Sir Richard Branson has lost out in another key transport battle.
The tycoon learned tonight that his airline Virgin Atlantic had not been chosen by aviation regulators in a fight to operate UK to Moscow flights.
With more flights now available between the UK and Russia, British Airways, easyJet and Virgin had been vying for the right to fly on the London-Moscow route.
Tonight the Civil Aviation Authority (CAA) decided that BA, which already operates to Moscow, and easyJet should be allowed to take up the Moscow flights - meaning that Virgin had missed out.
The decision follows the Department for Transport (Dft) ruling in August that FirstGroup rather than Virgin Rail should take up a new 13-year franchise on the West Coast Main Line.
Sir Richard launched a legal challengers against the ruling and the DfT has now scrapped the West Coast bidding process, suspended three civil servants and asked Virgin to carry on for the time being.
The CAA's perming two-from-three decision came after what is known as a scarce capacity hearing at which a panel of CAA board members considered the arguments put forward by each of the applicant airlines.
The panel decided to allow BA to continue to operate the services it currently operates from London Heathrow to Moscow’s Domodedovo Airport and to grant easyJet permission to operate between London Gatwick and Moscow Domodedovo.
Iain Osborne, the CAA’s director of regulatory policy, and chairman of the panel, said: “On balance, allocating scarce capacity to BA and easyJet is likely to deliver the greatest benefit to consumers.
“EasyJet’s proposal will introduce an innovative product into the market and has the potential to deliver the greatest dynamic fare benefits for consumers.”
He went on: “We concluded that easyJet’s proposal would introduce a distinctly different product into the market and would stimulate innovation on the route as a whole, as well as satisfying and stimulating consumer demand that is currently under-served, in particular, people who prefer or are content to use Gatwick.”
The CAA said easyJet was expected to begin operating services to Moscow from early 2013. The CAA understands that BA will continue with its current schedule.
EasyJet said it would operate an Airbus A320 on two services a day between Gatwick and Moscow. Each aircraft will have 180 seats and the airline expects to fly more than 230,000 passengers in its first year of operations.
EasyJet chief executive Carolyn McCall said: “We are delighted to have been awarded the rights to fly between Gatwick and Moscow.
“We believe this is the right decision for consumers both in the UK and Russia.”
A Virgin Atlantic spokeswoman said: ``We are very disappointed with the result of the CAA hearing which we believe flies in the face of what the consumer wants and our economy demands.
“Data shows that passengers travelling between Moscow and London want to use Heathrow airport and not Gatwick, long haul connectivity is far greater via Heathrow and this decision will also reduce capacity between the two capitals.
“The flying that disappeared with bmi’s exit from the route has not been remedied and now there will be a major shortage of capacity for UK business travellers seeking to trade with one of the world’s fastest-growing economies.
“We are perplexed by what we consider a very short-sighted decision. We will review the CAA’s report in full before considering all of our options.”