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Routes: Air France begins regional defence

Air France yesterday debuted its new provincial concept aimed at recapturing market share in the regions.

It has begun a series of flights out of Marseille. This includes three domestic routes to Biarritz, Basel Mulhouse and Brest, 10 new short-haul international destinations and ramped up capacity on existing flights

The concept aims to operate flights at a lower cost - around 15% lower than its mainline flights. This is achieved through a mix of operating a single aircraft type - Airbus A320s - locally based pilots and new work hours. Air France aims to spread the initiative to other French regional points in the spring, with Bordeaux, Nice and Toulouse next in line, adding 54 routes in total.

It forms part of an attempt by the French carrier to regain its footing in the regions. While Air France retains share levels in its home market not seen elsewhere in Europe by national carriers, much of this has been focused on its Paris hub and rivals have expanded in the regions. Its new provincial flights concept has been developed as a way to address this.

While several carriers have retreated from French expansion plans over the years, John Strickland director of consultancy JLS Consulting, and former executive at Buzz which had a strong presence in France before its acquisition by Ryanair, says rival carriers are gradually showing that it is possible to make in-roads into the French market.

"It has perhaps been over-complicated in peoples' minds because of the dominance of the Air France Group. That might have put some people off, but the French public have never been scared of flying with someone different. As long as you are doing the basic things right, the French public is willing to travel with you," he says.

Air France's market share remains high - more than a third of short-haul capacity into Europe from France and the majority of domestic capacity - but European low-cost rivals have gradually expanded (see tables). EasyJet is the second largest carrier by capacity in short-haul French markets, while Ryanair and Spanish carrier Vueling have all raised capacity.

EasyJet, for example, flies to 14 airports including those in Bordeaux, Lyon, Nice and Toulouse alongside its Paris Orly operation.

Ryanair, which abandoned its only French base at Marseille at the start of the year after a dispute with French authorities regarding crew tax, still retains a strong presence at that airport and across regional points in France. It seems unlikely to make dramatic expansion in France in the near term, however. "We've got very limited capacity coming in the next couple of years," explained Ryanair chief financial officer Howard Millar in July. "Whatever gives us the most attractive opportunity will be the one we take and France isn't particularly high on the list."

Barcelona-based low-cost carrier Vueling, meanwhile, chose Toulouse as its first non-Spanish base under its merged life, opening a base in the French city in April. It operates eight routes from the airport, including domestic connections to Lille and Nice.

"We are enthusiastic about our French market," says Vueling chief executive Alex Cruz, believing it is benefiting from providing a fresh option and dependable product. France was a logical market for Vueling to expand, given the money pumped into marketing which accompanied Vueling's short-lived Paris Charles de Gaulle base in 2007. "The bottom line isVueling is very well known in France," says Cruz.

While pleased with Vueling's progress, he says the airline will keep its progress steady. "We are not suddenly going to put 20 aircraft in. We are going to go steadily."

Strickland believes there are more opportunities in the French market, including domestic points, despite the strength of the country's high-speed rail network.

"Air France has used high-speed rail as a primary defence for not expanding within France," he notes. "The train is very good on north-south routes, but not so good on east-west. And [rail operator] SNCF was one of the first rail operators using revenue management, so travel by the very good high-speed rail system can also be expensive."

And for short-haul operators in Europe, citing opportunities such as UK regional operator Eastern Airways flying into Dijon, there are also wide-ranging opportunities. "There are a lot of things that can be done within France and it's not all about the second home ownership market," he says.

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