Ryanair, recently critical of proposed state funding for embattled national carriers Aer Lingus and Sabena, is itself at the centre of an ongoing investigation into possible "unfair competition" and "illegal state aid" in relation to its London-Alghero (Sardinia) route.

Sardinian public prosecutor Mr Paolo Piras has opened an investigation into a £395,000 (€501,550) deal between the Alghero airport authority (Sogeaal) and Ryanair. It is believed that Ryanair will receive the payment (or equivalent discounts by way of airport costs) in return for guaranteeing a substantial daily passenger quota into Alghero.

While various state carriers have flown to Alghero over the last year with half-empty planes, Ryanair's reduced tariff daily flight from London has proved successful, carrying 120,000 passengers since June 2000.

Alghero airport authority director, Mr Umberto Borlotti, yesterday emphatically denied any question of illegal state funding or unfair trading, telling The Irish Times: "We're not worried about the investigation. Sogeaal is a private company and we have a regular contract with Ryanair between two private companies and I can assure you we're very keen to maintain that contract."

Mr Borlotti's words reiterated those of the Sogeaal president, Mr Tonino Baldino, who earlier this week told Sardinian daily, L'Unione Sarda: "Look, this is a promotional activity, entirely above ground and I simply don't see the problem . . . As far as the investigation is concerned, no one has come asking me anything. After all, we have a whole stack of documentation that proves clearly that everything has been done legally."

The Alghero airport authority is currently at odds with the Sardinian Regional Tourist Authority (Esit), which had promised to at least partially underwrite the costs of the Ryanair promotion.

However, the tourist authority appears to have changed its mind on the funding. This change of mind has prompted alarm among Alghero tourist operators, fearful that Ryanair may pull out. The issue was also raised at the Sardinian Regional Council on Monday, when four councillors called on Esit to honour its commitment to Sogeaal "in order to ensure that Ryanair is not forced to transfer its flights to another airport".

Commenting on the recent developments regarding its Alghero route, a Ryanair spokesman last night expressed no concern about the investigation, but re-affirmed its commitment to Alghero. "This is a commercial agreement, non-exclusive and open to any airline company that can guarantee passengers. This is not state aid and, rest assured, we are not pulling out of Alghero."