Air Costa
Air Costa airline has not being paying salaries to its employees since June this year. Pictured: An Air Costa flight readies for takeoff.Wikimedia commons

Regional airline Air Costa has not paid salaries to its employees since June this year. The debt-ridden airline's Human Resource Chief AVP Kavitha Yarlagadda apologised for the lapses, according to letters reviewed by the Economic Times.

A week ago, Air Costa's Vice President Marketing Kavi Chaurasia sent out an email to the publication stating that there were "absolutely no issues regarding salaries." It is believed that Air Costa also has irregularities in rostering. "For example, a pilot is flown in as an additional crew member in a flight, which lands at 10:30 p.m., has to operate a flight the next morning at 5:15 am. In between, he is not given hotel accommodation," an employee told the publication on condition of anonymity.

Air Costa stake sale

Meanwhile, Air Costa is in talks with Qatar Airways for an equity tie-up. According to a report published in the Hindu, the Vijayawada-based regional airline's top management was in Doha to hold talks with Qatar airways.

Air Costa is willing to sell 26 percent equity shares to the Doha-based carrier. However, it will sell a higher stake in case the regional airline gets more funds. According to reports, last year the airline was in talks with foreign airlines for a stake sale to generate funds worth Rs. 350 crore.

Halting operations

Air Costa is also the second airline in the country, after Bangalore-based carrier Air Pegasus, to halt its operations due to a financial crunch.

The carrier had received a licence to operate flights across the country last year. However, owing to non-payment of dues, its flights were cancelled for a day. "There are some payment issues with our lessor GE Capital Aviation Services (GECAS), which are being sorted out. Tomorrow i.e. on August 5, we will start our operations as scheduled," an Air Costa spokesperson had said last Thursday.

The airline covers six Indian states — Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Rajasthan and Gujarat. It flies 24 flights daily to nine destinations and is reportedly planning to start operations from Varanasi and Delhi in the near future.