Air One, promoted by former Indian Airlines officials and headed by an entrepreneur, will fly 50-seater Brazilian Embraer ERJ jets, linking small towns to major cities, but will avoid the highly competitive trunk routes.
The Bangalore-based Air One has raised Rs 14 crore (Rs 140 million) as equity, with investors from Kerala and Mangalore, besides a few non-resident indians, Air One chairman and managing director J W Lobo said.
He said the airline is holding talks with institutions to raise additional capital for the over Rs 20 crore (Rs 200 million) it plans to invest in the operations.
Lobo said Air One would be targeting the full fare paying business commuters and offer reduced rates under 'visiting friends and relatives' fare category, aimed at individuals.
Air One plans to sell a majority of its tickets, paid in advance by passengers on the Internet, replicating the success of India's first budget airline Air Deccan, which does not offer credit even to its travel agents.
Lobo said Air One will begin with one leased aircraft and by the year-end plans to fly five Embraer jets in the country. "We are not competing with any one. There is a niche market, which can be tapped," Lobo said.