The Competition Commission (CC) has ordered airport operator BAA to sell its Gatwick and Stansted airports, as well as one of its Scottish terminals, within the next two years.

In its final report on BAA's ownership of seven UK airports, the CC said BAA's dominant position had lead to passengers and airlines suffering from a lack of competition at all airports.

Christopher Clarke, chair of the CC's BAA Airports inquiry, said the chopping up of the BAA monopoly on large airports was the only way to ensure a fair deal to travelers and airlines.

"To address the detriment to passengers and airlines from the complete absence of competition between BAA’s south-east airports and between Edinburgh and Glasgow, we have decided to require BAA to sell both Gatwick and Stansted as well as either Edinburgh or Glasgow," he said.

"They will each then operate under separate ownership from BAA’s other airports. We recognize that in using our powers in this way, we will have a significant impact on BAA’s business."

Clarke added that due to the nature and scale of the competition problems, the CC had dismissed BAA's calls for alternative measures, such as the sale of only one of the London airports or greater regulation.

A spokesperson for BAA said the company will consider the CC's report carefully before deciding on an official response.

He did, however, suggest that the BAA considers the CC report to be inadequate.

"We accept the need to change and, having reorganised to improve customer service and having initiated the sale of Gatwick, BAA is already changing," he said.

"However, we believe the Commission’s analysis is flawed and its remedies may be impractical in current economic conditions."

Last month, BAA reported an 18 per cent slump in profits for the year ending 31 December 2008 following a decline in the number of passengers.

BAA is owned by Spanish building group Ferrovial, which acquired the airport operator for £10.5bn in 2006. Image: BAA is planning a £40m redevelopment of Edinburgh Airport – one of the sites it might have to offload