Ryanair has written to chancellor of the exchequer, Sajid Javid, calling on him to extend the air passenger duty ‘holiday’ given to Flybe to all UK airlines.
The deal was announced earlier this week and could see the regional airline defer up to £100 million in tax liabilities.
The news has met with opposition from rival airlines and environmental campaigners.
British Airways’ owner IAG has filed a complaint to the EU arguing the rescue breaches state aid rules.
IAG chief executive, Willie Walsh, described the decision as a “blatant misuse” of public funds.
At the same time, both easyJet and Ryanair have said taxpayer funds should not be used to save a rival.
easyJet chief executive, Johan Lundgren, said: “Taxpayers should not be used to bail out individual companies, especially when they are backed by well-funded businesses.”
Flybe is owned by a consortium of Virgin Atlantic and Stobart Air, with critics arguing the carriers are in a position to support the subsidiary.
Ryanair had previously called for more robust and frequent stress tests on financially weak airlines and tour operators, so taxpayers does not have to bail them out.
The Irish carrier added that the Flybe business model is neither profitable nor viable and argued it has lurched from failure to failure repeatedly over the last 20 years.
Ryanair chief executive, Michael O’Leary, said: “This government bailout of the billionaire owned Flybe is in breach of both competition and state aid laws.
“The Flybe model is not viable which is why its billionaire owners are looking for a state subsidy for their failed investment.”
He added: “The reason why Flybe isn’t viable is because it cannot compete with lower fare services from UK regional airports on domestic and EU routes provided by Ryanair, easyJet, British Airways and others; and it cannot compete with lower cost road and rail alternatives on many smaller UK domestic routes.
“If Flybe fails (as it undoubtedly will once this government subsidy ends) then Ryanair, easyJet, British Airways and others will step in and provide lower fare flights from the UK regional airports, as we already have to make up for the recent failure of Thomas Cook Airways.”