Tough security restrictions at Britain’s airports have contributed to an 18.1 per cent fall in operating profit in the first nine months of the year at BAA.

The company, owned by Ferrovial, the Spanish construction group, said that it had spent £27 million on new security measures demanded by the Department for Transport.

The airport owner spent an extra £12 million on reducing queues and on cleaning in an attempt to improve passengers’ experience at its airports, which came in for fierce criticism over the summer holiday period.

Operating profits fell to £544 million, largely thanks to £68 million of exceptional costs, including a loss on BAA’s disposal of Budapest airport. The company also spent an additional £16 million on preparing Terminal 5 for its opening next March.

Passenger traffic rose 1.4 per cent to £115 million in the period, while revenues were 2.7 per cent stronger at £1.99 billion. Retail income at the group grew by 4.5 per cent to £493 million, but the company is considering selling its World Duty Free business, which contributed £122 million of that revenue stream in the first nine months of the year.

The profit slump adds to the difficulties of the debt-saddled company. BAA faces a squeeze because the landing fees that it charges airlines to use its airports, which are its chief source of revenue, are capped by the Civil Aviation Authority and are under review for the next five-year period. Ferrovial said that the cap proposed for the period did not give it enough room to restructure the debt that it took on when acquiring BAA. The airport owner has also lost several executives, including Stephen Baxter, the chief operating officer, who left last month, only six weeks after he had been appointed “passengers’ champion”.

BAA is the subject of a Competition Commission investigation into whether the company’s ownership of seven UK airports distorts, restricts or prevents competition. Some airlines have called for the break-up of BAA’s monopoly of the three big airports in the South East – Heathrow, Gatwick and Stansted.

BAA said that it was “vigorously defending” its case and that it was in the best position to deliver the extra runway capacity that London requires. The commission will publish “emerging thinking” on the break-up in 2008. There will a final report early in 2009.

Passenger numbers at Heathrow were unchanged at 51.4 million for the nine months. The figure rose 2.8 per cent to 27.4 million at Gatwick. BAA was allowed to increase its aircraft charges by the regulator this year, and income rose by 7.9 per cent to £834 million, partly driven by tariff increases and by higher passenger numbers.

Malcolm Robertson, BAA’s head of corporate communication, said: “We view it as a good set of results – revenue is increasing, passenger numbers are increasing and costs are under control.”

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