Transavia is popular with younger passengers

The airline is mulling over plans for a French launch of Transavia.com, the KLM-owned budget airline currently operating out of the Netherlands.

If approved at a board meeting later this month, Transavia would offer scheduled and charter flights from Paris to Spain, Morocco and Tunisia.

Europe's expanding budget airline market is highly competitive.

Nice fit

While airlines such as Ryanair and Air Berlin have gone from strength to strength, other budget operators such as Volare have collapsed.

This initiative will meet with the demand for scheduled flights to leisure destinations not presently served by Air France Air France

The proposed start-up would be jointly owned by Air France and KLM.

Air France has not yet said how much it would be prepared to invest in the business or when it would begin services.

"This initiative will meet with the demand for scheduled flights to leisure destinations not presently served by Air France," the airline said.

"It would also fit in very well with the growth strategy of transavia.com, which has for some time been planning to operate from additional bases outside the Netherlands."

Transavia launched budget airline Basiq Air in the Netherlands several years ago and subsequently merged it into its existing operation.

It now flies to more than 90 destinations.

Air France-KLM has improved its financial position since its 2004 merger, with passenger numbers and profits rising.