LEPL Group, a Vijayawada-based real estate and renewable energy company, will be investing over $100 million (or approximately Rs 617 crore) in its airline business ‘Air Costa’ through internal accruals during the next two years, according to its chairman L Ramesh.
Announcing that Air Costa, the first regional airline from Andhra Pradesh, would be launching its commercial operations with the first flight from Vijayawada to Bangalore on October 14, Ramesh told mediapersons on Tuesday that the company would initially start with two Embraer E-170 jets. It aims to have five E-170s and E-190s this year, 10 next year and take the total fleet size to 25 aircraft by 2018.
“Air Costa will initially connect Vijayawada, Chennai, Hyderabad, Bangalore, Jaipur and Ahmedabad and spread its wings to other cities like Pune, Vizag, Goa, Madurai, Mysore and Thiruvananthapuram in a phased manner,” he said, adding it would be having pan-India operations by 2015 with 14 routes and reach 25 destinations in three years from then.
With its main base in Vijayawada and maintenance centre in Chennai, Air Costa will follow a flexi-fare system with the lowest fare being Rs 3,000.
The low-cost airline, which currently has about 300 employees including foreign pilots and engineers, is also in the process of setting up an MRO facility at Gannavaram Airport near Vijayawada in one-and-a-half years from now.
According to Deepak David, financial adviser to LEPL, air travel is expected to grow steadily in India with a compound annual growth rate of 20 per cent. This is expected to see the air traffic cross 70 million by 2014.
Rapid urbanisation has led to the burst in traffic between metros and non-metros, he said, adding there was scarcity for regional and charter operations in south India.
“There is a huge market potential in such point-to-point and feeder routes, which offer 59 per cent of potential RPKMs (revenue per kilometre). These are the non-trunk routes that Air Costa will tap into,” David added.