• Air Costa grounds fleet, says renegotiating with lessors

    Another regional airline Air Costa has suspended its operations on Thursday claiming that it is renegotiating contract with its lessors.

    The Vijaywada-based airline suspended all its flights but said it will resume the operations on Friday. GE Capital Aviation Services (GECAS) is Air Costa’s lessor and is also the world’s leading commercial aircraft and engine lessor based out of the US.

    Last week, the Bengaluru-based Air Pegasus suspended its operations after lessors took back all its aircraft after the airline failed to pay the rentals.

    “We are resolving the issues we have with lessors. Currently, we are operating with 3 E190’s and simultaneously other developments about inducting new aircraft as well as the pan-India licence is in process,” a spokesperson for Air Costa said.

    He added that the airline was neither committed to its future expansion plans nor were there any delays in disbursing salaries to its employees. This is the second time the airline is renegotiating its contract with its lessors. A year ago, it had carried out a similar exercise and brought down the leasing cost to ?1.2 crore from ?2 crore.

    Mounting losses

    The airline had two E170s in its fleet earlier, which was a major reason for the airline’s mounting losses. The E170 has a total capacity of 78 but the airline chose to have a configuration of 60 economy and seven business class seats, thereby losing 11 seats per aircraft in the process. On an average, the airline was incurring loss of about ?2.5 crore per month for both the aircraft. Hence, E170s were phased out and replaced with two more 112-seater E190s. The airline has three E190s.

    An analyst with a global consultancy firm, who did not wish to be quoted, said in spite of carrying out the necessary correction in the fleet, the airline has not been able to post profits.

    The airline as of last year has invested over ?400 crore in its operations and was planning to invest a further ?60-80 crore this year. It had also placed an order for 50-E190s for a total ticket price of $2.94 billion. As of last year, the airline which was in the process of phasing out E170s, used to incur costs of up to ?40 crore per month, while revenues were of the order of between ?36 crore and ?37 crore per month. Victor Rask Womens Jersey

    Share This