Shannon Airport is preparing to reduce its airport charges significantly as the State's three main airports begin a new era of competition.

The chairman of the new Shannon Airport Authority, Mr Pat Shanahan, told The Irish Times that the airport was preparing to switch to a "low-cost model". He was speaking after the first meeting of the new airport body.

He said Shannon's relatively small catchment area meant it had to switch to a new business model to attract airlines. "We have got to reduce charges to increase volume and our new business plan will address this," he said.

He said there was scope to significantly lower the charges, but volumes needed to move upward in tandem with this. He said Shannon was a west of Ireland destination and consequently was not necessarily in competition with Cork, although he conceded the big challenge would be to get some airlines to look beyond just Dublin airport.

At present, the aviation regulator Mr Bill Prasifka has imposed a cap on per passenger charges of €8.02 at Shannon and Cork airports, although both airports are believed to charge somewhat below this.

Sources said yesterday Shannon would find it difficult to drop its charges much below €7 unless there was a radical change to its cost base. Mr Shanahan agreed yesterday that its cost base would need to be reviewed in the years ahead.

Earlier this year, a leaked 10-year business plan from Aer Rianta suggested 281 redundancies might be needed at Shannon. It pointed out that Shannon had a higher staff-to-passenger ratio than Dublin or Cork. The report said staff numbers might need to be reduced in the catering division and among some clerical grades.

Meanwhile, Mr Shanahan revealed that informal contacts had taken place with various airlines, including Ryanair, but actual deals could not be done until the board officially took up its position early next month.

"Our intention is to double the passenger throughput over the next three to five years. That is a very bold statement to make but we believe as a board we have the potential to try to achieve that."

He added: "If we did just achieve half of that, we would bring in half-a-million extra tourists into the region, which would contribute €160 million per annum.

"This would represent an increase of 20 per cent in tourism income into the west of Ireland".

From October 1st the assets and liabilities of Aer Rianta will transfer to the new Dublin Airport Authority. The assets include Shannon and Cork airports, but under the State Airports Act the Dublin Airport Authority is entitled to enter into arrangements for the management of these assets with the local boards.

The boards of Cork and Shannon will spend the first few months drawing up new business plans.