KLM will move its intra-European services into its regional subsidiary KLM Cityhopper as it seeks to cut costs.
The move will be phased in over the next few years and follows the collapse of talks between the Dutch carrier and its cabin crew trade unions intended to settle a new pay structure.
Although KLM mainline staff and aircraft—the carrier’s Boeing 737 fleet—will not be transferred to Cityhopper, short-haul cabin crew will in the future work under KLM Cityhopper pay and conditions.
This, the airline said, is expected to produce cost savings of €20 million ($27 million) a year by 2019, as part of the wider Air France-KLM Transform 2015 restructuring plan.
Standards of passenger service will not be reduced, it added.