Air France on Monday will unveil a new pricing and service structure on flights at four key domestic airports as the carrier continues to remodel its short-haul non-hub operations.

This revamp, which will be applied to three provincial bases and operations at Paris Orly Airport, will include unbundled fares and ancillary fees for food and baggage services.

The new fare structure will exist parallel to Air France’s traditional full-service options, and will be tested on domestic and European routes from the carrier’s bases at Marseille, Nice and Toulouse, as well as Paris Orly.

Air France’s hybridization of its loss-making, non-hub short-haul operation is part of the airline’s effort to defend against the growth of low-cost carriers in its home market.

The strategy created the three provincial bases, with Nice and Toulouse opening in spring 2011 and Marseille that fall.

This latest strategic move mirrors Lufthansa’s recent decision to merge all its short-haul, non-hub flights into its low-cost unit Germanwings and reposition the operation as a value carrier with an “a la carte” service and fare concept.

The three provincial bases are performing well, but their profitability is below target, an Air France spokesperson tells Aviation Week.

The spokesperson also denies recent reports that Air France intends to close the three bases.

“We have introduced new measures to address the profitability issue and we’re confident that their financial performance will be line with the business plan from spring 2013,” the spokesperson says.

“A full review of their performance is scheduled for September and we will assess the situation at that moment,” the spokesperson adds.

These new measures include capacity adjustments and changes to revenue management to increase yields, and will cover fuel costs, which are €60 million ($79 million) higher than initially budgeted because of rising prices.

Staff and aircraft productivity at the three provincial bases has increased 15-30%, as targeted, and passenger numbers in 2012 increased 1 million year-on-year, according to Air France.

Air France also is restructuring its domestic regional airlines, and will fold Airlinair, Brit Air and Regional into one entity with one CEO, Lionel Guerin.

Details of the new organization will be released at the end of the month.

Air France will increase its stake in Airlinair as part of the restructuring of its French regional operation. “It is a probable scenario that Air France will acquire full ownership of Airlinair,” an Air France source tells Aviation Week. Paris Orly-based Airlinair operates 24 ATR 42/72 turboprops.

Currently Air France’s wholly owned subsidiary Brit Air holds 39.86% of Airlinair and 60.14% is held by Financiere Linair, the company controlled by Lionel Guerin, who founded the airline in 1998.