UB filed applications with U.S authorities two weeks ago for flights from India's IT hub of Bangalore to New York and San Francisco, he said.

India only permits airlines that have been operational for at least five years to fly overseas. Private airline operators have been lobbying for that rule to be relaxed as the domestic market gets increasingly crowded and competitive.

"Air Deccan will be five years old in 2008. If norms for flying abroad are not relaxed, we will fly Air Deccan," Mallya told reporters on the sidelines of a business conference.

UB (Holdings) owns 83 percent in two-year-old Kingfisher. It bought 26 percent in budget carrier Deccan Aviation in May and has made an open offer to buy a further 20 percent.

The offer was delayed after India's capital market regulator earlier this month raised queries on the funding for the offer.

Mallya said funds were already in place to cover the offer.

Deccan's managing director, G.R. Gopinath, said the firm hoped to start making a profit from the first quarter of the financial year 2008/09.

Kingfisher and Deccan, which together have more than 30 percent of the domestic market, compete with state-run Air India and private airlines including Jet Airways, SpiceJet, GoAir and IndiGo.

(Reuters)