A bitter row has broken out between a private bus company and Bus Éireann over a lucrative bus route from Dundalk to Dublin.

The private bus operator, Matthews Coach Hire, claims that, since April 28th, it has had the exclusive licence to operate a service on the motorway (M1) between Dundalk and Dublin.

However, it claims Bus Éireann has sometimes operated on the route, although it is not licensed to do so. This is rejected by Bus Éireann.

The company also claims that Bus Éireann is trying to force its way onto the route following Matthew's decision to apply to the Department of Transport for permission to operate the route.

The managing director of Matthews Coach Hire, Mr Paddy Matthews, said his company identified the gap in the market for a route along the M1 and Bus Éireann only applied five months after his company.

He told The Irish Times yesterday that Bus Éireann should only be using the old N1 route from Dundalk to Dublin. He said he had invested €1.5 million in the route and it was not fair that Bus Éireann could operate a similar service, even though they failed to identify the opportunity in the first place.

Bus Éireann's Mr Cyril McIntyre said his company was operating within any licence conditions set down by the Department of Transport.

He said the company was still operating on the N1 but sometimes, when the bus on this route was full, an additional bus was put on and used the M1 route.

"This is normal operating practice. When the first bus is loaded up, we use the second bus to go straight to Dublin without stopping. This is the most direct route and it is quite normal. This is standard practice," he said.

He acknowledged the company had applied for new "high frequency" services on the M1, which was before the Department for consideration. He accused the Matthews service of "creaming off customers at peak periods".

The Department said it was still considering the application from Bus Éireann. It refused to be drawn on the claims of both sides. But a spokeswoman pointed to a recent parliamentary reply from the Minister for Transport, Mr Brennan, on the issue.

In it, he said Matthews had applied five months before Bus Éireann and, following a thorough examination, the Department granted the application.

He said there were several considerations which led to the decision, including: the large-scale residential and other developments along the route; the growth in commuter traffic; the absence of an express bus service from the main population centres involved and the significant over crowding on rail services in the area.