Page 23 - AAA MARCH - APRIL 2015 Online Magazine

FEATURE AVIATION BUSINESS

“This will help improve the balance LEPL Group, is in talks with Private over the past couple of years. But growth
sheets of the new airlines,” says a senior Equity (PE) players to raise funds for its is expected to soar to double digits by
officer at the Ministry of Civil Aviation. expansion plans, says Choudhary. 2015-16, helped by economic recovery,
Air Costa , another low-cost carrier, The low-cost airline, which has relatively smaller price hikes and
based out of Vijayawada in southern India, clocked 4.5 billion rupees revenues since enhanced connectivity. Economic growth,
will be adding two Embraer E-190s to its the launch of its operations, is confident of after being sub-5% for two consecutive
existing fleet of four aircraft by September achieving break even in the next one-and- years, is expected to pick up in 2014-
as the airline looks to apply for a pan-India a-half year despite competition heating 15 and 2015-16. Also, the launch of new
licence this April. up with new players foraying into the civil routes and direct connectivity between
“In 2015, we will lease two Embraer aviation market. smaller towns will help passenger traffic
E-190 aircraft. One is slated to be delivered As part of its pan-India expansion, the growth,” Prithiani says.
in August, the other in September,” says airline plans to add 100 additional staff by end
Air Costa chief financial officer Vivek of this year to the existing strength of 750.
Choudhary. According to Prithiani, at an aggregate
To support pan-India expansion of level, the domestic carriers are expected
its operations, Air Costa, which has to post an operating profit of 81 billion
completed over one year of operations, rupees in fiscal 2016, a total shift from
had last year placed an order for 50 from the 15 billion rupees loss posted in
aircraft valued at US$2.94 billion. The fiscal 2014.
aircraft will be used to launch a slew of The profitability is likely to be driven by
flights to newer destinations. factors such as improvement in demand
Currently, the airline operates in and, therefore, passenger load factors
nine locations - Ahmedabad, hyderabad, (PLFs), a largely stable rupee-dollar
Chennai, Bangalore, Coimbatore, Jaipur, exchange rate and, most importantly, a
Tirupati, Vijayawada and Visakhapatnam. steep fall in crude oil prices. Vistara is enthused by the
Air Costa, which is carrying out “Domestic air traffic has remained government’s proposed move
demerger of the airline from its parent almost flat at about 60 million passengers to replace the ‘5/20’ rule
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