Budget fliers battle for French skies

BRITISH-based budget airlines are gearing up for a massive assault on the French aviation market. EasyJet hopes for clearance later this month to open a Paris hub, Ryanair is studying the launch of a Paris operation out of Beauvais, while buzz will this spring increase its French destinations from six to 15.

And in March, in a move being keenly watched by rivals, buzz - owned by Dutch carrier KLM - will open French domestic routes, becoming the first low-cost airline to offer services within a mainland European Union country.

This expansion at a time when most of the aviation industry is struggling to recover from a bookings slump after the 11 September terror attacks arises from a happy confluence of opportunities. Thanks to the pioneering spirit of Ryanair and its chief executive Michael O'Leary, budget airlines have discovered a latent demand among Britons for no-frills services to second-tier French airports. Biarritz or Bergerac, Toulon or Tours, Limoges or La Rochelle, the list of modest towns to be served by direct flights from Britain this summer is extraordinary.

While long-term incumbents British Airways and its franchisees, and Air France, concentrate on high-margin business traffic into each others' capitals, the budget carriers have shaped their French routes to the provincial destinations of holidaying Britons.

Spearheaded by the budget carriers, non-French airlines have expanded the market, capturing three-quarters of air traffic across the Channel, the biggest air route into and out of France.

Ryanair has already overtaken Air France between France and the UK, moving a million passengers last year, and like its rivals is planning more capacity this year. A rising number of expatriate sun-seekers, and half a million British-owned French holiday homes, with an estimated average annual 12 visits per household, provide an all-year round core market and explain why 80% of Ryanair's traffic between Britain and France originates in the UK.

French families are also getting low-cost fever, seduced by promotional fares such as buzz's e49 (£30) return between Toulon and Stansted, while BA continues to charge e179 to fly from Marseilles to Gatwick.

But now the budget carriers are beginning to offer cut-price French destinations to other Europeans. In addition to the UK, easyJet is now flying out of Geneva and Amsterdam to Nice, while Ryanair offers direct flights from Frankfurt to Perpignan and Montpellier.

Meanwhile, the local chamber of commerce at Carcassonne, the historic southern French town plucked from obscurity by the Ryanair effect, is extending the runway at its little airport to accommodate 189-seat Boeing 737-800 aircraft from London and Brussels at a rate of four flights a day.

All over France, small-town mayors and regional presidents are rushing to offer underused airports with low landing charges to budget carriers. Their enthusiasm to capture a larger slice of the 70 million tourists a year drawn to the world's most-visited country is all the keener because of the contraction of Air Lib, France's second-biggest airline.

Built into a credible challenger to Air France under the Air Liberte name by BA, then sold to nowdefunct SwissAir and rescued by a management buy-in, Air Lib seems caught in a cycle of downsizing and rescue-funding. After a lively lobbying campaign, easyJet hopes later this month to be awarded 20,000 annual take-off and landing slots at Orly, Paris's second airport - slots among 35,000 that should be surrendered by Air Lib as it halves in size. That would allow the Luton-based carrier to make Orly its French hub, home to six or seven planes serving European and perhaps some French destinations.

All this should worry Air France which, thanks to its broad spread of routes, has proved the most resilient major European airline in the past quarter. On cross-Channel routes, where the number of daily flights soared by 40 to 452 in 2000 carrying 8.5m passengers, it has already lost the battle. But other European destinations account for a quarter of its revenue and the French internal market, involving 27m passengers a year, another fifth.

'We are watching these carriers closely,' the airline's Brigitte Barrand said, 'and on many routes we are well-used to low-cost competition from the TGV (express train).' True, but by opening east-west routes such as Bordeaux to Grenoble, buzz is targeting the best of the rest.

With a 56% stake in Air France, the French government is going to find itself caught between the desire to protect its national champion and the appetite of bargain hungry consumers, backed by the liberalising instincts of the European Commission, for low-cost flying. A spectacular dogfight looms.