The Minister for Public Enterprise, Ms O'Rourke, has sanctioned Aer Rianta to spend £86 million (€109.2) on a new terminal and car-park at Cork Airport.

The scale of the investment is more than twice that recoverable from landing fees following a ruling on tariffs last week by the aviaiton regulator, Mr Bill Prasifka.

He said expenditure of £40 million on terminal developments at Cork was "justified" by Cork Airport.

This means Aer Rianta must pay the remainder from its internal resouces.

The State company has substantial retail and interests in Irish and international airports.

It has suggested selling the Great Southern Hotel group to fund its capital programme.

Mr Prasifka's determination said only £272 million of the £998 million programme was required.