Budget carrier Air Costa eyes IPO in three years

India's newest budget airline Air Costa Ltd, which started operations last October, is mulling to go public over the next three years as it hopes to clock profit in the upcoming fiscal starting April 2014, according to a report by Bloomberg.

The Vijayawada-based regional carrier has also been approached by a few investors and may look at selling stake in the company after some time, Air Costa's chairman Ramesh Lingamaneni told the global news agency.

Currently, the airline is operating a dozen flights a week with two aircraft and had recently placed an order for 50 jets with Embraer, the world's largest maker of regional aircraft. It placed an order for 25 of the E190-E2s and 25 of the E195-E2s model and retained purchase rights for an additional 50 aircraft.

So far, real estate and renewable energy company LEPL Projects Ltd, formerly known as Lingamaneni Estates group, has invested around $100 million in Air Costa and is looking to invest further to augment its presence.

The airline currently flies to six destinations and is looking to add three more destinations once it obtains approval for its two more aircraft to fly, Lingamaneni said, adding that the focus of the airline will be connecting tier-II and III cities with metros.

Meanwhile, another budget carrier AirAsia India is gearing up to fly and will compete with other budget carriers such as IndiGo, SpiceJet and GoAir besides some new players such as Air Pegasus. In February last year, Malaysian budget carrier AirAsia had formed a JV with Tata Group and another local business partner Arun Bhatia to operate a domestic low-cost airline.

Airport ground handling services firm Décor Aviation is setting up a new low-cost carrier which would start with regional flights in the south India under the banner of Air Pegasus. The carrier, which is expected to commence operations in the next two months, will have Bangalore as its hub.

(Edited by Joby Puthuparampil Johnson)

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