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It began operations in October 2013 and made a loss of Rs 69.5 crore in first six months till March 14. In the first nine month of FY15 the airline made a net loss of Rs 90 crore on a revenue of Rs 250 crore.
The airline is tweaking its network, increasing its fleet utilisation and adding frequencies on existing routes. Also going forward the airline will only induct E-190 planes which offers better seat economics than the smaller E-170 planes.
The airline plans will add four E-190 planes in 2015 and plans to connect Bhubaneswar, Lucknow, Varanasi, Chandigarh, Indore, Pune from its hubs in South India. It is also said to be exploring services to Delhi.
Last February the airline ordered 50 Embraer E-2 jets and those deliveries will begin from 2018 onwards.
In the summer schedule Air Costa will double its service between Vijaywada-Bengaluru, and add flights between Vijaywada-Chennai and Hyderabad-Chennai. In winter schedule it dropped certain routes covering 3-4 cities replacing them with direct flights.
"We enjoy a monopoly on three city pairs: Jaipur-Chennai, Tirupati -Vishakhapatnam, and Vijayawada-Vishakhapatnam sectors, and a duopoly on five others. On the other sectors, we enjoy competition from just two other airlines. Our current average utilisation of the E-170 aircraft is 10 hours and the average utilisation of the E-190 aircraft is 14.5 hours each day which is currently the best in the industry," said Vivek Choudhary, chief financial officer, Air Costa.
"Start up airlines over the world usually take over 2-3 years to break even and even longer in our country. However, we made a operational profit of Rs. 1.5 crore last December. The airline's load factors have been consistently above 75 per cent and have been above 80 percent for two months of 2014. However, we are evolving as an airline each day with innovations in our sales and marketing, customer support and service approach," Choudhary added.
Air Costa is a part of LEPL group with interests in real estate and infrastructure development. The management is carrying out demerger of the airline from parent company (LEPL Projects) enabling it to garner private equity investment in aviation business. The demerger scheme has been approved by High Court and is awaiting approval of the civil aviation ministry.
"Air Costa will be facing competition with four new start up airlines being launched from South India. Also the airline may also have to relook at its hub strategy. It operates from two hubs - Vijaywada and Chennai. Metros such as Bengaluru and Hyderabad have higher pan-India traffic potential than Vijaywada and even now Air Costa's base departures from Vijaywada connect only Bengaluru and Hyderabad,'' an aviation expert remarked.
Air Costa offers Rs 999 fare
Air Costa today announced the launch of 'Happy Holi offer' for its customers with a starting fare of Rs.999 (all-inclusive)- on every economy class ticket booking across its network. The discount tickets can be purchased from February 26- March 3 and are valid for travel between March 15- September 30.
