Air Costa temporarily suspends flights, salaries delayed2 min read . Updated: 28 Feb 2017, 09:03 PM IST
Regional airline Air Costa's two airplanes were impounded by lessor GE Capital Aviation Services after it defaulted on payments
New Delhi: Air Costa, which said on Tuesday it is suspending its operations temporarily, has not paid salaries for January.
The regional airline’s two airplanes were impounded by aircraft lessor GE Capital Aviation Services(GECAS) on Monday after Air Costa defaulted on payments.
The airline has returned its third plane a few weeks back and is now left with none.
The employee said that with “January salaries yet to come, we are a little worried now".
Air Costa has suspended operations for two days and is taking bookings from 3 March onwards, the airline’s spokesman said.
He added that salaries are paid by the 15th of the following month, admitted to a delay, but said they would be paid out soon.
The spokesman said the airline is in talks to arrange funds and has already spoken to GECAS about the subject.
It hopes to close some funding this week itself, he said.
Air Costa has about 600 employees mostly based out of Vijaywada, its headquarters, and Jaipur, Ahmedabad, Hyderabad, Tirupati, Chennai, and Bengaluru.
The airline uses Brazil-made Embraer planes and has ordered 50 which are to be delivered starting next year.
In August 2016, Air Costa grounded operations because of similar financial issues with its lessor but restarted operations after a few days.
“The last time was comparatively very tough but we came out of it," the spokesman said.
“We are very hopeful that funds will come soon."
Regional airlines have had a hard time in India in recent years even when they are backed by big business houses.
Religare VoyagesLtd, which operated Air Mantra, stopped operations eight months after its launch in 2013 because of poor bookings. Religare Voyages was promoted by brothers Malvinder Singh and Shivinder Singh.
MDLR Airlines Pvt. Ltd, the regional carrier that started operations in 2007, stopped flying in 2009.
Star Aviation Pvt. Ltd, ZAV Airways Pvt. Ltd, Jagson Airlines Ltd and King Air Pvt. Ltd, were licensed to fly as regional carriers, but none of them could launch because of high aviation fuel prices and the economic slowdown of 2008.
Significantly, Paramount Airways Pvt. Ltd, a scheduled airline that had a substantial southern focus, suspended operations after the aviation regulator cancelled its operating licence when it fell short of the minimum requirement of five aircraft.
These airlines had come up after ministry of civil aviation had introduced the so-called scheduled operator permits for regional airlines in August 2007, to increase air services to smaller cities.
In 2016, the ministry released a new regional policy called Udan. The difference this time is that it is providing monetary subsidy from a Rs500 crore corpus to smaller airlines.