Air Costa stops taking bookings; airline hunts for investors
Regional airline Air Costa, which had suspended its flights last week amid a cash crisis, has stopped taking all future bookings.
“Revival is looking increasingly difficult. Flight bookings have been blocked for all days. We have been told that search for investors is on,” said a person with knowledge of the matter who did not wish to be named. The airline had earlier blocked ticket sales till March 8.
Vijaywada-based Air Costa was founded in 2013 by property developer LP Bhaskara Rao, according to its website.
The airline is yet to report profits. It incurred a loss of ₹130 crore on revenue of ₹327 crore and operating expenses of R457 crore, according to data provided by the airline to the Directorate General of Civil Aviation.
“We have extended the suspension till Thursday and we have blocked the entire summer schedule bookings. Until we announce the resumption on Monday the bookings will remain off. The final date of resuming the operations will be clear on Monday,” an Air Costa spokesman said.
Two Brazil-made Embraer jets used by the airline have been impounded by GE Capital Aviation Services (GECAS) because of payment defaults and are now parked in hangars at the Hyderabad airport. The airline has an order for 50 Embraer aircraft that are scheduled to be delivered starting next year.
Air Costa’s problems with regards to the payments for planes which run into few million dollars started in January.
The aviation ministry, which has been pushing its Udan regional aviation policy, has been supportive of the airline, which is one reason why its planes have not been deregistered from India’s flying registry and only grounded, giving the airline some leeway to attract funds or investors, said the person cited above.
The airline had also grounded its operations last year after similar issues with the aircraft lessor—but that was only for a day.
The cash-strapped carrier— which has 600 employees based in Vijaywada, Jaipur, Ahmedabad, Hyderabad, Tirupati, Chennai, and Bengaluru—has not paid salaries for January.
Another regional airline, Bengaluru-based Air Pegasus, which has been grounded since July last year, has not been able to start services despite announcements of new investors last year.
Regional airlines have been facing difficult times in India. Religare Voyages Ltd (which operated Air Mantra), MDLR Airlines Pvt. Ltd and Paramount Airways Pvt. Ltd, among others, have shut shop, in some cases following similar defaults with aircraft lessors.