Come August 26, India's first no-frills airline, Air Deccan, will unveil the mother of all airfare wars.

Delhi-Mumbai air travellers can now fly by paying just Rs 500 plus Rs 200 as passenger service fee. Bookings, however, have to be done 90 days in advance and can be done only on the Internet at www.airdeccan.net or through the airline's call centre.

The aggressive price is certain to stun all domestic airlines, not to mention the India Railways too.

"We will be offering various price bands and the lowest ticket price in this sector will be Rs 500," said GR Gopinath, Managing Director, Deccan Aviation.

At Rs 700, a Delhi-Mumbai ticket slightly more than 10 per cent of the existing economy airfare of Rs 6,445 and very close to the Rs 421 second-class Delhi-Mumbai railway ticket.

In other sectors, Air Deccan's services are about 50 per cent lower than the normal full-service operator, though in no sector does it offer tickets at less than Rs 990. The world over, low cost carriers operate at about half the costs of a full-service airline.

Air Deccan has obtained parking slots at the Indira Gandhi International Airport and will launch two daily flights connecting Delhi from August 26.

Gopinath says two brand new Airbus A-320 planes have arrived and a third one is expected this weekend. ''We have also signed up with Jet Airways for check-in counters,'' he said adding the airline has worked out a great business model to give passengers value for money.

Gopinath said that fares go up as seats fill up. If a passenger books early, he pays less. As more seats get booked, the fare goes up too. Air Deccan planes will sport advertisements of Sun Microsystems, NDTV, etcetera inside as well as on the exterior.

The Bangalore-Delhi flight will depart at 0550 hrs, Delhi-Mumbai at 0855 hrs, Mumbai-Bangalore at 1130 hrs, Bangalore-Mumbai at 1345 hrs, Mumbai-Delhi at 1600 hrs and Delhi-Bangalore at 1830 hrs.

Air Deccan plans to expand its network across the country, giving a run for their money to big operators like Indian Airlines, Jet Airways and Air Sahara on main routes.

A Delhi-Bangalore ticket on these airlines costs over Rs 10,000. On Air Deccan, it will be for around Rs 7,000.

A new concept called dynamic pricing yield management has been put in place. Here, 45 seats on every flight will be available at prices starting Rs 500 per seat to Rs 3,000.

The next range will be for 90 seats costing between Rs 3,000 and Rs 5,000 and the third range of 45 seats will be available between Rs 5,000 to Rs 7,000 (prices Delhi-Bangalore sector), said agency reports.

The Bangalore-based airline has been operating short-haul flights in South India with quick turnaround times, which ensure higher aircraft utilisation. Money is saved by having more seats in the aircraft, cutting down in-flight services and using only one type of aircraft for the fleet to minimise maintenance costs.

Air Deccan has now signed up for nine Airbus A-320 aircraft. While seven aircraft are on firm order, the airline also has the option of taking another two.

Air Deccan said it is expecting revenues of $120 million in the current fiscal. "We expect revenues of $120 million during 2004-05 fiscal and have positive cash flows in the last two months while the average occupancy is 83%," Gopinath said after inaugurating the Mumbai-Surat and Surat-Bhavnagar-Mumbai flights.

The airline, which was launched nine months ago, would induct eight 48-seater ATR aircraft by March 31, 2005 taking the total ATR fleet to 15, he said adding five ATRs, which would be inducted in September, would be deployed on the Delhi-Dehradun, Delhi-Ludhiana, Delhi-Agra, Agra-Jaipur and Delhi-Kanpur sectors.