Air Costa to invest $100 m for fleet expansion

Air Costa, the first regional airline from Andhra Pradesh, will be investing about $100 million to expand its fleet of Embraer E-jets in the next two years, besides setting up an aircraft repair facility.

Promoted by LEPL Group, a Vijayawada-based infrastructure development firm, the airline today announced the launch of its operation with the first flight between Vijayawada and Bangalore from October 14.

It has taken delivery of two E-170 jets and will be adding two more E-190 jets next month. “Our plan is to add 10 E-jets by the end of 2014 and have a fleet of 25 aircraft by 2018,” L. Ramesh, Chairman of the LEPL Group, told mediapersons here.

It will initially connect Vijayawada, Chennai, Hyderabad, Bangalore, Jaipur and Ahmedabad and expand to other cities like Pune, Goa, Madurai, Mysore, Thiruvananthapuram and Visakhapatnam in a phased manner. “We plan to have pan-India operations by 2015 with 14 routes and expand to 25 destinations in three years from then,” Ramesh said.

K.N. Babu, CEO, said on the pricing front, the carrier will be on par or cheaper than the existing low cost airlines. “Our fares will start from Rs 3,000 and will go up depending on the demand. Today, the fares for a Vijayawada to Bangalore flight starts from about Rs 5,000 and goes up to Rs 9,000 as demand peaks,” he said.

It sees strong demand for air services connecting metros and non-metros, apart from tier 1 and tier 2 cities. It feels that its choice of Embraer jets would give the added advantage of faster and more fuel-efficient services. It has re-configured the E-170 jets from 80 seats to 67.

“While the E-170 jets are priced between $27 million and $ 29 million, the E-190 versions have a price tag of about $34 million,” Babu said.

As part of its expansion plans, LEPL will be setting up an MRO (maintenance, repair and overhaul) facility at Gannavaram airport near Vijayawada at a cost of about Rs 150 crore within 18 months.

> amitmitra@thehindu.co.in