Bengaluru, Apr 12 (IANS): India's latest low-cost airline Air Pegasus on Sunday launched its maiden service to Hubballi in north Karnataka for providing air connectivity in the region.

Union Civil Aviation Minister Ashok Gajapathi Raju flagged off the ATR-72 turboprop service at the Bengaluru international airport in the presence of state Law and Parliamentary Affairs Minister T.B. Jayachandra and others.

Hubballi, about 400 km from here, is a major commercial centre in the region, with a cluster of small and medium industries. Its twin city Dharwad is a major educational centre in the state.

"We will operate a daily flight between Bengaluru and Hubbali in the morning. The timings will be convenient to take connecting flights to other metros and cities from here," Air Pegasus managing director Shyson Thomas told reporters.

The city-based Decor Aviation Ltd, which secured permit from the regulator (DGCA) to fly across the southern region, will launch a daily service to Thiruvananthapuram in Kerala on Monday using an ATR aircraft.

"The new routes with a regional focus will help local business and boost tourism. We see huge potential for both business and leisure travel," union minister Raju said on the occasion.

The company has invested Rs.100 crore to launch the air service, with 3:1 equity-debt ratio.

The airline plans to add three more 66-seater ATR aircraft to the two such aircraft it has on dry lease by December.

"Kadapa in Andhra Pradesh will be our third destination from Bengaluru as it has no air connectivity. We will also launch a daily service between Chennai and Tuticorin and Tuticorin-Coimbatore in Tamil Nadu when we get the additional three ATRs," Thomas said.

Using the hub-and-spoke model, the airline plans to operate daily service to other cities and towns in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana over the next two years.

The airline has permit to launch service to and from any of the 22 airports across southern India, connecting tier-two and tier-three cities with cities and metros like Bengaluru, Chennai and Hyderabad.

Air Pegasus is the ninth carrier in the country and third new airline to launch service after Air Asia and Vistara during the past 12 months.

New aviation policy to connect India with 'Bharat': Raju

A new civil aviation policy, which is on the anvil, will facilitate more airlines to connect metros and state capitals with more cities and towns across the country, Civil Aviation Minister Ashok Gajapathi Raju said Sunday.

"We want more airlines to operate across the country, connecting more cities and towns, as air connectivity is crucial for rapid economic growth. Our new aviation policy will accelerate the sector's growth and connect as many cities and towns in Bharat," Raju told reporters at a function here.

Admitting that running an airline was a tricky business and the aviation sector has gone through turbulent times, the minister said the new policy would encourage more investment in the sector, attract new players and enable the existing airlines expand their operations in the domestic and international routes.

"Our new policy will ensure sustainable growth benefiting all stakeholders, especially passengers and cargo operators. We have about 30 airports without aviation activity, which is non-productive. We need a long-term strategy to turn them around into assets," Raju said at the launch of Air Pegasus, a new low-cost regional airline, at the city airport.

The new policy, whose draft has been circulated among all the stakeholders, aims at enhancing air connectivity, developing six metro airports as international hubs, developing more airports through public-private partnership mode, rationonalising jet fuel cost, promoting air cargo, maintenance, repair and operations (MRO), helicopter operations and improving passenger facilitation.

"Taxation is a major issue in the sector. We have asked the finance ministry to exempt service tax on MROs for 5-10 years so that airlines can maintain, repair or service their aircraft within the country than sending them to Sri Lanka, Singapore and Dubai and save costs," Raju said.

In this context, he mentioned the inordinate delay in the setting up an MRO facility at Nagpur by national carrier Air India with the global aerospace major Boeing since 2006 due to tax and regulatory issues.

Similarly, Raju said he has written to all chief ministers to slash VAT on aviation turbine fuel, as 40-45 percent of the operational cost is incurred on this.

"Some (CMs) have responded, but not many of them. The tax on jet fuel ranges from four to 30 percent across states. To tax them (airlines) to death is not good. The tax on jet fuel needs to be rationalised," he stressed.

The policy also will address the issue of route dispersal guidelines (5/20 rule) and inter-connectivity, as the prevailing rule does not allow an airline to fly overseas without five-year operational experience and a fleet of 20 aircraft.

The ministry has identified six airports in Delhi, Mumbai, Chennai, Kolkata, Bengaluru and Hyderabad for developing them as major international hubs for aircraft, passenger and cargo movement.