Budget Airlines in Head-on Collision With Air France

Dec. 4--TOULOUSE -- Ryanair and Easyjet are among three low-cost airlines that have bid to set up an operating base at Lyon, posing a serious challenge to Air France-KLM on the French carrier's home turf.

The budget airlines are being offered capacity for 1.2m passengers a year, rising to 1.8m within five years, in a dedicated "basic" terminal with a per-passenger fee that is one-fifth that paid by Air France.

The move to woo budget airlines by Lyon-Saint Exupéry airport has infuriated the national champion, which with Lyon as its second-biggest French hub, carries half the airport's 6.2m passengers a year.

But the airport, run by the Lyon Chamber of Commerce and Industry, says it has a duty to the region's inhabitants to attract low-cost airlines that will bring tourists, cheap flights and E90m ($105m, £61m) a year into the local economy.

With only 3 percent of its passengers carried by budget airlines, Lyon-Saint Exupery says it is missing out on the budget airline boom. Rival airport Nice, where Easyjet carried 2.1m passengers in the past 12 months, derives 32 percent of traffic from low-cost carriers. At Geneva, equally well located for winter ski traffic, the percentage is 33 percent. By 2010, low-cost carriers are forecast to account for one-third of European air traffic.

To fill the void, Lyon-Saint Exupery is overhauling a charter departure hall on the fringe of its terminal to offer basic services, including limited heating and air-conditioning and a walk to the plane. Airline users will pay E1.50 a passenger, against E7.95 in the main terminal.

Bids from the three would-be users, filed on 25 November, will be studied by a commission. "The winner will almost certainly be the airline with the biggest flight programme," said an airport spokeswoman.

Easyjet, which is the second-biggest airline in France with 5m passengers a year from its Paris base, will operate 17 flights a week between Lyon and Stansted this winter. Easyjet confirmed talks with the airport.

Ryanair wouldn't confirm its approach to Lyon, but said it was "in talks with 50 airports throughout Europe."

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