Air Deccan, the country's well-known chartered aviation major, will launch its low cost regional service on Monday, with prices up to 50 per cent less than conventional rates.

Air Deccan will initially fly to Hubli and Mangalore till 31 August. From 1 September, it will commence its operations to all other major towns in Karnataka, Tamil Nadu and Andhra Pradesh.

Though the company has not disclosed the investments made thus far, it is targeting Rs 250 crore (Rs 2.50 billion) in revenues for the first 12 months of operation, which is expected to double in the following year.

Announcing the launch of Air Deccan, managing director, G R Gopinath, said the airline will commence operations with two 48-seater aircraft, which has been obtained on dry lease from the French-based aviation major ATR.

Return flights on the same day will result in huge cost savings by business passengers. By November, when the company will operate six aircraft, it will translate to 75 flights a day. The reporting time being 45-minutes before time of departure, the baggage limit per passenger is 15 kg.

Gopinath also expressed happiness on the directives taken by the governments of Andhra Pradesh and Karnataka in reducing the sales tax for regional airlines.

While Andhra has completely abolished this tax, Karnataka has reduced it from 25 per cent to 4 per cent. "The Karnataka chief minister has also issued a directive to officers who holds the rank of a tahsildar or above, to travel by Air Deccan for official purpose. As ticketing procedure has been made simpler via a phone call or the Internet, we will take off from the tarmac within 15-20 minutes from the time of departure. This faster we are able to do this, we will be able to reduce our costs. We will manage costs and not revenues," Gopinath said.

While the call centre connectivity has been outsourced to Bharti, the Internet reservation system will be handled by the Delhi-based Inter Globe Technology.

The company has tied up with Citibank, Bank of India and ICICI to handle its ticketing through the Internet at www.airdeccan.net. Citibank will be the payment gateway for all credit card transactions. Those who would book tickets on phone, will be given a PNR number, which can be taken to strategic points such as Thomas Cook or ICICI, where an e-ticket can be obtained on up-front payment.

Despite a 50 per cent tariff reduction, Gopinath noted that nearly 30 per cent of the amount will go towards various taxes, of which 12 per cent alone is passenger security fee.

Air Deccan will have 16 Indian pilots who have already completed training. The company's head of operations and chief pilot is Rajiv Kotiyal, the man who test-flew the light combat aircraft, which has been indigenously-developed by the HAL. The company already operates nine helicopters and has nine air bases in the country. Air Deccan has a 240-strong work force.

Though the day-to-day inspection will be carried out by the company itself, ATR will look into the overall maintenance of the aircraft. In case of an emergency, Air Deccan already has parts worth $3 million onsite, and as per the terms of the agreement with ATR, it has access to parts worth $20 million in Toulouse (France), which will be flown within 48 hours during the time of need.

The company has taken a group insurance policy of $200 million in case of an aircrash. As per this policy, a passenger will get a minimum cover of Rs 750,000.