AP's first regional airline set to take off

Undeterred by the ongoing tussle over the bifurcation of the state or the falling domestic passenger traffic, the Vijayawada-based Lingamaneni group is going ahead with the launch of the first-ever regional airline operations from Andhra Pradesh.

"We will inform our plans at the end of this month," said Capt K N Babu, chief executive officer of the airline Air Costa.

The airlines business is altogether a new area for Lingamaneni Estates and Projects Limited (LEPL), which is engaged in real estate, hospitality and power. In June this year, Air Costa said it was in the process of getting final approvals from the Director General Civil Aviation (DGCA) to launch regional operations covering south Indian cities and Tier II cities within the state.

According to sources, the company is planning to start operations as was decided earlier and the aircraft is also ready stationed at a local airport. "Recruitment of pilots and other staff has been completed and the company had also established a network with the airline agents for marketing," a source close to the development said.

A recent report by India Ratings and Research, a Fitch group company, said data of the domestic passenger traffic in the first five months of the current calendar year indicate a 3-5 per cent fall for the whole of the year. However, passenger load factor (PLF) is expected to go up by 200 bps to 400 bps in the current year as the seat availability has come down due to the closure of Kingfisher Airlines. It may be recalled that the PLF had come down to 74 per cent in 2012 from 78 per cent level in 2010.

As the economy of South Indian cities has been reasonably doing well, regional air services targeting these cities may not be a risky proposition at this point if the company keeps minimises costs and optimises the returns from its assets, say industry analysts.

Air Costa has chosen the 70-80 seater E-Jets, initially three of them from Brazilian aircraft maker Embraer. It had bought one aircraft and leased two for the initial operations.