British Airways owner International Airlines Group is establishing a new low-cost Austrian subsidiary.
Branded as LEVEL, flights are due to start from Vienna on July 17.
The move follows rival Ryanair teaming up with former Formula 1 racing driver Niki Lauda by acquiring 75% of his Austrian carrier LaudaMotion.
EasyJet Europe was also set up in Austria last year and now has more than 100 aircraft under registration in Vienna.
The airlines have chosen to set up in Austria to safeguard their networks in case the UK fails to agree a new aviation deal wit the EU after Brexit.
The new IAG subsidiary, which carries the same name as its long-haul low-cost offshoot, will have an Austrian Air Operator’s Certificate.
Four 210-seat Airbus A321s will be based in Vienna flying to 14 European destinations, including Gatwick and Palma from July 17, with fares starting at €24.99.
Flights from Vienna will be launched to Barcelona, Malaga, Venice, Olbia, Ibiza, Paris Charles de Gaulle, Milan Malpensa, Dubrovnik, Larnaca, Alicante, Valencia and Bilbao over the following four weeks.
IAG chief executive Willie Walsh said: “We are launching this new short-haul subsidiary to provide Austrian consumers with more flight choices across Europe.
“These flights will be branded as LEVEL to build upon the huge success of our new long-haul low-cost operation.
“We will serve the Austrian market with low-cost, reliable flights and will initially create around 200 new jobs at our Vienna base.
“Customers can check-in online or at the airport and take one hand baggage item onboard for free. They can choose to pay for additional items, such as checked luggage, from a menu of options designed to suit a variety of budgets and needs. There will also be a large selection of food and drink which can be purchased on board.”