Ryanair has cut five routes out of Edinburgh after negotiations to extend its operating agreement with the BAA-owned airport broke down.
The Irish budget carrier has been trying to negotiate an extension of its current five-year agreement, which is due to expire in October, on "more competitive terms". Ryanair says BAA Edinburgh's high cost base is restricting growth.
But Edinburgh Airport says it could not accept some of Ryanair's demands, such as paying lower air traffic control charges than competing carriers. Managing director Jim O'Sullivan says: "We have tried extremely hard to negotiate with Ryanair but sadly on many issues have not been able to find common ground."
Ryanair will remove one aircraft from its base at Edinburgh, bringing its total there to six, and cancel its services from Edinburgh to Berlin, Malmo, Murcia, Ibiza and Tallinn from April. This will reduce passenger numbers by 300,000 per year and result in the loss of 300 jobs, the carrier says.
Ryanair says it will continue to negotiate with BAA Edinburgh, but warns of further "significant" aircraft, route, traffic and jobs cuts if the talks are unsuccessful.
Chief executive Michael O'Leary says: "Ryanair regrets BAA Edinburgh Airport's rejection of our proposals for a competitive cost base, which would allow Ryanair to further grow our traffic and routes for summer 2012.
"While Ryanair remains committed to Edinburgh Airport, BAA Edinburgh cannot continue to ignore the competitive marketplace, where airports all over the UK and Europe have been reducing costs and lowering charges in return for traffic growth."
Edinburgh Airport responds: "As ever, our focus remains on providing managed, sustained and high value growth matching the aspirations of our city."
BAA agreed in October to sell Edinburgh Airport, after the UK Competition Commission ordered the company to dispose of one of its two Scottish hubs.