific—not to mention the airline's lack of suitable aircraft. (The 757 wasn't designed for long-haul flights, and Harmony said it couldn't invest in long-range planes until it had secured the Asian routes.)

The company tried to compensate with new routes closer to home, eventually moving into the ultracompetitive Vancouver-Toronto run, dominated by Air Canada and WestJet. Bad move. “In order to succeed with a route of that nature, you need a very high frequency of flights,” says Joseph D'Cruz, a professor of strategy at the University of Toronto's Rotman School of Management. “Otherwise you're too insignificant to attract a following, regardless of how good you are.”

Harmony ran 1,780 flights out of Vancouver in 2006, up from 985 in 2005. But seats were often empty, particularly on the Vancouver-Toronto flights, which were running at around 20% capacity. CEO Collins bailed out in December, while insisting that the company's future was bright. An advisory board of investors and aviation experts convened by Ho recommended shutting down the company in March (around the time Ho was allegedly pulled over by Vancouver police with two prostitutes and a bag of cocaine in his car). “This is the restructuring of a going-concern company that will continue to treat its customers, suppliers and employees fairly,” Ho said in a prepared statement. “This is not a bankruptcy.” Harmony continued to fly for another few weeks, then laid off most of its 350 employees.

Future plans for the “going concern” are vague, but the company has kept two of its planes and is mulling the possibility of launching a charter service, à la CanJet. As for Ho, perhaps he's now in the market for that Gulfstream.

***

WHAT THE EXPERTS SAY...

PLAN FOR SNAFUS: Harmony seemed to lose its focus when its China expansion ran into predictable snags, says Rick Erickson, a Calgary-based aviation consultant. “It's a skinny business, and there's zero room for error when you're a smaller player. You need to plan for the contingencies.”

CHOOSE THE RIGHT NICHE: “Harmony made the assumption that significantly better service would attract customers,” says Rotman's Joseph D'Cruz. “But people today also want a practical edge.” D'Cruz contrasts Harmony with Porter Airlines, which runs intercity flights out of Toronto's tiny, centrally located island airport, saving fliers the trip to Pearson International. Porter also has the right birds for its chosen mission—small, efficient Bombardier turboprops.