There are reports today that ANA, Portuguese Airport Authority, is in negotiation with an unnamed airline (Ryanair?) to open a new hub at Faro Airport to further promote the Algarve tourist industry,
http://www.lowcostportugal.net/aeroportos/ana-negoceia-%E2%80%9Chub%E2%80%9D-em-faro/2009/07/
In certain articles it is reported that Ryanair are interested also in operating domestic flights in Portugal. According to a report in the Portuguese Newspaper Publico, one route being considered is Porto to Faro.
http://economia.publico.clix.pt/noticia.aspx?id=1389896
We will have to see if the Portuguese Government is ready to approve this as it would compete directly with both Rail and Bus Companies operating the route. Nonetheless, it would be a very useful route.