The Civil Aviation Authority (CAA) has added its voice to calls for BAA, the airports operator, to be broken up.

The regulator joins the Competition Commission, the Office of Fair Trading and the big airlines in demanding that BAA be forced to cede control of Heathrow, Gatwick and Stansted, the main London airports. The Competition Commission said last month in an “emerging thinking” report on BAA's control of airports that the monopoly was anticompetitive.

The CAA responded to that report yesterday by stating that common ownership of the UK's busiest airports was “likely to prevent, restrict and/or distort competition”.

The Competition Commission is expected to deliver its final verdict on BAA's monopoly this year, which could force the company to sell Gatwick and/or Stansted and also Glasgow. The CAA has been responsible for policing BAA's monopoly through restrictions on how much the airports operator can charge passengers for using its facilities. The regulator came under criticism this year when it granted BAA a price increase of 23.5 per cent at Heathrow and 21 per cent at Gatwick over the next five years.

The CAA insisted yesterday that its pricing controls had been successful in mitigating the market power of BAA. One airline executive said that it made no sense for the regulator to claim that its pricing system had worked while also admitting that BAA's monopoly distorted competition.

The UK's largest airlines, including British Airways, Virgin Atlantic, Ryanair and easyJet, believe that the CAA has been too weak to control BAA, which has led to poor service for passengers and carriers. EasyJet launched a High Court action on Thursday seeking to block the latest round of landing fee increases, and the Government has started an inquiry into the regulator's role in setting landing charges.

Harry Bush, group director of economic regulation at the CAA, said: “BAA enjoys a very strong market position in the UK airport market, owning a number of neighbouring airports that to varying degrees would otherwise be expected to act as rivals and compete for airlines and passengers.”

BAA said in a statement: “We are disappointed that the CAA has not recognised the important differences between airports in the South East, which are subject to capacity constraints and regulation, and other airports in the rest of the UK. In BAA's view, it is capacity constraints and regulation that prevent airport competition, not their ownership.”

Deadline

BAA must refinance its £10billion debt by June 30. If it fails to do so, credit agencies are expected to downgrade the company to junk status

This would allow about half its bondholders to recall their loans - worth approximately £3billion

That would force BAA's banks to bail out the company

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