Mumbai: Air Costa, the south Indian regional airline run by Air Costa Aviation Pvt. Ltd, has secured a no-objection certificate (NoC) from the ministry of civil aviation for pan-India operations.

The airline, promoted by Vijayawada-based construction firm LEPL Group, is expected to start flights to Delhi, Bhubaneswar, Varanasi and Pune from the summer of 2016.

Vivek Choudhary, deputy chief executive officer at Air Costa, said the airline will add an Embraer E190 (110 seater) aircraft this month to its fleet.

Choudhary said this will be followed by another plane in February 2016, taking the airline’s fleet to five.

“Pan-India operations shall commence from the summer schedule 2016," he said.

Air Costa, which has 1% market share in domestic passengers, has recently completed two years of commercial operations and carried one million passengers.

It currently has 32 daily flights and connecting nine cities such as Chennai, Bengaluru, Hyderabad, Jaipur, Ahmedabad, Tirupati, Coimbatore, Visakhapatnam and Vijayawada.

Regional airline Air Costa operates the Embraer E170 (67 seats) and E190 (112 seats) jets made in Brazil.

Since October 2013, when Air Costa launched operations, crude oil prices fell 65.82%.

Jet fuel prices account for more than 45-55% of an airline’s revenue in India.

A 4% reduction in fuel costs adds around 2% to the operating margins of airlines, according to India Ratings and Research.

However, Air Costa’s national aspirations are critical as many regional airlines had shut shop owing to high cost of operations and low demand in India.

On 31 March 2013, Mint reported that Religare Voyages Ltd, which runs Air Mantra, stopped operations of the regional airline eight months after its start because of poor bookings.

Religare Voyages is promoted by brothers Malvinder Singh and Shivinder Singh.

Air Mantra started operations in July 2012 with daily flights connecting Amritsar and Chandigarh.

It became the first regional airline to be launched in India in five years.

MDLR Airlines Pvt. Ltd, the only regional carrier that started operations in 2008, stopped flying on 1 October 2009.

Apart from MDLR Airlines, several companies, including 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 start because of high jet 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 five aircraft requirement.

Paramount Airways had also used Embraer type of aircraft with no middle seat and offered twin-class configuration.

The ministry of civil aviation had introduced so-called scheduled operator permits for regional airlines in August 2007, to increase air services to smaller cities.

Regional airlines are required to operate in small towns within one of the designated regions—north, south, west, east and the north-east region.

But they are not allowed to connect to more than one major city, except those licensed to fly in the southern region.

Ramesh Lingamaneni, chairman of Air Costa, said the next big growth is coming for tier II and III cities, adding that the airline is in the process of buying more planes to connect such small cities to metros.

In February 2014, Air Costa had signed a deal with aircraft manufacturer Embraer SA of Brazil to buy 50 jets.

Air Costa placed definite orders for 25 E190-E2s and 25 E195-E2s, which have an estimated value of $2.94 billion based on 2014 list prices.

The airline has the rights to purchase another 50 jets under the deal.

Besides Air Costa, True Jet (run by Turbo Megha Airways Pvt. Ltd) and Air Pegasus (Decor Aviation Pvt. Ltd) are operating as regional airlines.

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