Dutch airline KLM plans to leave all inter-European flights in the hands of its subsidiary KLM Cityhopper within five years, in an effort to save €20m.

Cityhopper personnel have a cheaper pay and conditions agreement, with fewer days off. The decision follows a failure to agree on a new round of savings with the cabin crew unions, Nos television said.

Measures to reduce costs already rejected by the unions include a pay cut for beginners, a reduction in holiday entitlement and a three-year pay freeze.

Unions are also angry at the decision to switch European flights to Cityhopper, describing it as ‘unworkable’.

KLM says it has no option but to transfer flights to Cityhopper, which will be phased in between 2014 in 2019.