The Office of Fair Trading has announced an investigation in the UK airport market, a move that is likely to see scrutiny of the way in which the BAA Group has operated in the key market areas of London and Scotland.

The recent acquisition of BAA by ADI, a consortium led by the Spanish group Ferrovial will not affect the terms of the OFT inquiry. ADI has promised full co-operation with the OFT.

The OFT investigation will look at the UK airports market to see if it works well for consumers. It has the power to refer any concerns to the Competition Commission, a government body that is able to take action against any company abusing a dominant position.

BAA owns a number of airports in the UK including Gatwick, Heathrow and Stansted in London, and Aberdeen, Edinburgh and Glasgow in Scotland. In Scotland, 86% of all passengers use BAA airports.

Low cost operators have welcomed the news as they have long complained about high landing charges imposed by airports owned by BAA. The low cost carriers will hope for a better bargaining position with the airports, either enforced by regulation, or by change of ownership.

In a statement Ryanair's Michael O'Leary welcomed the news, singling out the cost of the proposed new runway at Stansted for criticism:

“We would strongly welcome an investigation by the OFT of the BAA airport monopoly. When a Government protected monopoly like the BAA can spend £4bn building facilities at Stansted which should only cost £1bn, something is wrong."

Analysts believe that it is likely two airports will eventually change ownership. In London, Gatwick is considered a candidate particularly as a new owner would have access to an established long haul market in addition to a strong European network.

In Scotland, Glasgow may be a candidate for new ownership. Glasgow competes with Ayrshire Prestwick although both airports have good representation by the low cost carriers.

The OFT investigation is likely to take around six months, reporting towards the end of 2006.