Fare cuts by no-frills airlines and flag carriers have fuelled a revival in air passenger traffic, airports operator BAA has said.

BAA said that the number of passengers travelling through its airports, which include Edinburgh and London Heathrow, rose by 4.3% in the April to December period.

Growth was led by traffic on domestic and European routes.

"Lower fares from both traditional and low-cost scheduled airlines stimulated these markets," BAA said.

The firm said that airlines enjoyed a strong December, even on long-haul routes, where passenger numbers dropped particularly after the terror strikes on 11 September 2001.

"Traffic was particularly strong over the Christmas holiday period," the firm said.

War factor

But BAA said pre-tax profits had risen by only 1.1% to �448m over the period, as costs involved in projects such as building Heathrow's Terminal 5 ate into the cashflow.

The firm also warned of considerably higher insurance and security staff costs.

However, it forecast that even if an Iraq war hit short term trade, it was optimistic over prospects.

"Despite current uncertainties in the geopolitical climate, we remain confident about growth for the medium to long term," chief executive Mike Hodgkinson said.

Mr Hodgkinson, who will retire in June, will be replaced by his deputy Mike Clasper, BAA confirmed in a separate statement on Monday.

In the City, BAA shares stood 0.5p higher at 449.5p in lunchtime trade.