BAA is to stage a dramatic about-turn by selling Stansted, the Essex airport that handles 23m passengers a year and is the centre for no-frills airlines in Britain.

The move will finally end BAA’s domination of London airports. It has owned and operated the London trio of Heathow, Gatwick and Stansted since it was created 40 years ago as a government agency.

The airports group, majority-owned by Spain’s Ferrovial, has to date fought to keep hold of Stansted, despite recommendations from competition watchdogs that it should sell.

Senior BAA executives have pledged to fight the Competition Commission in the courts rather than give up the Essex hub. It is understood, however, that the Spanish infrastructure group is now prepared to drop its objections.

The Competition Commission will make its final decision on airport ownership early next month, and is expected to order BAA to give up Gatwick – which it is already selling – Stansted, and one of its two large Scottish airports.

BAA is not expected to oppose the demand.

The company last night declined to comment, saying any such decision was a matter for its board.

However, industry insiders say they have been expecting a climbdown ever since the government controversially decided to support the construction of a third runway at Heathrow.

“There was no point in [BAA] going on fighting the Competition Commission. It has won on the bigger point of expanding Heathrow,” said one airline executive.

The sale of Stansted may also generate some welcome cash for Ferrovial, which like many infrastructure companies is struggling with debts taken on during rapid expansion in recent years.

Analysts have in recent months questioned whether Ferrovial can meet its repayment schedule for debt taken on during the purchase of BAA, for which it paid £10.1 billion three years ago.

Meanwhile, BAA is in the final throes of the Gatwick auction, having told the remaining bidders to submit their final offers by March 30.

Three groups are still in the hunt – a team led by Global Infrastructure Partners, another led by Citigroup’s infrastructure fund, and a third comprising the Canadian fund Borealis and Manchester airport. They will be vetted by the Competition Commission in the first week of March.

Bidders will have to satisfy the commission of their financing, operational expertise and independence from BAA – and that they do not own a competing airport.

BAA executives remain confident they can secure a price in excess of Gatwick’s notional “par” value £1.7 billion, which is the value regulators put on its assets.

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