The Irish Hotels Federation has said the Government should retain its ownership of Aer Rianta, stating that there is no evidence to suggest that changing the airport body's status "from public to private monopoly" will improve safety, cost efficiency or customer services.

In a submission to the Government on aviation, the hotel body said it saw merit in a proposal by Ryanair to develop a "low cost" terminal at Dublin Airport in return for a reduction in the passenger landing fees charged by Aer Rianta.

"The issue for Government, Aer Rianta and the industry is not what would they lose by approving Ryanair's proposals, but what are the alternatives when no other airline is interested in opening new routes to Ireland," said the federation's chief executive, Mr John Power.

"The IHF is asking Government to revisit its strategy for raising finance for airport capitalisation programmes, and look at it again in the light to Ryanair's proposals, which would go some way towards increasing routes, constructing a new terminal at Dublin airport and opening up new access routes direct to and from Shannon."

The federation said a plan to allow the development of a "low cost" terminal at Dublin Airport should be put out to tender.

While any plan for a private company to build on State land would have to be subject to tender, the Minister for Public Enterprise, Ms O'Rourke, is believed not to be in favour of Ryanair's proposal.

Ms O'Rourke, who is understood to favour the flotation of 2530 per cent of Aer Rianta, is expected to receive a study on aviation policy by London consultants Warburg Dillon Read before the end of the month.

The report is assessing Aer Rianta's Future Strategic Direction report in which it said a part flotation would enable it to secure international funds for its capital expansion programme. Warburg Dillon Read is also assessing other aviation matters, including Ryanair's plan to develop a "low cost" terminal at Dublin Airport.

Mr Power said the federation's opposition to the flotation of Aer Rianta was not linked to suggestions that the airport body's Great Southern Hotel chain would be sold off. He said the federation was not opposed to the sale of the group.