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Tag Archives: Vijayawada

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

14 Monday Oct 2013

Posted by theflyingengineer in Operations

≈ 9 Comments

Tags

Air, Bangalore, Costa, Costs, fare, First, Flight, market, Pricing, Vijayawada

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.

Air Costa: Set to fly with Embraer ERJ 170 “E-Jets”

24 Thursday Jan 2013

Posted by theflyingengineer in Manufacturer, Operations

≈ 6 Comments

Tags

Air, Costa, EMB 170, LEPL, Q400, Vijayawada

(I so badly wanted to title this: “India’s second ERJ 170 series operator: Air Costa”. But we’ve learnt our lessons of a volatile industry, the hard way.)

Air Costa, the Vijayawada based operator that had initially planned to launch operations using five Bombardier Q400s, is finally taking delivery of two Embrarer ERJ 170s. These E-Jets are leased from ECC Leasing. ECC Leasing was established in 2002 to manage and remarket Embraer´s pre-owned aircraft.

Both the ERJ 170s were formerly flying for Gulf Air, and were stored in Germany. One of the airplanes was spotted when it recently received its Air Costa paint scheme from Airbourne Colours at Bournemouth, UK. Airbourne Colours specialises in painting commercial, corporate and military aircraft. The second ERJ 170 is expected to roll out of the paint shop on the 29th of January, 2013.

The two ERJ 170-100LRs are presently registered G-CHJI (MSN 17000278) and G-CHJU (MSN 17000293), and will hopefully bear their Indian registrations soon. The last time Embraer 170s (-200LR, marketed as ERJ 175) were registered in India was when Paramount Airways was operating the type, until the airline ceased operations in 2010.

Air Costa’s Operations are expected to commence in the April of 2013. Reportedly, plans are to operate from Vijayawada to Ahmedabad, Bangalore, Chennai, Hyderabad, Pune, and Vishakhapatnam. Air Costa’s promoter, LEPL (Lingamaneni Estates Private Limited), is a Vijayawada based company involved in infrastructure, power, hospitality, education and entertainment.

Air Costa LogoSurprisingly, the website has published a requirement only for captains, and not first officers or Aircraft Maintenance Engineers. [EDIT*: Experienced pilots with Jet and Turboprop experience have already been recruited and type rated . Most other staff including Engineers have been recruited and trained as well . Recruitment for Cabin Crew is still going on. Experienced crew have been taken to meet insurance requirements.] Further, as per existing civil aviation rules, the yet to take-off “airline” requires a fleet of a minimum of five airplanes, within one year of grant of operator’s permit, to continue its “scheduled passenger air transport services”. However, for a “scheduled regional air transport service”, operations can commence with just one airplane, with the condition that the fleet size grows to a minimum of three aircraft within two years, and a minimum of five aircraft by the end of five years from the date of securing the operator’s permit.

Since none of Air Costa’s planned routes are Category I (certain Metro-Metro pairs), Air Costa may very well start with a Regional Scheduled Operator’s permit.

As per existing Civil Aviation Rules, “Scheduled Regional Air Transport Service means a Scheduled Air Transport service  which operates primarily in a designated region and which on grounds of operational and commercial exigencies may be allowed to operate from its designated region to airports in other regions, except the metro airports of other regions.”

Based on available information, the fleet will comprise of Embraer 170-100s, of a yet unknown fleet strength [EDIT*: 3 additional ERJ 170s are expected, in the period of 6-8 months following the commencement of operations] . This Embraer 170 variant can seat upto 80 passengers, with typically 78 being opted for. The maximum takeoff weight of the heaviest version is 38,600kg. Being lighter than 40,000kg MTOW qualifies Air Costa to pay only 4% service tax on fuel, as opposed to as much as 30% service tax for heavier aircraft. Further, the Airport Authority of India (AAI) does not charge domestic scheduled operators any landing fees for aircraft with a maximum certified capacity of less than 80 seats. These factors bode well for Air Costa.

Why the Embraer 170?

The ATR 72-500/600 burns roughly 760kg/hr, and claims a range of around 825 nautical miles (NM) with 70 passengers at 95kg each. The Embraer 170 burns roughly 1,400kg per hour, but claims a range of close to 2,000 NM with 70 passengers, or a little less than 1,500NM with 80 passengers, at 100kg each. While it may initially appear that Air Costa has gone in for an aircraft that consumes nearly twice the quantity of fuel of the most economical-to-operate western world turboprop, operating economics seem to have possibly been traded for operational flexibility, with the speed of a jet.

For example, the longest sector that the ATR 72 is operated on, in India, is 500NM. The air distance, under no winds, between Vijaywada and Ahmedabad is around 700NM.

Although the ERJ 170 is listed at around US$28M, US$5M costlier than the US$23M listed ATR72-600, slowing sales of the 70 seat jet leads to lowered market value, which translates to attractive purchase or lease rates for operators. In 2012, Embarer produced just 22 ERJ 170 series airplanes (170 and 175), of which only 2 were Embarer 170s; the rest being ERJ 175s. In contrast, ATR produced 64 airplanes in 2012, of which 60 were the ATR 72-500 and 600: airplanes with the same seating capacity as the ERJ 170. With a backlog of 221 airplanes: ATR has the largest backlog for regional aircraft up to 90 seats. In summary, significantly lower demand for the EMB 170 may make it available for cheaper than an equally aged ATR 72. [EDIT*: They were planing on leasing 3 Q400 from Botswana but Embraer offered them a better deal that they couldn’t resist.]

The two airplanes that Air Costa is leasing were delivered to Gulf Air in the March of 2010, but were stored in the July of 2012, logging 2 years 4 months of service with the Middle East carrier. Only in the January of 2013, did the aircraft take off in the colours of their new operator.

Air Costa: A behavioural review

Air Costa’s initial announcement of the launch of its airlines with five Q-400 Turboprops, followed by its sudden change of the airplane type within less than a year reflects poor homework, preparation and research, on the part of the airline. Hopefully, the airline has well researched its routes. Further, it is hoped that the demonstrated fickle-mindedness does not reflected in its business plan, making it yet another airline that blossoms only to quickly wither away.

* With Inputs from Cyril Roy

[Images of the Air Costa airplane may be viewed here: LINK]

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