Dublin Airport Authority is to go ahead with a €110 million expansion at Dublin Airport despite only having sanction to spend €75 million. The authority claims that this is the only way that it can meet the Government's timetable for upgrading the airport by next year.

The aviation regulator's office has sanctioned about €75 million for the proposed Pier D facility. Airport sources believe it will cost up to €35 million more than this to build under the Government timeline.

The regulator ruling means the authority cannot recoup this overspend from passengers unless it gets retrospective approval via an appeals panel. The potential overspend equals more than two-thirds of the authority's profits in 2004 of €41 million before tax.

Pier D is an additional area for passengers to board planes after they check in. It will be built onto the existing terminal at the airport and should be able to accommodate about 12 additional aircraft at any one time. The aircraft stands will be able to handle narrow and wide- bodied aircraft.

Last year the then aviation regulator Bill Prasifka allowed expenditure of €89 million for the facility - however, this was later revised downwards by €14 million. This meant the Dublin Airport Authority was entitled to recoup €75 million of the cost via higher passenger charges.

The authority has yet to decide on a precise specification for the facility and there are two options available. The first one would cost €28 million extra, while the other cost €35 million extra.

The levels of spending which should be allowed will be adjudicated upon by an appeals panel established by Minister for Transport, Martin Cullen.

The Dublin Airport Authority is also pursuing a more general and wider review of Mr Prasifka's recent determination.

A spokesman for the Dublin Airport Authority said last year's Government decision mandated the company to develop a fully operational Pier D by 2007 and a full terminal by 2009. He said a decision had been taken to proceed with both plans and the company would strive to make up any funding deficit in other ways.

Mr Prasifka announced his departure from the regulator's office in November. The acting regulator is Cathal Guiomard, who was previously the economist in the regulator's office. The regulator's office declined to comment last night.

The effect of the Dublin Airport Authority decision is that it will press ahead with its building plans while waiting the outcome of the appeals hearing. The authority said it has fully appraised the Department of Transport of its decision.