LONDON’s Gatwick airport is set to become the latest battleground in the cut-throat struggle between no-frills airlines, with Ryanair and BMI Baby planning a big challenge to incumbent Easyjet.

Ryanair, led by controversial chief executive Michael O’Leary, has to date restricted its Gatwick operations, saying the airport’s relatively high landing charges did not fit its low-cost business model.

But industry sources said Ryanair and BMI had applied for extra Gatwick runway slots at a recent conference in Toronto where slots were allocated for congested airports.

Ryanair yesterday declined to comment on its Gatwick plans. “We are in discussions with more than 50 airports around Europe with a view to expanding and developing our services,” a spokeswoman said.

BMI Baby managing director Tony Davis said: “It is a congested airport, but it is manageable for a low-cost operation. What we are seeing is that airline competition in Britain is increasingly no-frills airline against no-frills airline, rather than a no-frills against a conventional carrier.”

Easyjet’s operations at Gatwick have mushroomed. From nothing three years ago, it now has 13 aircraft based there, and flies to 22 destinations.

The revelation of the Ryanair and BMI challenge will worry Easyjet investors, who have been spooked by two recent profit warnings. The airline said tough competition and a capacity glut meant it was struggling to keep fares up. Its shares have tumbled from nearly 350p to close last week at 154Çp.

The low-cost airlines’ expansion at Gatwick has come as British Airways’ presence has shrunk. Three years ago BA had 42% of runway slots, but this summer it was down to 27%.