RYANAIR and Easyjet, the largest low-cost carriers in Europe, are set for a showdown at Luton airport later this year.

Luton is Easyjet’s base and the airline accounts for two-thirds of all flights there. But Ryanair is in talks with TBI, the quoted airports group that runs Luton, which could lead to it moving “a significant number” of aircraft there from October.

Airline-industry sources said last night that a tentative agreement over Luton was struck between TBI and Ryanair earlier this year as part of a deal covering three TBI airports.

Ryanair announced in January that it had chosen Skavsta, a TBI airport near Stockholm, as one of its new bases in continental Europe. It is thought TBI has also secured in-principle agreement for Ryanair to put more aircraft into two of its other sites, Belfast International and Luton.

Keith Brooks, TBI’s chief executive, declined to comment directly on the talks with Ryanair. “We have a good relationship with Ryanair and its base at Skavsta has been very successful. We have had talks about other airports,” he said.

Michael O’Leary, Ryanair’s chief executive, confirmed that he had held talks with TBI. But he said there was no guarantee that aircraft would be moved to Luton.

“I’m always talking to six or seven airports at one time,” he said.

Ryanair has just one aircraft based at Luton, operating services to Dublin. TBI is understood to be keen to increase passenger numbers at Luton. The new terminal has 60 check-in desks, but Easyjet uses only 20. Airport bosses are thought to believe that Ryanair would establish new routes to Germany, Italy and Scandinavia.

An invasion of Luton by Ryanair would concern Easyjet, which has avoided confrontation with its aggressive rival. Both airlines have large operations at Stansted but do not compete on individual routes.

Easyjet has been struggling to reverse a steady decline in its yields — the revenue brought in by each passenger.

This month the airline said that in the first half of its financial year — which began in September — it recorded a 32% rise in passenger numbers, but a 10.7% drop in average fares. Analysts expect the airline to record an interim loss. Easyjet has been cutting costs and is to close a Stansted airport call centre that it inherited from Go, the carrier it bought last year, with the loss of up to 114 jobs.

Analysts said that a move by Ryanair to Luton might not be all bad news for Easyjet.

“The two airlines have quite different business models, and they might well try to avoid competing head-to-head at Luton as they have avoided it at Stansted,” one said.

• FLYBE, the regional airline formerly known as British European, is this week expected to place a $700m (£445m) aircraft order with Bombardier, the Canadian industrial conglomerate. The purchase is likely to be the largest order by a British airline this year, with Flybe expected to take up to 18 Q400 planes from Bombardier.