Businesses could shift their headquarters out of Britain if Heathrow continues to lose its competitive edge against rival European airports, Willie Walsh, the chief executive of British Airways, warned today.

Mr Walsh, who apologised again for BA’s catalogue of errors when Terminal Five opened in March, told the Institute of Directors' (IoD) annual conference that Heathrow needed more runway capacity to catch up with Charles de Gaulle airport in Paris, and those of Amsterdam and Frankfurt.

Heathrow’s European rivals all have more runways than London’s flagship airport.

Mr Walsh said that Heathrow had to catch up and if the relative decline continued “UK business will lose competitiveness and might be forced to consider relocating abroad.”

The BA chief said that a third runway at Heathrow would help to underpin punctuality and enable the airport to serve an additional 75 or 80 destinations. He said that it was essential that “the reputation of Heathrow as an effective global hub is restored”.

He said that had BAA not owned Stansted, Gatwick and Heathrow, all three airports would have been more quickly developed. He added that a third runway would also have been built at Heathrow by now.

Mr Walsh told business delegates at the London conference that he had been “bitterly disappointed” at the logistical troubles which had beset Terminal Five’s opening. But he urged them “not to rush to judgment on the basis of the first few days”. He said that the terminal was on course to meet its new timetable of beginning to transfer long-haul flights by early June and to complete the process by October.

Mr Walsh repeated admissions that BA had made mistakes in the opening of the terminal but said that they were now being fixed and would herald a new era for the airline.

He said that BA had also learned to manage customers' expectations and made a joke at the expense of Michael O’Leary, his counterpart at Ryanair: “At Ryanair the expectation is that they will get nothing…and they generally get just what they expected.”

Mr Walsh’s warning over Britain’s competitiveness came as the IoD published a survey showing that 49 per cent of business leaders thought that the UK is less competitive than it was ten years ago, while 33 per cent believed that it was more competitive.

According to the survey, 53 per cent forecast that the country will become less competitive, while 23 per cent thought it would become more internationally competitive.

The business leaders called for action on regulation, tax, and education to improve Britain’s international standing.

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