RYANAIR will create 200 new jobs in Dublin over the next two years with a £2.5 million investment to establish a telemarketing subsidiary.

Ryanair Direct, which is being supported by the State agency Forbairt, is expected to open in Dublin by early summer and will employ at least 100 people initially. The 200 new jobs will bring total employment at Ryanair to more than 700.

Ryanair chairman Dr Tony Ryan said the call centre would enable the company to improve the quality of its service and also reduce its costs.

"With this new telemarketing centre, Ryanair will continue to be at the forefront of attracting inbound tourism to Ireland," Dr Ryan added.

Four sites are currently being considered for the venture, and a decision on the exact location will be taken shortly.

The company will also continue to operate its shop front reservations and back office operation in Dawson Street, Dublin.

The £2.5 million investment in the company is being funded by an undisclosed grant from Forbairt and from Ryanair's internal resources.

The operation has, been set up to handle Ryanair's sales and marketing functions, and to cope with a planned expansion of its business, according to a spokesman for the airline.

Ryanair currently processes about four million customer calls a year, while the new facility will be capable of handling about 10 million calls annually.

The company plans to make use of freephone numbers for customers in Ireland and Britain and to become "more proactive" in winning business by "cold calling" group customers who have previously used the airline.

Ryanair Direct may also undertake contract telemarketing work on behalf of other companies, the airline's spokesman said.

The announcement of the 200 new jobs comes less than one week after Ryanair said that it might cancel its expansion out of Ireland, following the Government's decision to reject its proposal to develop a new commercial airport at Baldonnel, Co Dublin.

The Ryanair spokesman said the plans for the call centre had been in the pipeline for more than a year, but added that the future expansion of routes was being switched to Britain from Ireland.

Ryanair's short term aim would be to develop new routes within Britain along the lines of its London Glasgow service which was launched last October.

The airline, which says that it will carry 2.5 million passengers this year, has an estimated turn over of £68 million and pre tax profits of £1 million.

It has a fleet of 11 Boeing 7375 but plans to expand this to 13 later this year, the spokesman added.