The long running legal action taken by Aer Rianta against the aviation regulator, Mr Bill Prasifka, has been dropped by the new Dublin Airport authority.

The case concerned the extent of Mr Prasifka's authority to control the charges levied by Aer Rianta on airlines. Aer Rianta wanted to set charges at a certain point in order to fund a capital expenditure programme.

The case also concerned the process used by Mr Prasifka to evaluate Aer Rianta's charging structure.

Aer Rianta was appealing an earlier High Court judgment which upheld Mr Prasifka's position. The legal action has cost at least €5 million so far, according to sources.

However, yesterday the Dublin Airport Authority said the legal action was being "discontinued", mainly because of the provisions of the State Airports Act, 2004.

The authority said the new Act allowed the airport company's concerns to be "considered comprehensively" by Mr Prasifka.

"The most important of these amendments obliges the commission to ensure that any future determination on airport charges enables the company to operate and develop Dublin Airport in a sustainable and financially viable manner," said a statement.

Under the Act, the aviation regulator must protect the "reasonable interests" of future and current users of the airport, said the new authority. Also, Shannon and Cork airports would no longer be subject to economic regulation according to the Act, the authority pointed out.

The authority is likely to have a more harmonious relationship with Mr Prasifka than was the case during the time when Mr Noel Hanlon was Aer Rianta chairman.

"The company looks forward to working closely with the commission, the airlines and other stakeholders to ensure that the most appropriate pricing levels are put in place to meet the needs of all the airport's users, over the short and long term," said the authority yesterday.