BAA issues O'Leary with writ over Stansted landing charges

Ryanair, the low-cost airline headed by the outspoken Michael O'Leary, yesterday headed for a major battle with BAA, the owner of London's three major airports, over landing fees.

BAA said yesterday it would issue a writ against the airline after it failed to pay £1m in landing fees for Stansted airport in time to meet a 4pm deadline set by the airports operator.

The flashpoint follows weeks of fighting between the two parties, it was revealed yesterday, after Ryanair took issue with a number of charges which it feels it is unfairly being forced to pay, either directly to BAA or as a result of BAA policy. In protest, it ignored yesterday's deadline to come up with its latest landing fees bill of £1m, and said it planned to counter-sue the authority for overcharging on fuel levies at Stansted.

Whilst Ryanair will be allowedto use the airport as the dispute unfolds, BAA said it would withdraw the discounts it currently extends to the airline for all future landing fee bills - a move which could cost the budget carrier as much as £50m over the next two years.

The subsidies are granted by BAA to new airlines and for new routes, to ease start-up costs during the first few years. It is thought Ryanair qualified for the discounts at Stansted until 2007.

BAA, which is headed by chief executive Mike Clasper, said it was unable to provide specific details as to how much it charges Ryanair because the information is commercially sensitive. However, the average fee which it levies to airlines at Stansted is about £2.80 per passenger - more than £2 a head below the maximum it is permitted to charge according to UK regulations. With 12.5 million Ryanair passengers passing through Stansted every year, an increase to the maximum levy would set back the company about £25m a year.

A spokesman for BAA said: "They have repudiated their contract, which means they will no longer enjoy the current discounts on landing fees."

Ryanair disputes that BAA will be able to withdraw its discounts, arguing it has a binding contract with the authority until 2007, which means it cannot alter the airline's prearranged landing fees. However, BAA said the terms of the contract had been broken by Ryanair's failure to pay its landing fees. As a result, it said its agreement over subsidies no longer applied.

The Irish airline said its protest against BAA centred on fuel levies, which it charges to the principal supplier of fuel at its airports, and which are consequently being passed on directly to the airlines. BAA said this is a standard policy which it operates at all its airports. It said that fuel charges were an issue which airlines should take-up with the oil companies rather than the authority.

BAA added that Ryanair had also expressed dissatisfaction over other issues, but that it was unable to discuss details ahead of a potential court clash.

A statement issued for Ryanair yesterday evening read simply: "We are issuing our own proceedings against BAA for overcharging on fuel levies at Stansted over a 12-year period. As BAA is already aware, our agreement on charges is very specific and expires in 2007."

The feud is not Ryanair's first battle over fees this year. The European Commission ruled earlier this year that cheap fees which the airline had negotiated with Charleroi airport in Belgium had been illegal. The airline eventually came to an agreement with Charleroi which allowed it to continue paying the same levy, within the boundaries of European Union guidelines. However, it is still pursuing an appeal against the Commission's decision, and is refusing to pay back several million euros of European subsidies which are being demanded.