Bristol Airport has confirmed it is taking legal action against the Welsh Government over its subsidy plan for Cardiff Airport.
Ministers want to spend £205 million on the Rhoose airport in a bid to safeguard jobs and boost passenger numbers, which have been slow to recover since the Covid pandemic.
But Bristol chiefs say the Welsh Government has "failed to respond" to further requests for more information about its ten-year plan.
Senedd members heard on Wednesday afternoon that Bristol Airport would press ahead with a legal challenge via the Competition Appeal Tribunal.
Economy Secretary, Rebecca Evans, said the Welsh Government would defend the legal challenge.
They argued that Bristol, which employs over 4,000 people, already provides jobs for people in South Wales and supports the Welsh economy wihout the need for state aid.
In an open letter to the Economy Secretary last April, Bristol Airport chief executive Dave Lees said: "Bristol Airport welcomes competition, but this must be on a level playing field to avoid market distortions."
"This subsidy could move activity between locations at huge cost to the taxpayer but without any net economic benefit."
"Distorting competition between airports and airlines will lead to higher prices for consumers and unbalanced public subsidies will have a chilling-effect on future private sector investment."
On Wednesday, a spokesperson for Bristol Airport told Bro Radio News: "Unfortunately, the Welsh Government failed to respond to repeated requests for more information and to engage meaningfully with us and other stakeholders for many months before confirming this unprecedented subsidy of £205m, far beyond the £20m announced publicly on 2nd April."
"We have therefore sought a review by the Competition Appeal Tribunal under the Subsidy Control Act."
The Welsh Government argues its proposed subsidy package would provide Cardiff Airport "with the financial resources necessary to create new jobs by focusing on aircraft maintenance, repair & overhaul (MRO), air cargo, general aviation and sustainable aviation technologies."
They added: "The package will also enable the airport to develop routes to those parts of the world identified in the Welsh Government’s international strategy as being important for inbound tourism and inward investment."
Rebecca Evans told MSs that ministers had been notified of Bristol Airport's challenge last month.
She said: "Cardiff Airport is of vital importance to the economy of the South Wales region – with thousands of jobs stemming from the airport and the economic ecosystem supported by it."
"It is not yet clear how long it may take for the legal challenge to reach its conclusion...I will update the Senedd when we have clarity over the outcome of the challenge. I can reassure members that there will be no impact on day-to-day operations at Cardiff Airport during the legal challenge."
"I recognise that members and their constituents may have many questions regarding the implications for the airport’s future arising from this legal challenge."
"However, as the Welsh Government is now in a litigation process, ministers will be limited in what they can provide to the Senedd in terms of updates and responses to questions. It is imperative that we let the independent legal process run its course in proper order."
The announcement also provoked further criticism from the Welsh Conservatives, who have called on the Welsh Government to sell off the airport back into private ownership.
Sam Rowlands, shadow transport secretary, said: “The Welsh Labour Government has already sunk more than £200 million of taxpayers’ money into this failing nationalised airport - that’s around £286 per household across Wales."
“Given these figures, people across Wales will rightly question what they are getting in return."
“Labour has shown time and time again that ministers in Cardiff Bay have no idea how to run an airport and they should follow calls from the Welsh Conservatives that this failing airport should be sold to the private sector, so that it can not only survive but thrive.”
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