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A new medium-haul service will begin operating from Charles de Gaulle airport in Paris later this year, with long-haul flights to follow in summer 2018.
The French carrier unveiled details of its new service after resolving a lengthy dispute between the management and pilots over the establishment of the subsidiary.
Joon is "especially aimed at a young working clientele, the millennials (18 to 35 year-olds), whose lifestyles revolve around digital technology", Air France said in a statement, without elaborating on what new technology would be deployed.
The name was chosen "to illustrate a positive state of mind", it added.
Air France (@airfrance) September 22, 2017
Joon is aimed at helping Air France compete with the increasingly intense competition from budget European carriers such as Easyjet and Gulf airlines such as Emirates.
However, the airline said: "Joon will not be a low-cost airline as it will offer original products and services that reflect those of Air France."
While Air France's pilots have agreed to support the new subsidiary on condition they will receive the same pay and conditions as on the main airline, the hiring of stewards, hostesses, and part of the ground personnel for the new service will be outsourced.
The pilots were initially hostile to the plan, fearing they would be forced to accept lower wages.
In September 2014, they went on strike for two weeks over the expansion of Air France's low-cost European subsidiary Transavia, grounding thousands of flights.