Aer Rianta will appeal a ruling on airport fees by the aviation regulator, its chairman said yesterday.

Mr Noel Hanlon said the determination by the regulator, Mr Bill Prasifka, would leave it providing services worthy of a "banana republic".

That decision reduced Aer Rianta capital expenditure recoverable from landing fees to £272 million from £998 million.

Mr Hanlon rejected a suggestion that the company's management and board had been undermined by Mr Prasifka's decision and said the State company would not impose an increase next month in landing charges at its airports in Cork and Shannon.

However, at the same time, he said the company would press ahead with its £1 billion investment programme, even if its appeal was not successful.

Internal sources of money were available to the company, Mr Hanlon said, and he hinted it might sell the Great Southern Hotel group.

Corporate advisers to the Government have said the hotel group should be sold, but the suggestion was opposed by politicians, including the independent TD in Co Kerry, Mr Jackie Healy-Rae.

When imposing an order on Aer Rianta to reduce all its landing tariffs next year, Mr Prasifka ruled that £726 million of its capital investment programme could not be recovered from landing fees because it was not "justified".

The determination differed from a draft published in June, which suggested landing charges would be increased.

At a briefing yesterday, Mr Hanlon claimed Mr Prasifka's determination on landing fees would not have "one iota" of a bearing on its plans to float the company on the Stock Exchange.

This was despite the fact that the investment programme was a cornerstone of its flotation strategy, which was rejected last year by certain Cabinet members. Mr Prasifka's determination on charges sanctioned an increase to a average per passenger maximum of £5.29 in Shannon and Cork from an average £4.65, which will not now be imposed.

Charges at Dublin will fall to an average £4.41 per passenger from £4.65 on September 24th. The decrease will apply even as the Aer Rianta appeal proceeds.

The appeal will be heard by a three-person body appointed by the Minister for Public Enterprise, Ms O'Rourke.

Mr Hanlon said the appeal would be lodged by Aer Rianta after its next board meeting.

The board meets on the third Wednesday of every month, but its thought that a special meeting may be called.

Stating that the company wished to avoid providing "Third World" facilities, Mr Hanlon claimed Mr Prasifka's analysis of its capital expenditure needs was "fundamentally flawed".