Ryanair promise rock bottom fares on a new Dublin to Cork route and the prospect of cheap flights to other centres. The budget airline launched the new route with an average fare of 40 euros (£27) return (including taxes). It says it will consider services to other regional airports.

And Mr O'Leary sounded a warning to Iarnrod Eireann, in particular: "If I were them I'd be quaking in my boots right now," he said. "Whatever they decide to charge for their Dublin-Cork service we will undercut it."

To promote the Dublin-Cork route which starts next month, Ryanair is offering an internet fare of one cent each way (excluding taxes and charges).www.ryanair.com

Aer Arann is the only airline operating the route at present, Said Michael O'Callaghan of Aer Arann: "It's not surprising an airline like Ryanair would decide to target some of our routes."

But he added: "Offering one cent fares on an extended basis is unrealistic. Below cost selling is basically aimed at getting a competitor off a specific route."

Announcing the new three times daily service in Cork yesterday, Mr O'Leary said it was taking on Irish Rail for the business rather than Aer Arann. "There is no doubt there are huge changes coming given the new rolling stock on the railroad and the improvements to the Dublin-Cork road. I think trains certainly pose the greatest challenge to Cork Airport," he said.

Ryanair recently announced two new routes linking Londonderry with the UK. Daily services will operate between City of Derry Airport, Liverpool and Nottingham East Midlands airports - the first starting on February 9 and the latter on March 7.Ryanair already flies between Derry and London Stansted.