Mumbai: Low-fare regional airline Air Pegasus started its commercial operations on Sunday with a daily flight to Hubli and Thiruvananthapuram, to and from Bengaluru.

Bengaluru-based Air Pegasus is the third airline to be launched in India in the past year, after AirAsia India and Vistara.

This Decor Aviation Pvt. Ltd-backed start-up was scheduled to launch services in December 2014 as per the original plan but this was later postponed to mid-February. The airline received its operating permit from aviation regulator Directorate General of Civil Aviation (DGCA) on 24 March.

Passengers on the maiden flight to Hubli on Sunday included Ashok Gajapathi Raju, civil aviation minister, Hari Marar, president—Bengaluru International Airport Ltd. and V.S. Krishna Kumar, chairman of Canara Bank.

Hubli, which has the largest number of government offices in Karnataka outside of Bengaluru, is the commercial centre and business hub of the north Karnataka region with a wide cluster of small and medium industries.

“Connecting to the country’s IT (information technology) capital Bangalore (Bengaluru), the newly launched flights will boost the economies of these two towns, by simplifying the travel options for both in-bound and out-bound passengers," said Shyson Thomas, managing director, Air Pegasus.

Thiruvananthapuram is the capital of Kerala and contributes 80% of the state’s software exports and is a major IT hub.

Civil aviation minister Raju said the new routes with a regional focus will help local business and boost tourism, opening up potentials in both business and leisure travel.

The parent of Air Pegasus Decor Aviation is part of the Decor Group of companies that provides ground handling services to Indian and foreign carriers across 11 airports in India.

Air Pegasus plans to scale up services gradually to connect Kochi, Chennai, Belgaum, Rajahmundry, Puducherry and Madurai.

Air Pegasus faces competition from established names such as SpiceJet and start-ups such as FlyEasy in the southern region.

According to consulting firm Capa India, Indian airlines have accumulated over $10 billion in losses and closer to $16-17 billion of debt over seven years, while the airline industry requires around $2.5 billion in the next 12 months to fuel expansion and meet operational expenses.

In the past 10 years, the industry saw the grounding of Kingfisher Airlines, Air Deccan (which had merged with Kingfisher), Air Mantra, Deccan 360, MDLR Airlines, Paramount Airways and Indus Air. That hasn’t deterred potential new entrants. Besides Air Pegasus, more airlines such as Air One, Zexus Air, Premier Air, Turbo Megha, Air Carnival and Zav Airways are waiting to take to the skies.

In the long term, Air Pegasus hopes to launch international services to Malé and Dhaka.

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