BAA was today given less than two years to sell off Gatwick and Stansted in a damning final report from the Competition Commission.

The Spanish-owned airport operator was ordered to off-load two of its three London airports because of its consistent failure to improve services for passengers and airlines.

The commission said that only a radical break-up of BAA's near monopoly ownership of Heathrow, Stansted and Gatwick could generate competition and bring any hope of progress for holidaymakers and business travellers. Inquiry chairman Christopher Clarke said: "We are confident that the sale of these airports will bring substantial benefits to passengers and airlines."

Gatwick and Stansted will have to be sold to separate owners. The £2billion sale of Gatwick is already well advanced - final bids are due by the end of the month - but BAA has been told it must start the £1.2billion auction of Stansted within months and have completed it by about the end of next year.

Colin Matthews, chief executive of BAA, which also has to off-load either Edinburgh or Glasgow airports, said: "We might have to appeal if we reach the conclusion that it is simply not practical to proceed."

In a further statement the company, which is owned by construction giant Ferrovial, said: "We accept the need to change and, having re-organised to improve customer service and having initiated the sale of Gatwick, BAA is already changing.

"However, we believe the commission's analysis is flawed and its remedies may be impractical in current economic conditions." It estimates the cost of the break-up at £106million, but the commission believes the real cost would be £63million.

Today's final report brings to an end a two-year investigation and shatter's BAA's dominance of aviation infrastructure in the London area, which it has enjoyed for more than 40 years and in the private sector since 1987. However, it has come under increasing criticism over recent years from passengers and airlines, culminating in a barrage of condemnation two years ago when new security measures exacerbated overcrowding and led to a summer of "Heathrow Hell".

BAA was also attacked over its handling of the botched opening of the airport's Terminal Five last March.

Mr Clarke said: "Given the nature and scale of the competition problems we have found, we do not consider that alternative measures, such as the sale of only one of the London airports, or greater regulation, will suffice."

However, the timing of the sales could not be worse for BAA as the global recession has led to a sharp downturn in flights being taken from London airports.

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