UK regulator says could order BAA to sell airports

By John Bowker

LONDON (Reuters) - BAA may be ordered to sell one or more of its seven UK airports after the competition regulator said the operator may not best be serving the interests of airlines or passengers.

Britain's Competition Commission said on Tuesday it would publish possible remedies in August, but said a preliminary study had found that under a single owner there was no competition among some of the airports.

BAA, part of Spain's Ferrovial (FER.MC: Quote, Profile, Research) since 2006, has owned the three main airports serving London -- Heathrow, Gatwick and Stansted -- as well as Scotland's Edinburgh and Glasgow airports since it floated over 20 years ago.

The Commission is investigating whether problems faced by airline travellers through Britain, as highlighted by the botched opening of Heathrow's Terminal 5, are caused or exacerbated by BAA's monopoly.

It is also addressing whether the monopoly is the best way to expand capacity at the country's packed airports, and also the effectiveness of the current regulatory system under the Civil Aviation Authority (CAA).

"There is no competition between BAA's three London airports, and only very limited competition from non-BAA airports (London City and Luton)," the inquiry's chairman, Christopher Clarke, said in the interim report.

"Similarly, there is no competition between their two airports in lowland Scotland," he added.

He said that the CAA, which sets the price caps on what BAA can charge airlines, had little power to intervene in how airports were operated or developed.