Ryanair intends to halt its expansion at London's Stansted airport if BAA, Stansted's owner, increases landing charges next year to compensate for lost retail earnings when duty free sales are abolished within the European Union.

Mr Michael O'Leary, chief executive of Ryanair, said the proposed increase - 15 per cent over two years - was unacceptable.

"If BAA goes ahead with this, we will not start any more new services through Stansted," he said. "We will go to an airport that is more growth orientated."

Mr O'Leary said this could be another British airport, such as Luton or Birmingham, or one on the continent. However, Ryanair would continue its existing Stansted services, he said.

BAA said it would not rescind the increase in landing charges if the abolition of duty free shopping went ahead next year.

Charges at Stansted, along with BAA's other London airports, Heathrow and Gatwick, are subject to price regulation by the Civil Aviation Authority (CAA). It approved the one-off £55 million increase to defray the loss of duty free revenues.

"Our London airports have among the lowest landing charges in Europe," BAA said.