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Air Costa: Operational Costs, Market & Inaugral Flight Pushed to 15th October

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An Air Costa EMB 170 prepares for its test flight at Chennai (14th October 2013)

An Air Costa EMB 170 prepares for its test flight at Chennai (14th October 2013)

This article talks of Air Costa’s peculiarities, as well as the costs on a particular sector and the market potential associated with that sector.

Peculiarities and Image-damage

Paper_advert

Air Costa’s newspaper advertisement that appeared in leading dailies, on October 13th

Air Costa, which has been making the waves as a regional carrier with many peculiarities, including first class seats, added one more today, by achieving a 0% on time performance, on it’s launch date.

As was conveyed to the media a week ago, and published on their website, Air Costa was to have both launched and inaugurated its services today, by flying the Vijayawada-Bangalore sector. All other sectors have been mentioned as starting from 15th October, 2013.

Air Costa planned to inaugurate its regional air connectivity on the 14th of October, 2013, to coincide with the supposedly auspicious day of Dussehra. The usual 06:45IST departure and 07:45IST arrival was changed to a 10:30IST departure and a 11:30IST arrival to stay clear of a particular inauspicious time of the day.

Air_Costa_Vij-BLR_Oct_15Air_Costa_Vij-BLR_Oct_14Air_Costa_BLR-Vij_Oct_14But to the dismay of many spotters, who made their way to BIAL to catch the Embraer through their lens, it didn’t turn up. Bangalore briefing was contacted, and a spotter was told that there was no flight plan received for an “Air Costa flight 601”.

While start-up hiccups are understandable, calling for a press-meet and then changing plans without notification is operationally acceptable but image-damaging.

We do sincerely hope that this doesn’t reflect the future of an airline that had initially planned for turboprop Q400s and then switched to turbofan Embraer E-Jets (nothing wrong with a switch, as the E-jets opens up much longer routes, but reflects poor homework on the part of the airline), wants to offer low fares but doesn’t have the cabin of a low cost carrier (dual class cabin), publishes routes on its timetable, while the route map misses out those very routes, has been pushing the launch date far too many times, and promises the first flight only to revise that as well.

Sector Costs and Market Potential

How Air Costa is going to manage their costs is uncertain. The Embraer 170 on a 60 minute flight (Vijayawada-Bangalore) consumes, on average, approximately 900 liters of ATF. At the present ATF prices at Bengaluru, and 4% sales tax, this translates to INR 60,000. Including fuel, the operational cost is estimated at a very conservative INR 300,000 – 400,000, which will actually be much higher for a start-up airline. If we are to divide this by the 66 seats on board the airplane (60 economy + 6 first class), this translates to about INR 4,600 – 6,000 per seat, or INR 5,000 – 6,700 per seat neglecting the first class seats. Being regional, seldom will their aircraft fly with a 100% load factor, which further pushes up the cost per seat. It is further unlikely that there will be many takers for the expensive “Economy Plus” seats: the economy seats on an Embrarer are very comfortable, both in pitch and width, and upgrading to a first class seat on a 60-minute flight does not make much sense.

For a flight one month from today, Spicejet’s direct flight from Vijayawada to Bangalore is priced at INR 3,172, all-inclusive, per person. Air India, with an inconvenient stop, offers seats for 3,671 per person, and Jet Airways’ direct flight INR 5,187 per person. However, based on the fact that the Jet Airways’ 08:15 departure is the most convenient, there is a higher demand for that flight. If a person from Vijayawada wishes to wrap up business at Bangalore, in a day, he may pick Air Costa’s early morning 06:45 departure, reach Bangalore at 07:45, reach the heart of the city by 10:00am, wrap up business by 13:30, and pick the only convenient return flight at 16:40. But Air Costa will have to price economy at no less than INR 6,000 per economy seat, to break even at 90% economy-cabin load factor (54 seats), to prevent themselves from bleeding.

Air Costa’s Vijayawada-Bangalore economy all-inclusive fares start at INR 2,284 and progresses through 2,798, 3,323, 6,314 and upward based on demand, but still staying lower than the competition. How this pricing pattern covers operational costs, if ever, will be interesting to observe, as these are inaugural fares priced at INR 9, adding up to the above mentioned figures due to surcharges, fees and taxes.

Air Costa’s Bangalore-Vijayawada and Vijayawada-Bangalore may have the highest passenger loads among all carriers, simply because of the convenient timing, and pricing, if the fares continue to be priced the way they are.

It will be interesting to watch the growth of this regional airline, in the hands of an aviation first timer. You may notice a stark difference between the way Air Costa handles things and the way in which Air Asia India will manage their show.

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9 thoughts on “Air Costa: Operational Costs, Market & Inaugral Flight Pushed to 15th October”

  1. Nice article. Very well researched.
    just one correction, 07:45 IST Arrival.

  2. prashanth said:

    I am sure its DGCA & Other Aviation Department that caused in delay of this airline to start operation , if at all its just as per rules then its never a problem unfortunately we know the facts of government .

    & Talking about Newbie (Air Costa Managment ) , it will have to get on with DGCA and other Departments for which it will definately take some time .

    At the end of the day it did its first flight . (So cheers for it ) and please dont give a quick judgement about this Airline because it does effect its image .

    • As mentioned in the article, “operationally acceptable but image-damaging”. We do understand what causes an airline to not take-off, or have a delayed start. But neither of us can do anything about the image. The ones flying are the public, not us, to whom the image is everything.

      It didn’t fly where it was supposed to (VGA-BLR). No quick judgements about the airline. The facts speak, and will speak for themselves. 🙂

    • liyakahath said:

      DGCA HAS NOTHING TO DO WITH THIS ONCE THE AOP IS ISSUED AND OTHER FORMALITIES HAVE DONE THEN THERE IS AN APPROVAL FOR GO SITUATION ITS BECAUSE OF THE NEGLIGIENCE OF THE AIRLINERS THAT THEY HAVE POSTPONED IT…..JUST DONT SPEAK ANYTHING

  3. ATPL 4xxx said:

    Flying Engineer, with all due respects, you have got many facts wrong
    .
    1. Air Costa had plans to operate in bangalore but was changed to HYD long time ago due to political reasons.

    2. Air Costa ‘s first flight on 14th was not for the general public but on Invitation basis only. So it was based on a charter basis with no operational timings so where does the delay come from ?

    3. Air craft has 60 + 7 seats instead of the 66 seats you are mentioning.

    4. VGA-BLR block time is 1 hour but the flight time is no more than 45 minutes.

    5. You will be surprised by the load factor on the “Economy Plus” class. People in short sectors fly Premium Class for privacy more than comfort.

    6. Air Costa’s scheduled LB 601 has already operated into bangalore as I reply to you with a delay 9 minutes and a turn around in bangalore of 28 minutes which has even surprised the management of the efficiency especially at start up phase of the airline.

    I really suggest you get your facts right before your blurt out such harsh criticism on an start up airline that has commenced operations after braving so many storms.

    If you think dealing with DGCA bureaucracy for a pilot license is known to be hard
    then I ll let it to your imagination the hassles when starting an airline. Its insane.

    ps. Air Costa’s economy and economy plus seats are the most comfortable ones being offered in India at the moment.

    • Dear ATPL 4XXX,
      1. Thank you for that info, I wasn’t aware of them wanting to start from Bangalore.
      2. I am well aware that the 14th Oct flight was intended to be for PR purposes, not for revenue generation.
      3. I have been a little concerned with that. DGCA mentions 67 seats, but the only config that makes sense, is 6+60. I am eager to fly on board the Air Costa EMB170 to see were that extra 1 seat is. But that still doesn’t affect my calculations, much.
      4. I am aware of the block time. The fuel mentioned is very obviously for the sector distance, not for the time, although mention has been made to the block time. We wouldn’t pride ourselves in aviation if we did it that way, would we?
      5.I wouldn’t be surprised. I just am certain that 100% is difficult. I mention very clearly that you may rake up some good LFs.
      6. Very good to hear! BTW, another post of mine covered that. Today. Almost as soon as the wheels were down.

      There is no harsh criticism. As you can very well read, I do mention “While start-up hiccups are understandable, calling for a press-meet and then changing plans without notification is operationally acceptable but image-damaging.”. The way I see it, most of my facts are right. When you see the ways in which IndiGo and Air Asia started (start) and operate, you’ll see the difference. I am well aware of how difficult it is in this country to do anything in aviation. But the false-start promises were based on poor homework, leading to speculations that better-prepared airlines refrain from making public.

      If you see, I do mention the seats being really comfortable in earlier posts. Please read them.

      An airline makes/breaks its own image. Noone else.

    • chandrakanth said:

      While I can understand the hiccups of a start-up airline, I find it difficult to understand why the Corporate Communications department is not professional or savvy. I am a journalist and called up the Corp. Com head so many times, no response. Only once he picked the phone and said would get back. I sent mails, questions for the interview, sms stating that I had mailed the questions….. but no reply.

      In the article you have mentioned Air Asia, I sent a mail to Mr. Tony Fernandes and I got a prompt reply.

      I think that differentiates ……

      Thanks
      Chandrakanth

    • What is the current status of the airlines?

  4. All the Best to Aircoasta… please get your flight details in all travel websites to make it convenient….

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