John O'Sullivan is in a bind. His fleet of eight buses has been ferrying passengers from Dublin Airport to the city's hotels since last November. But while Mr O'Sullivan's company, Aircoach, was granted its licence because of a loophole in the 1932 Transport Act, he has been unable to secure further licences because the act is under review. Ironically, the review's aim is to open up the bus market in Dublin to competition.

A former senior manager at Bus Eireann, Mr O'Sullivan was instrumental in the introduction of a new fleet and enhanced services by that company, a move which transformed its image. Mr O'Sullivan is no less fond of quality vehicles these days. With £2 million (€2.86 million) of a bank loan invested in the firm, Aircoach's blue coaches have become a familiar sight in the city since their introduction.

But many have remarked that passenger numbers are not strong. While Mr O'Sullivan accepts the company "struggled with the economics" when it first started trading, he claims Aircoach has almost turned the corner. "In mid-January we were averaging about 300 passengers per day. Now we're averaging 1,000 per day, so we're getting comfortable with the economics . . . We're getting close to break-even at 1,000 a day."

Mr O'Sullivan says the introduction of the service in the winter has given it a chance to bed down in time for the peak summer season. "If we had launched in the high season we would never have got off the ground."

He claims Dublin Bus's introduction of new routes to the airport around the same meant that he was "bombarded with resources" as a competitive tool.

But CIE group chief executive, Mr Michael McDonnell, disagrees, stating that its new routes are designed to cater for the commuters working in the airport, not for tourists. Nevertheless, a new Dublin Bus pricing arrangement for Aer Lingus air passengers suggests the State-owned firm is keenly aware of its new competition.

For its part, Aircoach has entered a similar arrangement with Ryanair, with bus tickets for sale on board inbound flights.

As for the review of the 1932 act, Mr O'Sullivan is keen to see "viable routes" in Dublin available to private firms for tender. This system would co-exist with the state-subsidised business on non-profitable routes, he says.

While a deregulated market would be welcome, the review has its drawbacks. "The review has set me back a year at least because we had planned to have further services available for the Millennium. "We had commitments with our backers and our plans were well-advanced," he said. The original plan was to have 30 buses on the roads at this stage.

"The Aircoach concept is to create a network of quality bus routes, with Dublin Airport as a hub, to all catchment areas within Dublin and a two-hour drive."