Vijayawada-based airline Air Costa currently flies from its base to cities like Ahmedabad, Bangalore, Chennai, Jaipur, and Hyderabad. However, chairman Ramesh Lingamaneni has plans for a pan-India presence by the end of the year and has already placed orders with Brazil?s Embraer SA for 50 E-Jet E2 planes, estimated to be priced at about $2.94 billion, with purchase rights for an additional 50 jets. In an interview with Rhik Kundu, Lingamaneni discusses his strategy. Excerpts:
In February, Air Costa inked a deal for 50 jets worth $2.94 billion with Embraer SA of Brazil. What next?
Air Costa has become the first customer of E-Jet E2s in the Indian aviation market. We will have 8-10 aircraft delivered by March 2015 and plan to add four aircraft every year ? one aircraft each quarter ? until 2018 when the new order joins.
Are you looking to expand your operations in India?
We are planning to expand our operations by March 2015. Our strategy is to serve the Tier-II and III cities and connect them to the Tier-I cities.
At present, since we hold a regional operator licence, we can?t connect major metros or Tier-I cities. But we plan to get a pan-India permit before this year end.
Several regional airlines like MDLR, Jagson, King Air and Star Aviation have found survival tough in an industry, which has incurred huge losses every quarter for the past few years. What is your strategy to survive in this market?
Our research and analysis convinced us that there is a wide scope for development in trade and commerce in Tier-II & Tier-III cities, which has been lacking proper air connectivity. So, we connected these markets with our services. We believe that running a successful airline is no different from any other business. Our strategies have involved robust planning, timing the launch, long-term vision and sustainability.
What cities do you currently fly to? What are the new destinations you are looking to connect?
Currently, we fly to Ahmedabad, Bangalore, Chennai, Jaipur, Hyderabad and Vijayawada. We are connecting to Visakhapatnam, Coimbatore and Madurai in our summer schedule.
What?s the current size of your fleet and how many flights do you operate on a daily basis?
Our fleet comprises the contemporary two Embraer E-170 and two E-190 aircraft. We are operating with 18 flights connecting seven sectors.
You had earlier said that you will come out with an IPO three years after turning profitable. When do you see yourself turning profitable?
We will make profits by March 2015. As for the IPO, we would be able to comment better on this a year from now.
Since the launch in October, what has the airline?s average load factor been like?
We have seen impressive growth in passenger load factors since the launch. The average load factor has been 70-75 % for October-February period.
