Italy's cap on island airfares ignites feud with Ryanair

ROME (Reuters) - A decision by the Italian government to cap airfares to the islands of Sicily and Sardinia has prompted a dispute with airlines and been branded illegal by Ryanair, in a fresh sign of friction between Rome and big business.

Prime Minister Giorgia Meloni's cabinet this week approved a decree law forbidding airlines from raising fares to Sicily and Sardinia beyond a level that is "200% higher" than the average price for flights to the two islands, a move aimed at stemming price increases over the peak summer holidays.

Eddie Wilson, the chief executive of Ryanair DAC, the biggest airline in the Ryanair group, has lashed out at the measure.

The move is "ridiculous and illegal", he was quoted as saying by Italian news agency Ansa, adding it resembled "Soviet-style stuff", and calling for it to be cancelled.

Ryanair's attack followed that of a group of other airlines operating in Italy, including Lufthansa, EasyJet, American Airlines and Delta, accusing Italy's decision of breaching European Union free market rules.

The curb on fares was part of a package of measures approved by the government on Monday, including a windfall tax on Italian banks that sent jitters through European stock markets.

Industry Minister Adolfo Urso, who held talks with Wilson on Wednesday, defended the measure.

"We intervened with a decree that protects the market and consumers," Urso said on Thursday.

Speaking to the TGcom news channel, he said that "the market is not the Wild West where speculators take advantage. It is regulated by the state, by laws, by authorities and by the EU."

(Reporting by Federica Urso, additional reporting by Federico Maccioni; editing by Keith Weir)