Starting November 25, the low-cost airline, formerly known as Air Speed Up, will operate four flights daily between Ho Chi Minh City and Hanoi, and two on the HCMC-Da Nang route with its leased 172-seat Boeing 737-800.

It plans to expand to other cities next year and explore international routes after 2009, Do Anh Tuan, the airline’s commercial director, said at a ceremony Friday.

He said Indochina Airlines would lead a “new generation” of carriers, charging costs of budget airlines but “offering traditional services.” Tuan said the new airline, which aims to carry one million passengers in its first year, would focus on promotion to attract passengers.

The government opened the door to private airlines last year, but stipulated a minimum registered capital of VND200 billion (US$12.5 million) for domestic carriers and VND500 billion ($30.2 million) in case of international services.

It has since also issued a license to another private carrier, VietJet Air, while Mekong Aviation is awaiting approval.

State-owned Vietnam Airlines and its subsidiary Vasco are the only other airlines flying domestic routes.

Reported by Minh Quang