Regional air carrier Air Costa is planning to invest $100 million by December next year as part of its pan-India expansion plans.
Regional air carrier Air Costa is planning to invest $100 million by December next year as part of its pan-India expansion plans. The airliner has applied for a national licence with the Director General of Civil Aviation (DGCA) and expects to get it by the end of this month or early January. Besides, Air Costa is in talks with strategic investors for raising funds for expanding its services and strengthening its fleet strength as well.
“From a regional carrier of south India, we are looking at a pan-India expansion. As part of it, we plan to link under served markets with more direct flights, increasing frequencies and routes, thus serving growing metropolitan areas, as well as key secondary and tertiary business centers. The estimated investment is expected to be in the range of $85-$100 million by December 2016. So far, we have invested about $70 million,” Vivek Choudhary, deputy CEO and CFO, Air Costa, told FE.
Vijayawada-based Air Costa is part of the privately-held LEPL group, a diversified entity with interests in property development and infrastructure development in the commercial, residential, education, power and health sectors.
The airline commenced scheduled services in October 2013. The $100 million is part of the initial planned investment by the promoters and current shareholders. In 2016, the shareholders shall put in an additional $15 million to $20 million into the business which is in addition to the over $70 million already invested by them so far, he said. Air Costa has a current annual average load factor of 78% and is targeting to be over 80% by next year.
Further, the airline is also planning to raise funds and is in talks with strategic investors. “We are currently in talks to raise funds, both domestic and overseas investors. We are also talking to international airliners for code sharing deals and strategic partnerships,” he said. A code share agreement is an aviation business arrangement where two or more airlines share the same flight.
Incidentally, Sao Paulo-based Embraer SA, the world’s largest manufacturer of commercial jets upto 130 seats, had signed a definitive agreement with Air Costa in June 2013 for a firm order for 50 E-Jets E2s with an additional 50 purchase rights. The acquisition is a mix of 25 E190-E2s and 25 E195-E2s with an estimated value of $2.94 billion. Air Costa is the first customer of E-Jet E2s in the Indian market and will take delivery of the E190-E2, in 2018. The E195-E2 is scheduled to enter service in 2019. The airline flies four E-Jets: two E170s and two E190s. By 2016, the fleet size is expected to touch 10 E190 Embraer flights, and by 2018, the total strength would be about 50 E2195 jets.
The airline at present operates 35 flights daily across Ahmedabad, Bengaluru, Coimbatore, Hyderabad, Chennai, Vijayawada, Jaipur, Tirupati and Visakhapatnam.