Aer Rianta has rejected demands by a Government working group to develop "low-cost" services at Dublin Airport.

But the State company has proposed paying concessions to airlines using its airports at Shannon and Cork if they reach certain targets for incoming passengers next year.

In a 22-page paper delivered to the inter-Departmental working group yesterday afternoon, the company claimed Ryanair had delivered "nowhere near" the one million additional passengers promised when a discount scheme was introduced in 1997.

The Aer Rianta paper will be scrutinised today by the working group in what is seen by some company sources as an unusually prompt consideration. The airports operator states that tourism development was not its responsibility - but that of Bord Fβilte.

Set up to explore opportunities to reverse the projected decline in tourist visits since the attacks on the US on September 11th, the group will make a submission to Cabinet at its meeting next Tuesday.

Aer Rianta had made no secret that it rejected an interim paper published by the working group, which said it should build a new pier at Dublin airport as a "low-cost facility targeting low-cost carriers".

Instead, the company said Shannon and Cork should be the focus of attempts to revive incoming tourist business. Cork traffic would remain stable next year and sources said Aer Rianta believed no new initiatives were necessary at Dublin Airport.

But Shannon could lose up to 500,000 passengers next year, the paper said. For traffic into that airport, the company proposed paying a £10 (€12.70) cash incentive next year for each visitor in excess of 80 per cent of the passenger traffic level in 2001. Each additional visitor would continue to be supported for a ten-year period on a reducing basis of £1 each year, the company said.

The measure would cost £55 million over 10 years if one million passengers were delivered.

For Cork-bound traffic in 2002, the company proposed a £10 incentive for each additional visitor over the level carried into the airport this year. Additional visitors for three years would be paid for, with the concession reducing by £1 each year.

The paper said any new measures should not provide a competitive advantage or distort the market between airlines, implying that it was not possible to confine use of the pier suggested by the working group to "low-cost" carriers.