Ryanair has warned that it will cut its services at Shannon airport by 75% if the airport does not reduce its cost base, or if the Government refuses to remove the €10 tourist tax.

This would result in the airline operating just one plane from Shannon, which would mainly serve the London and some UK provincial routes.

The airline is in discussions with Shannon airport about the terms of its five year base agreement, which runs out next April. It says that under the current five year deal, Ryanair has invested $400m in Shannon Airport and has grown its annual traffic there from 300,000 passengers in 2004 to 1.9 million last year.

However, the airline says that since the introduction of the €10 tourist tax earlier this year traffic has fallen at Shannon. Ryanair, which had six planes based in Shannon last winter, reduced this to four planes in summer and is further reducing the base to three aircraft this winter.

Ryanair says it has lost money in each of the five years it has operated a base at Shannon, but says it is willing to continued to base planes there if the tourist tax is axed by next February and if Shannon airport extends Ryanair's cost base for another five year period.

The airline says it wants a 50% reduction in its costs at Shannon, which it says reflects the 70% decline in fares which Ryanair has seen there over the past five years.

Ryanair's Michael Cawley says that since the introduction of the €10 tourist tax in April, traffic at Irish airports has fallen by more than 15%. He said that all of Ryanair's traffic growth is taking place outside of Ireland because of the tax.

'It's time to lower airport charges and axe the tourist tax, before this Government turns away even more passengers, tourists and jobs at Shannon and the other Irish international airports,' he stated.