Watchdog tells BAA to sell airports

The Competition Commission (CC) also recommended that Spanish-owned BAA lose control of either Edinburgh or Glasgow airport.

In a preliminary report, the CC said there were competition problems at each of BAA's seven UK airports "with adverse consequences for passengers and airlines".

The CC report - with a final report on BAA's airport ownership due at the end of the year - effectively means that BAA will have to give up running Gatwick and Stansted as the commission made it clear that it was "unlikely to require the divestiture of Heathrow unless the sale of Gatwick or Stansted is likely to be impractical or ineffective". BAA also runs Southampton and Aberdeen airports.

The commission was also critical of Government aviation policy, saying "aspects of Government policy restrict or distort competition by contributing to the current capacity constraints at BAA's London airports".

BAA chief executive Colin Matthews said: "By calling not just for a fundamental restructure of BAA but also for a review of the Government's air transport White Paper, the commission risks delaying the delivery of new runways and making better customer service less, not more, likely."

The CC said as well as now consulting to see which airports need to be sold, it was also seeking views on the need for "some form of enhanced regulation at Heathrow.

The CC said that it believed that "separate owners would be more active than BAA in exploiting existing opportunities" at south east England airports.

The commission also said there were competition problems arising from the existing planning system and the system of regulation for airports which is under the control of the Civil Aviation Authority.

The commission said it did not expect to require the sale of either Southampton or Aberdeen airports.