UK airport operator BAA must begin selling off London Stansted airport and one of its Scottish hubs, Britain's Competition Commission said in its final report on BAA's position.
The report upheld a decision reached by the competition authority in March when it rejected an appeal by Ferrovial-controlled BAA, the owner of London Heathrow — Europe's busiest airport — to prevent it from being forced to sell Stansted, in southeast England.
"The CC has concluded that the sale of the airports is fully justified and that passengers and airlines would still benefit from greater competition with the airports under separate ownership, despite the current government's decision to rule out new runways at any of the London airports," the CC said in a statement.
"The sales process will start in three months' time, or sooner if undertakings are accepted from BAA in the meantime."
The decision ends a two year battle between BAA and the Competition Commission, who in 2009 ruled BAA exerted a dominant hold on British airports and told it to sell Gatwick and Stansted airports and one of its Scottish airports.
BAA, which owns Glasgow, Edinburgh and Aberdeen airports in Scotland, as well as Heathrow, Southampton and Stansted in England, said it was looking at its legal options with regards to the ruling.
"This decision would damage our company which is investing strongly in UK jobs and growth," BAA said in a statement. "We have a responsibility to protect our shareholders' investment and we will now consider a judicial review of the Competition Commission's decision."
BAA sold Gatwick to Global Infrastructure Partners for GBP£1.5 billion in October 2009.
BAA could raise about GBP£1.2 billion from the forced sale of Stansted but should be allowed to delay a sale until market conditions improve, BAA's chief executive Colin Matthews said in April.
The company claims the UK airports market has changed significantly since the CC's initial ruling but that this fact was not taken into account by the CC.
"A new government has changed aviation policy to rule out any new runway capacity in the south east (of England) and BAA has sold Gatwick Airport. Both are significant changes to the airport market," BAA said.
"Further, the airports in question face increased competition from non-BAA airports, particularly those in Europe, for the business of low cost carriers who now take a pan-European view of the market."
The CC said Stansted airport must be sold off first but has not given BAA a deadline. The regulator's initial ruling gave BAA two years to sell the three airports – a timetable which was pushed back by BAA's appeals against the ruling – leaving it around 18 months to arrange a sale.
In Scotland BAA has been told to sell either Glasgow or Edinburgh airport and analysts believe it would opt to sell Glasgow because it is the weaker performing of the two.