The BBC's Tony McMahon : "KLM expects buzz to break even after two years"

KLM's bargain airline, to be called buzz, will be based at London's Stansted Airport.

It will initially have a fleet of eight 110-seater aircraft flying to seven European destinations including Paris, Berlin and Milan.

Floris van Pallandt, chief executive of KLM UK, the British subsidiary of parent company KLM Royal Dutch Airlines, said he believed that the low-cost flight market would continue its growth.

He said: "Following a major review of KLM UK's operations, we took the decision that not only did we want to play a significant role in this sector of the market but also that we could add another dimension."

KLM's buzz will be taking on British Airways' Go and Virgin Express. All have been launched in response to the success of earlier budget entrants into the market such as easyJet, Debonair and Ryanair.

Industry experts believe that the budget flights market could triple in the next five years.

Charles de Gaulle

KLM says it is planning for buzz to break even within two years. Despite the popularity of the flights, establishing such airlines is a costly business, with BA recently revealing that Go had lost £20m in its first 17 months.

The new KLM airline, to be launched in January, will be based on a "pay as you go" principle with customers able to buy add-on services such as an in-flight meal on top of their low-cost flight.

The planes will sport a lime-green, yellow and purple livery.

KLM claims it will have an advantage over some of its competitors by flying directly to the main airports in all its destination cities, such as Charles de Gaulle in Paris.