MUMBAI: The financial woes at Air Costa got even deeper on Monday with the carrier cancelling bookings for an indefinite period. The Vijayawada-based airline initially halted bookings till May after grounding flights on February, 28. After three years of operations as a regional carrier, it received a pan-India air operator’s permit on October 3, 2016, which will lapse this October.
As the carrier races against time to get investors on board who can write a Rs 200 crore cheque, industry sources doubt if the airline can ever get back to its feet, but join others like Religare and Paramount, which gradually shut shop.
“Once the flights are grounded, dues keep getting mounted and with no operational income, servicing payments becomes a major concern,” said an airline official. On its part, the company is hopeful that a revival is in order in the next 2-3 months.
“We have been talking to potential investors and have arrived at the final stage of discussions for funds infusion. We will have an update in the next one month,” Kavi Chaurasai, VP, Marketing & Brand Communication, Air Costa told Express. He, however, added that the revival of operations will take time as the airline hadn’t been flying since the past 40 days. Prior to suspending its flight services, the carrier was operating 16 flights per day through a fleet of two-leased aircraft — Embraer E190 — that can carry 112 passengers.
The fiscal troubles first emerged in August 2016, when aircraft lessor GE Capital Aviation Services impounded one of the three-leased Embraer planes for failing to pay lease rentals. Air Costa had to suspend flights, but it managed to restore operations the next day with the parent company LEPL coming to its rescue. This bridge loan however didn’t solve the problems as the carrier continued to bleed leading to frequent cancellations.
“We’ve cancelled several flights and have even given refunds to passengers. We’ve been facing a financial crunch for the past 6-8 months,” said an Air Costa official. Owing to non-payment of salaries, the carrier’s workforce has been reduced to half from about 600 employees in the past.