TBI, the UK regional airport operator, yesterday expressed concern about the impact on its business from intense competition in the low-cost airline sector.

The Irish financier Mr Dermot Desmond holds a 5 per cent stake in the company.

Ms Caroline Price, finance director, said the aviation sector over the past few years had faced "challenge after challenge and this is another of them which obviously causes us to be cautious".

TBI's low-cost traffic grew 31 per cent in the year to March 31 2004, of which 82 per cent was predominantly generated by three airlines - Ryanair out of Stockholm Skavsta and London Luton airports; EasyJet out of Luton and Belfast and BMIbaby out of Cardiff and Belfast.

Ms Price said TBI was sensitive to the number of passengers carried by the low-cost airlines, which now accounted for 62 per cent of the group's traffic, rather than their profitability, or rate of capacity growth. But she acknowledged: "There is a supply chain here . . . We are not in the frontline, but we are in the back room."

She said Ryanair and EasyJet should be able to withstand the price war, while BMIbaby was somewhat protected by its parent.

TBI reported a 45 per cent fall in pre-tax profit in the year to March 31st, 2004, from £11.2 million (€17.06 million) to £6.2 million, after a £5.9 million goodwill write-down in relation to its US business, which it is selling.

- (Financial Times Service)