FINANCE Minister Michael Noonan last night threatened to keep the controversial travel tax if Ryanair and Aer Lingus fail to boost passenger numbers into Ireland.
The €3 tax will only be scrapped from July 1 if the airlines agree to bring in additional passenger numbers, Mr Noonan said.
And he warned that a review of the decision to "suspend" the tax will be conducted by the end of 2012.
It is hoped that abolishing the travel tax and reducing airport charges will boost tourism numbers and lead to the opening of new routes.
"If it is not successful, the air travel tax will be reapplied," Mr Noonan warned.
The abolition of the travel tax will result in a loss to the Exchequer of €15m this year, €90m next year and €105m the year after.
The €10 travel tax was first introduced in 2009 but was reduced to €3 in the last Budget following intense lobbying.
The airlines have argued they can provide cheaper fares and boost passenger numbers if the travel tax is abolished.
Last night's decision was welcomed by the airlines, with Ryanair saying it had submitted a proposal to the Government which would deliver growth of up to five million additional annual passengers at Dublin, Cork and Shannon airports over a five-year period.
Mr Noonan said it was hoped that the suspension of the tax would revitalise the tourism industry, which has endured a 25pc decline in inbound tourists between 2007 and 2010.
In another move to boost tourism numbers, a reformed visa application system is to be introduced.
"This initiative will make it much easier for overseas visitors -- including visitors from crucial emerging markets -- to come to Ireland without having to incur the trouble and expense of applying for separate visas, once they have already obtained visas for the UK," Mr Noonan said.