Ryanair and BAA agree on fuel levy

Ryanair and BAA, the owner of Stansted airport, reached an out-of-court settlement of their legal dispute over fuel surcharges yesterday, averting a long and acrimonious court case.

Ryanair and BAA, the owner of Stansted airport, reached an out-of-court settlement of their legal dispute over fuel surcharges yesterday, averting a long and acrimonious court case.

Ryanair, the biggest user of Stansted, has agreed to pay £1.4m owing to BAA in return for which the airport operator has agreed to cut the fuel levy by 40 per cent, saving the low-cost airline more than £1m a year.

The reduced fuel levy will also apply to all other airlines using Stansted but a BAA spokesman said the total loss of revenue to it would be less than £2m a year. Ryanair accounts for around 60 per cent of traffic at the Essex airport.

After the row broke out last year, Michael O'Leary, the chief executive of Ryanair, accused BAA of being "rapists" because of the way it allegedly used its monopoly position to overcharge airlines.

Despite the settlement of the fuel surcharges dispute, BAA and Ryanair are still at loggerheads over landing charges at Stansted and the cost of the proposed second runway at the airport.

BAA has come up with a new plan to cut the cost of the runway and associated facilities such as terminals and transport links from an initial £4bn to £2bn. But Mr O'Leary says it could still be built for just a tenth of that reduced amount.

Ryanair and other Stansted users are also facing a phased increase in landing charges from £3.20 per passenger at present to the full rate of £5 by March 2007.