Air France Pushes Regional Offering With Hop! Discount Unit

Air France-KLM (AF), Europe’s biggest airline, said it will create a regional travel subsidiary as it seeks to regain market share from low-cost competitors on short and medium-haul destinations.

The division, a fully-owned subsidiary of the carrier’s main French unit, will be called HOP!, operate a fleet of 98 aircraft and offer 530 daily flights, the company said at a press conference in Paris today.

“HOP! aims to become the reference airline on inter- regional routes in France and Europe with a competitive offer, quickly adaptable to market changes and competition, for business or leisure travel,” Air France said in a statement.

Air France is following other airlines such as Deutsche Lufthansa AG (LHA) in creating a discount short-haul subsidiary as established carriers feel the squeeze from no-frills competitors. The Hop! offering would also help Air France feed passengers into the Paris-Charles de Gaulle hub for long-haul routes.

The regional airline would seek to reach break even by 2014 or 2015, and will garner as much as 900 million euros ($1.21 billion) in revenue initially, on a loss of as much as 30 million euros, the company said.

The airline said Jan. 7 that it would introduce a discount fare on short-haul routes from France, in a push to stem the loss of market share. The reduced fare, branded MiNi and available on 58 routes from Feb. 6, will exclude rights to air miles and free hold baggage, according to Air France.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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