Air Costa Cancels All Its Flights ! End Game ?
NEW DELHI | MUMBAI: Southern regional carrier Air Costa cancelled all its flights on Wednesday on payment issues with its plane lessor, becoming the second fledgling airline in barely more than a week to do so.
This comes barely two months after the government unveiled its ambitious regional aviation policy under which airlines would charge low fares and would be funded via a cess levied on carriers flying pan-Indian routes.
Air Costa's schedule showed it has cancelled flights to Coimbatore, Vishakhapatnam, Ahmedabad and Jaipur from its base in Vijaywada. While the airline claimed it will resume flying tomorrow, past stories of a cash crunch and unpaid salaries coupled with the overall financial struggles of regional carriers have cast doubts on its survival.
"From tomorrow (5-08-2016), we will start our operations as scheduled. We are resolving the issues we have with lessors. We are very positive about our operations and future expansions. There are absolutely no issue regarding salaries in Air Costa," said Kavi Chaurasia, vice president-marketing for Air Costa, said in an email statement.
A person in the know said however said its Embraer E190 jets have been grounded by the lessor GE Capital Aviation Services because of pending lease rentals. A lessor gives a grounding notice to the airline when it fails to honour its payment schedule. Ignoring the notice leads to reposession of the aircraft by the lessor, which is what happened with Kingfisher Airlines in 2012 and more recently with Air Pegasus. He also said salaries have been delayed althought not for long.
On July 27, Bangalore-based Air Pegasus cancelled all flights indefinitely, after its planes were reposessed by Dublin based lessor Elix Aviation for non-payment of dues. Its operations remain grounded. A travel company executive said it hasn't even started refunding passengers yet.
ET had on October 12 reported on the growing cash problems facing new airlines. Air Costa consistently lists one of the highest number of monthly flight cancellations and delays on the DGCA website.
Critics have questioned the government's open-handed giveaway of approvals to airlines. Between 2009 and 2014, the government issued 16 no-objection certificates, of which nine were given between 2012 and 2014. Several lapsed and the companies didn't renew them.
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Another KFA in the making ?