The budget airline Flybe has called for restrictions on the number of passengers allowed on its Guernsey to Jersey air link to be removed.
At present the number of seats it can sell on the route is limited.
But Flybe said that means there is not enough capacity during the summer high season.
Derek Coates, the chairman of rival airline Blue Island, said lifting Flybe's restrictions would have serious consequences for other air operators.
'Highly destructive'
Ian Taylor, from Flybe, said: "Guernsey stands alone in Europe as the only jurisdiction that has a licensing regime.
"If you compare that with other islands not too far away, I don't think that an open skies policy has been detrimental at all.
"In fact it has increased the number of carriers and the number of destinations that are on offer."
Derek Coates, chairman of Blue Island, said: "We have been in dialogue with the Office of Utility Regulation emphasising the need for year-round stability of air routes between the islands.
"Adding a third carrier on these well-served links will be highly destructive to both ourselves and Aurigny [the State-owned airline] with possible dire consequences."
Flybe is currently restricted to selling only a small percentage of its seats for inter-island flights.
Guernsey's Office of Utility Regulation is expected to publish a review looking at the regulatory aspects of the island's air links later this month.
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