Ryanair escalated its legal row with the British Airports Authority (BAA) yesterday. The Irish airline filed a suit in the London High Court accusing the airports owner of abusing a monopoly situation in its charging of a levy on fuel.

The airline, BAA's major customer at Stansted, said it was paying £5 million (€7.53 million) a year in a fuel levy that should have been discontinued years ago.

Ryanair said it had received repeated undertakings in writing that the levy would be eliminated when the costs to BAA of building a fuel hydrant system at Stansted in 1991 were recovered.

It said the cost was thought to be £12.5 million. "BAA has broken these agreements and, to date, BAA Stansted has, in a 14-year period, recovered over £34 million in fuel levies - three times the original cost," Ryanair said in a statement.

A spokesman for the airline said it had been negotiating for months over the issue and had lost patience.

In April this year, Ryanair started withholding payment of the fuel levy and of an increase in passenger charges implemented by the airport authorities.

This action triggered BAA's decision to file its own High Court action yesterday against the airline for £1 million it says it is owed. It claims the increase, understood to be 50p a passenger on top of the existing discounted rate of £2.80, was necessary to help fund a new runway.

In the absence of resolution, a spokeswoman for the airport said its position was that Ryanair had voided its contract and the passenger charge would now be increased to the full £4.90 rate from today.

"We have great respect for Ryanair but other airlines here have contracts and they have paid their bills," she said, pointing out that BAA had opted not to ground Ryanair aircraft in the dispute.

Analysts say the dispute is essentially a chapter in tough negotiations expected ahead of the expiry in 2007 of the current ariport charges deal between the airline and the airport.

"It is impossible at this stage to sort out who is right and who is wrong in this," said Davy analyst Mr Mark Hannon. "But it is in both their interests to settle as soon as possible. Why take a chance on losing?"

Goodbody's Mr Joe Gill said the £1 million "seems paltry but it does underscore how zealously the company protects its cost base." Ryanair stock shed 5 per cent in Dublin yesterday.