The "no frills" service launched by Air Deccan to connect Bangalore, Tirupati, Hyderabad, Rajmundhry, Vijaywada, Belgaum, Hubli, Mangalore, Cochin and Madurai will be 50 per cent cheaper than those offered by Jet Airways, Sahara and Indian Airlines.
The Bangalore-Chennai fare on Air Deccan is Rs 1,650, while those on Jet Airways and Indian Airlines are Rs 3,405 and Rs 3,020, respectively. A Mumbai-Belgaum ticket on Air Deccan costs Rs 2,425, while the other domestic airlines do not operate in this sector.
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Similarly, a Chennai-Rajamundhry flight will cost Rs 3,200 in the case of Air Deccan. Jet Airways and Indian Airlines do not operate in this sector.
The airline also plans to launch a nationwide low-cost service.
Business travellers are expected to benefit hugely from the airline's return flights on the same day. Those travelling to a city for a day's job can fly back the same day, thereby saving on accommodation and food expenses.
Tickets can be booked any time through the telephone or the Internet, or purchased at cash remittance points like ICICI Bank or Thomas Cook. While Bharti has been outsourced the task of handling phone calls, the Delhi-based Inter Globe Technology will look after the Internet reservation system. Citibank will handle all credit card transactions.
Till August 31, Air Deccan will fly only to Hubli and Mangalore. From September 1, it will start flights to all other major towns in Karnataka, Tamil Nadu and Andhra Pradesh. By November, when the company will operate six aircraft, it will translate to 75 flights per day.
Without revealing the details on investments made so far, the company said it was targeting Rs 250 crore (Rs 2.50 billion) in revenue during the first year of operations, which was expected to double in the following year.
It has bought two 48-seater aircraft on dry lease for five years from France-based chartered flight manufacturing major ATR at nearly $70,000 per month.
An organisation set up by a group of professionals from Army Aviation, Air Deccan's individual investors include S N Ladhani, one of the largest bottlers for Coca-Cola India, and two businessmen from Japan and Hong Kong.
Though Air Deccan claims that it is not competing with other domestic carriers, the no-frills service is expected to hit the latter's margins.
With one air hostess per flight, the airline will not have any elaborate meals served on board. Air Deccan Managing Director G R Gopinath says: "Since our business model is strong, we will aim at managing costs and not revenues."
Though day-to-day inspections will be carried out by Air Deccan, ATR will look into the overall maintenance of the aircraft.
In the case of an emergency, the airline has parts worth $3 million on site. As per the terms of the agreement with ATR, it has access to parts worth $20 million in Toulouse, France, which will be flown in within 48 hours of an emergency.
The company has bought a group insurance policy of $200 million in the case of an air crash. As per the policy, passengers will be entitled to a minimum cover of Rs 750,000 each.
