Skift Take

IAG is obviously pleased with Level's performance in Barcelona, but Paris is likely to be a bigger challenge given the strength of Air France-KLM in that market and its new millennial-focused airline Joon.

British Airways owner IAG SA chose Paris as a second base for its discount airline Level that operates a fleet of long-range, single-aisle Airbus SE jets for transatlantic flights.

Chief Executive Officer Willie Walsh unveiled the plan Tuesday in the French capital, which won out over Rome for the designation. Level plans to offer flights between Paris and New York from 129 euros ($154) for a one-way ticket and to Montreal, Guadeloupe and Martinique for 99 euros, he said.

“We believe long-haul, low-cost routes can be profitable,” Walsh said. Level will progressively replace the ‘Open Skies’ brand and operate out of Paris’s Orly airport.

Expanding Level will help IAG defend its markets against similar discount long-haul operations at Air France-KLM Group and Deutsche Lufthansa AG, as well as specialist low-cost operator Norwegian Air Shuttle ASA. The unveiling of a hub in France comes the same week as rival Air France prepares to roll out a new airline called Joon that it says will have lower fares than its flagship carrier.

Level wants to establish a fleet of 30 planes by 2020 under a plan for rapid expansion, Walsh has said. It’s evaluating opportunities for tapping the second-hand aircraft market, though it missed out on planes from defunct Air Berlin Plc that were snapped up by Malaysia Airlines Bhd.

Cheaper Long-haul

The startup currently serves Los Angeles, Oakland, Buenos Aires and Punta Cana in the Dominican Republic, and could add Asian routes by 2022, IAG has said previously. Its main base is Barcelona.

The expansion of Level continues a global trend that’s seeing the budget-airline model extend into long-distance flights, aided by advances such as more efficient composite-based planes like the Boeing Co. 787 and narrow-body models with significantly longer range, as exemplified by the Airbus A321neo LR.

Walsh said last month the industry may not have seen the end of systemic issues that led to the collapse of Britain’s Monarch Airlines and a bankruptcy filing at Italy’s Alitalia SpA, as well as the demise of Air Berlin.

IAG made the announcement about its second base in Paris a day after finalizing the purchase of operating rights at London Gatwick airport, most of which will go to BA.

©2017 Bloomberg L.P.

This article was written by Ania Nussbaum from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].

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Tags: air france-klm, iag, joon, level, low-cost long-haul

Photo credit: The interior layout of one of Level's aircraft. The discount carrier is coming to Paris. Level

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