The French and German governments have lent their support to the retention of duty free campaign, the Minister for Public Enterprise, Ms O'Rourke said yesterday, when she officially opened a new development phase of Dublin Airport.

The German prime minister, Mr Helmut Kohl, stated in a letter to the Taoiseach, Mr Ahern, that the abolition of duty free and tax free sales from June 30th, 1999, is no longer "cogent" because excise tax rates will not be harmonised by that date. Ms O'Rourke said the retention of duty free, with jobs dependent on it and as a showcase for Irish goods, was a matter of "great importance", although it was deemed unfashionabe to be pursuing the issue.

The Minister is due to meet next week Mr Andre Capet, who, as an emissary of the French prime minister, Mr Lionel Jospin, is carrying out an economic impact study of the abolition of duty and tax free sales. "There has already been quite an increase in the number of countries who now feel that the doing away with duty free is the incorrect way to go," Ms O'Rourke said.

The Aer Rianta chief executive, Mr John Burke, said an extension of the duty free expiry date would satisfy the company, rather than the permanent retention of the scheme.

"If it was a genuine single market we would not be arguing for retention of duty free," he said.

He added that seven member countries had supported either a study on the issue or a postponing of next year's date at the Econfin meeting on May 19th.

However because unanimous support was needed to reverse an earlier decision, duty free is still to be abolished next year.

Earlier Ms O'Rourke officially opened the first phase of Pier C, built at a cost of £31 million, as part of a £315 million programme.

Work on phase two of Pier C and on the extension of the main terminal building, which will double its arrivals/departures and baggage areas, has begun.

Ms O'Rourke said the numbers passing through the airport were far above expectations when the development programme began and to have comfort and space was an important requisite for travelling.

"Aer Rianta is a success story for all of us, not for themselves, for the country, for the economy, for the people who travel in and out of all the state airports," she said. The chairman of Aer Rianta, Mr Noel Hanlon, said the developments would ensure Dublin was one of the most efficient and lowcost airports in Europe.

Consultation would continue with "airline colleagues" so that facilities would meet their demands.

The chief executive, Mr Burke, added that through traffic of people at the airport was likely to reach 11.3 million this year, an increase of one million on 1997, and the opening of Pier C had increased boarding capacity by 60 per cent.