Air Costa, a Vijayawada-based airlines, officially wound up operations after the Directorate General of Civil Aviation (DGCA) suspended its flying licence on Sunday.
This came almost three months after the airline suspended its flight operations over financial difficulties in March.
Stating that the airline could permanently lose its license, if it did not begin its service in the next two months, Deccan Chronicle reported that Air Costa CEO Vivek Chowdary was considering options to overcome the crisis, including getting private equity to restart the services.
With its first flight taking off in 2013, the airline was operating daily service to eight cities, including six in the southern region--Bengaluru, Chennai, Hyderabad, Tirupathi, Vijayawada and Vizag and two in the western region--Ahmedabad and Jaipur.
Though the low-cost airline had four Embraer jets with a capacity to fly 112 passengers in each of them, two were grounded at the Hyderabad airport after they were impounded by GE Capital Aviation Services for defaulting on payments.
The budget carrier had around 600 employees at one point, and was founded by LP Bhaskara Rao, a realtor.
The airline had reported a Rs 130 crore loss on revenue of Rs 327 crore for fiscal 2015-16.
DGCA data for December-2016 also showed that Air Costa had the highest number of cancellations at 13.65% and its market share was 0.6%.
During the shutdown in March, Air Costa's Marketing Vice-President Kavi Chaurasia told IANS, "We have suspended our services since February 28 and stopped bookings till March 15 for operational reasons. We will announce our revival plans on March 15. We have grounded our two Embraer aircraft. We are talking to investors for infusion of investments as we are facing fund crunch"
However, it did not restart its operations.
Reports add that Air Costa is the third regional airline to face action in the last eight months, besides Air Carnival and Air Pegasus.