Transport Minister Noel Dempsey has given the Dublin Airport Authority the right to operate the new Terminal 2 at Dublin Airport.
The Minister said he had hoped to have a competition for the operation of the new terminal, but none of the rival candidates met the minimum requirements.
He said he had no option but to end the procurement process last December, adding that he did not see 'any practical alternative' but to mandate the DAA to operate the terminal.
Minister Dempsey said, however, that the DAA would have to show that it could run the terminal in line with cost targets set down by the Commission for Aviation Regulation in December, or 'alternative arrangements' would be made. He has given the authority three months to report back to him on this.
In a statement, DAA chief executive Declan Collier said the body had been set a 'significant challenge' by this decision. 'The benchmark costs envisaged by CAR will require a different cost model than that which currently pertains in the existing terminal,' he said, adding that the DAA would try to meet the criteria set by the Minister.
Ryanair chief executive Michael O'Leary said the decision was no surprise. 'Today's decision proves yet again that the Dept of Transport is the downtown office of the DAA,' claimed Mr O'Leary.
The airline claimed that 'not one' of the undertakings made by then Minister Martin Cullen and the Department of Transport in 2004 - when the DAA was awarded the contract to build T2 - had been honoured.
