Low-fare airline Ryanair has revised its plan to build a "low-cost" terminal at Dublin Airport, stating that it now wanted to pay Aer Rianta £12 million (€15.24 million) to build such a terminal in return for an agreement to charge landing fees of £1 per passenger.

Addressing the Dail Select Committee on Public Enterprise and Transport, Ryanair's chief executive, Mr Michael O'Leary, said the airline was no longer proposing to build the terminal itself. While Ryanair had no objection to a statutory tendering process which would be required before any private company could build on State land, he said this would take too long.

Speaking after his presentation to the committee, Mr O'Leary said the plan was revised in the past two weeks and would be resubmitted to the Department of Public Enterprise tomorrow.

A report by London consultants Warburg Dillon Read on the future of Aer Rianta and on other aviation matters - including Ryanair's plan - is expected to be delivered to the Minister for Public Enterprise, Ms O'Rourke, within a fortnight.

However, Ms O'Rourke is understood not to be in favour of Ryanair's plan and it is thought unlikely that it will be put to Cabinet.

Mr O'Leary repeated yesterday that use of a "low-cost" terminal would enable Ryanair to bring a million extra passengers into Dublin Airport annually after three years. The airline would introduce at least 10 new routes from Ireland to Europe and base 10 new aircraft in the State, creating at least 500 jobs.

Committee member Mr Emmett Stagg TD (Labour) rejected Mr O'Leary's plan on the basis that it would amount to a "massive State subsidy" for Ryanair. "What we have really is a sweetheart deal proposal where the taxpayer would be asked to subsidise Ryanair to the extent of £140 million," said Mr Stagg. "How (does) it make sense for Aer Rianta or any airport authority to give him free land to build a pier?"

Mr Stagg said any such project benefiting a private company which was not in financial difficulty would be subject to an immediate challenge at EU level.

Mr O'Leary responded that his plan did not amount to a State subsidy of £140 million. He argued that Aer Rianta growth incentive deals granted to Ryanair and Aer Lingus in the past could be seen as a form of subsidy. He was not looking for the exclusive use of the proposed terminal.

Senator Shane Ross (FG) also challenged Mr O'Leary, citing cases taken against Ryanair by the advertising standards authorities in Ireland and in Britain. "Not just with the UK Advertising Standards Authority, your record with the Irish Advertising Standards Authority is deplorable and does you no credit. How can I believe you?

"This is a matter on which those who have a great deal of time and goodwill for you find it very difficult to defend you," Senator Ross said.

Mr O'Leary responded that 11 of 13 complaints in Britain last year related to Ryanair stating in its advertising that it flew from London, while omitting to state that it used Stansted Airport. He said Go and Easyjet, other airlines which used Stansted, had not been reprimanded for using the same strategy. Ryanair would be challenging the Advertising Standards Authority in the High Court in London on this basis.

Mr Ivan Yates TD (FG) asked why similar proposals for Shannon Airport were dependent on acceptance of the Dublin Airport plan. Mr O'Leary said his proposals for Shannon Airport were "part of the price we're willing to pay" in order to get approval for the Dublin plan.