[BRUSSELS] Virgin Express Holdings plc, Europe's second-largest low-fare airline, said it is considering setting up a second hub in Paris next year to tap France's under-served market for low-cost carriers.

Virgin Express, controlled by Richard Branson's London-based Virgin Group Ltd, said it was looking at Paris Charles de Gaulle Airport and at Rome, where it already operates 12 flights a day, as potential locations for a new hub to serve Europe.

Virgin Express' plan for a second base after Brussels comes as airport ground-handling services in Europe are deregulated, which is likely to reduce airport charges. Low-cost carriers, including Europe's No 1, Ryannair Holdings plc, operate mostly from the UK where ground-handling companies already compete. "We are evaluating the possibility of Charles de Gaulle and other European cities as being an additional hub in the system," said Paul Skellon, Virgin Express' spokesman. "It won't happen before the spring of next year."

Virgin Express aims to become Europe's biggest low-cost carrier, Mr Skellon said, adding that it may eventually run three hubs in Europe with Brussels as the main base. He said demand for flights is rising with no sign of abating. "France has enormous potential," said Mr Skellon. "It has some of the highest fares in Europe." France is also Europe's largest domestic airline market.

Virgin Express operates scheduled services from Brussels to London's Heathrow, Gatwick and Stansted airports and to Copenhagen, Milan, Rome, Nice, Barcelona and Madrid. It also flies from Rome to Barcelona and Madrid, and between Stansted and Shannon, Ireland and offers charter flights to more than 150 destinations in Europe.

Salomon Smith Barney estimates that the low-cost travel market in Europe will quadruple over the next five years, expanding to 13.5 per cent of total traffic from 3 per cent in 1997 and 4.5 per cent in 1998. That outlook is in contrast to the prospects for European major carriers, which rely on high fares to maintain profits. As the number of seats in Europe exceeds the number of passengers willing to pay full fares, ticket prices are declining, driving down earnings at the major carriers. Virgin fares, meanwhile, start at £30 (S$80.40) one-way excluding tax. The carrier is benefiting from a 25 per cent yearly rise in traffic for low-cost carriers.

Virgin Express aims first to link Paris with its other European destinations, and later will fly to French cities, Mr Skellon said. Virgin carried 3.5 million passengers last year while Ryannair flew 6 million. -- Bloomberg