Continental Airlines -- "The Proud Bird with the Golden Tail," as it has in the past billed itself -- yesterday began twice daily nonstop service to Houston from Dulles International Airport.

While two singers with guitars played and sang "Yellow Rose of Texas" and "Home on the Range," the first passengers to board the first flight from Dulles were handed yellow roses and straw cowboy hats by Continental employes.

Some of the passengers getting off the first Continental flight from Houston moments before had on their own cowboy hats.

Continental's new service features its unique "economy" fare 20 or 25 percent below the regular coach fare, depending on the day of the week, with no restrictions on each flight. In addition, Continental offers discounts of up to 40 percent on advance purchase fares such as Freedom and Super Saver.

For instance, while Continental offers a Club Coach fare of $126 one way to Houston -- the same as other airlines' regular coach fare -- Continental also offers the unrestricted Economy fare of $101 weekends and $95 weekdays. The only difference between Club Coach and Economy is that full meal service is not provided on the discount ticket.

Passengers will be able to connect to Continental flights to Austin, San Antonio, Midland/Odessa and El Paso through Houston.

"It couldn't have happened without deregulation," Harvey J. Wexler, Continental's senior vice president for international and governmental affairs, said at yesterday's inaugural. He noted that beginning May 1, passengers will be able to fly to Australia from Dulles on Continental.