Bloomberg News

Air France Offers Discount Fares in Bid to Repel EasyJet Threat

January 07, 2013

Air France-KLM Group (AF), Europe’s biggest airline, will introduce a discount fare on short-haul routes from France starting at 49 euros ($64) including tax in a push to stem the loss of market share to low-cost carriers.

The reduced fare, branded MiNi and available on 58 routes from Feb. 6, will exclude rights to air miles and free hold baggage, Air France said today. Tickets will be about 20 euros cheaper than under the all-inclusive regular price, it said.

“We will offer more than 1 million seats with these new prices,” Alexandre de Juniac, chief executive officer at the main Air France unit, said at a Paris press conference, adding that the aim is “to become Europe’s No. 1 carrier on medium- haul flights by regaining customers.”

Air France-KLM is seeking to repel incursions from discount operators led by Ryanair Holdings Plc and EasyJet Plc (EZJ), which has added more flexible tickets to help lure business travelers. Deutsche Lufthansa AG (LHA), Europe’s No. 2 carrier, is folding short- haul flights outside Frankfurt and Munich into its Germanwings low-cost brand, while International Consolidated Airlines Group SA (IAG) has established the dedicated Iberia Express unit in Spain.

“Air France is a little late on this, as other players have already adjusted themselves to the market,” said Yan Derocles, an analyst at Oddo Securities who recommends buying Air France- KLM shares. “KLM will certainly do the same a little later.”

De Juniac said he’s hopeful that talks with Airbus SAS and Rolls-Royce Holdings Plc (RR/) over an order for A350 wide-body planes will reach a conclusion by the end of the first quarter.

Air France has been seeking rights to service engines for the aircraft at its own maintenance arm before signing a deal, something Rolls generally seeks to keep in-house.

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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