This news article from a couple of weeks ago says that Ryanair have applied for slots to fly between Madrid and Granada.
http://www.typicallyspanish.com/news...cle_4998.shtml
Iberia currently does this route and I heard Vueling are also planning to start up on this route.
Ryanair currently fly to Granada from 3 of their bases: Hahn, Stansted and Liverpool. Would Ryanair use an aircraft originating from one of these bases, or would they base an aircraft at Granada or Madrid?!