By Jeffrey Hodgson TORONTO, Feb 8 (Reuters) - A consortium led by the former president of bankrupt carrier Canada 3000 unveiled a C$550 million ($344 million) proposal on Friday to launch a regional airline operating from Toronto City Centre Airport. Regional Airlines Holdings Inc., headed by veteran airline entrepreneur Robert Deluce, said it is seeking government approval and hopes to start operating in September 2003. The plan includes the building of a new terminal and bridge to the airport, located on an island in Toronto Harbour in Lake Ontario. The proposed airline would operate about 15 prop planes and offer flights to destinations within 90 minutes of Toronto. Canadian destinations would include Ottawa, Montreal, Quebec City, Sudbury, Sault Ste. Marie, Thunder Bay, Timmins and Windsor. The airline would also fly to Detroit, Cleveland, Cincinnati, Chicago, Pittsburg, Philadelphia, Washington, Boston and New York. If it's cleared for take off, the new venture will find itself in a tough environment. The Sept. 11 attacks drove former No. 2 airline Canada 3000 into bankruptcy last year, while dominant carrier Air Canada (AC) racked up a record C$1.25 billion loss for 2001. But Regional Airlines chief executive Deluce, whose family founded Air Ontario and who was Canada 3000's president from 1988 to 1995, said the group has studied the market for more than 18 months and is convinced demand is there. "It's a niche market that allows us to compete with the dominant monopoly carrier on a level playing field. As long as we get the slots that we need and can roll out our business plan in a comprehensive way, it will succeed," Deluce told Reuters. "We're not coming at this without good financing. We know that starting airlines today requires good capital and we're prepared for that." Deluce declined to name any of the consortium's members or financial backers, but said they have access to C$550 million in capital financing. Around C$50 million would be needed to build the new terminal and the bridge to the airport, now reached by ferry. The remainder would be invested in the airline. The initiative would take the form of a private-public partnership. Deluce said it would be fully financed by the private sector and require no government money. But the group needs the City of Toronto's permission to build the fixed link and is asking the Toronto Port Authority to be its partner. It also needs the federal government to allocate it large aircraft slots at the airport. Regional Airlines said it will use Q400 turboprops manufactured by Bombardier (BBDb) rather than jet aircraft, so no runway extensions or changes to environmental restrictions would be needed. If the Regional Airlines proposal succeeds it may be entering a crowded market. Former Canada 3000 chief executive Angus Kinnear told Reuters in January he hopes to launch a scaled down version of the bankrupt airline by May 23, with a fleet of 10 planes. A number of other small players have proposed start-ups in the wake of Canada 3000's demise. ($1=$1.60 Canadian)