Payment delays halt regional airline Air Costa’s ops


Prime Minister Narendra Modi’s initiative to provide regional airline connectivity may face some difficulty in taking off.

South India-based regional carrier Air Costa, which received a licence for pan-India operations last year, temporarily stopped its operations for a day on Thursday due to payment issue with the lessor.

“There are some payment issues with our lessor GE Capital Aviation Services (GECAS) which are being sorted out,” said an airline official.

The development comes days after Air Pegasus, another South India-based regional carrier, stopped its operations from July 27 onwards due to failure to make payment to its lessor. The airline has a presence in all major airports in South India including Bengaluru, Chennai, Thiruvananthapuram, and is owned by Decor Aviation, which is one of the largest ground handling service providers in South India.

However, an Air Pegasus customer care executive informed dna that the operations will restart from Saturday. Also, the airline had recently received flak from aviation regulator Directorate General of Civil Aviation (DGCA) over serious safety issues, concerning which five of its pilots were suspended.

A spokesperson of Air Costa replied in an email, “Air Costa has suspended its operation of all 24 flights only for today, i.e., 4-08-2016. Tomorrow, i.e., on 5-08-2016, we will start our operations as scheduled. We are resolving the issues we have with lessors. Currently, we are operating with three E190s, and simultaneously, other developments about inducting new aircraft as well as the pan-India license are in process. We are very positive about our operations and future expansions. We have also taken care of the passengers scheduled to fly today.”

The Air Costa officials said that the airline has a fleet of three 112-seater Embraer jets in operation and is seeking to induct two more 110-seater Embraer 190s for starting its pan-India operation. The airline at present covers six states including Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Rajasthan, Gujarat with about 24 daily flights and 9 destinations. The airline has plans to start further operations from Northern India cities of Varanasi and Delhi apart from Bhubaneshwar and Pune.

The airlines seem optimistic regarding the future of their operations, but Bengaluru-based aviation analyst Devesh Agarwal is not surprised at the payment-related difficulties faced by them. “The regional aviation market is very difficult and we will have to wait and watch whether the failure of such regional carriers will make a dent on RCS. To talk specifically of these two airlines, I think that most of their (Air Costa and Air Pegasus) problems are of their own making”.

Similarly, Ventura Airconnect Ltd (VAL), a regional carrier run by a Surat-based diamond baron, has restarted its operations from June this year. The airline’s license, which was due for renewal last year, was suspended late for security reasons. The company recently also won a tender from Gujarat government for inter-state operations.

As part of the new civil aviation policy that came out in June, Union civil aviation minister Ashok Gajapathi Raju had unveiled the Regional Connectivity Scheme (RCS), under which an all-inclusive fare not exceeding Rs 2,500 for a one-hour flight to all unconnected airports was announced. The government aims to tap about 200-odd such airports in the country.

The major funding for the subsidy will be financed from a special levy of Rs 7,000-8,000 per domestic departing flight on all major routes which is expected to collect about Rs 500 crore annually. It will also be funded through exemption on several charges and reduced Value Added tax (VAT) on aviation fuel.