Tuesday, January 25 2005 14:05 Hrs (IST) - World Time -

Bangalore: Budget carrier Air One plans to launch its services from May to link cities on India's western coast and is positioning itself as a "clear differentiator" in the low cost airline market.

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 as equity, with investors from Kerala and Mangalore, besides a few Non Resident Indians (NRI), Air One Chairman and Managing Director J W Lobo told sources in Bangalore.

He said the airline is holding talks with institutions to raise additional capital for the over Rs 20 crore it plans to invest in the operations.

Lobo said Air One would be targeting the full fare paying business commuters and offers reduced rates in the visiting friends and relatives (VRF) fare aimed at individuals.

Air One plans to sell 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 we can tap and have the potential," Lobo said.