Airport expansion schemes hit by OFT's call for ownership inquiry

Government plans to meet increasing demand for air travel were thrown into doubt yesterday after a regulator called for a full inquiry into the ownership of London's main airports.

The Office of Fair Trading said that BAA's control of Heathrow, Gatwick, Stansted and Southampton did "not deliver best value for air travellers in the UK", arguing that greater competition could bring significant benefits to passengers.

If BAA's ownership of the country's biggest airports were broken up, however, the operator's senior managers believe the ability to fund planned expansion at Heathrow and Stansted would be put in doubt.

The OFT is recommending a full investigation by the Competition Commission but will hold an eight-week consultation before it makes the referral.

In its "progress report" on the 2003 aviation White Paper tomorrow, the Government is expected to confirm its backing for a third runway at Heathrow - subject to environmental concerns - and a second at Stansted.

Airlines have long pressed for a full investigation into BAA, recently bought by the Spanish infrastructure group Ferrovial. The OFT argued yesterday that without competition fresh investment could be inefficient.

The OFT chief executive, John Fingleton, said: "There is evidence of poor quality and high charges - BAA's investment plans, which are of great importance to the UK, have raised significant concerns among its customers."

Airlines applauded the OFT's decision, but the BAA chief executive, Stephen Nelson, said airlines' quest to gain more power over airport pricing should "not be confused with acting in the passenger interest".