Easyjet is to be allowed to operate flights from London to Moscow in preference to Virgin Atlantic.
The CAA has announced that Easyjet will join British Airways in being entitled to fly on the London-Moscow route under the bilateral agreement between the UK and Russian governments.
Easyjet plans to operate its Moscow service from Gatwick while BA will continue offering flights from Heathrow. Bmi had been the second UK carrier flying between London and Moscow under the bilateral deal but it has now stopped operating on ther route following its takeover by BA.
Virgin had wanted to fly from Heathrow using former Bmi slots which are being relinquished by BA as part of its deal with European regulators to allow the purchase to go ahead.
The CAA made its decision after a “scarce capacity” hearing where it considered arguments from Virgin and Easyjet on why they should be granted rights to fly to Moscow.
Iain Osborne, the CAA’s director of regulatory policy and chairman of the scarce capacity decision 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.”
EasyJet is set to start its Moscow service in spring 2013 while BA is planning to continue with its current schedule to the Russian capital.
Virgin hit back against the decision and said it “flies in the face of what the consumer wants and our economy demands”.
“Data shows that passengers travelling between Moscow and London use Heathrow airport and not Gatwick,” said Virgin in a statement. “Long-haul connectivity is far greater via Heathrow and this decision will also reduce capacity between the two capitals which is not good for UK consumers.”
“The flying that disappeared with Bmi's exit from the route has not been remedied despite the European competition authorities identifying this very issue. 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."
Virgin added that it would fully review the CAA's report into the decision "before considering all of our options".
Easyjet said it would offer two daily flights on the Gatwick-Moscow Domodedovo route and expected to carry 230,000 passengers in its first year of operations.
Chief executive Carolyn McCall said: “We believe this is the right decision for consumers both in the UK and Russia.
“Russia has a fast-growing economy and is a country rich in culture and history. We believe that our flights will be popular with both business and leisure travellers alike.
“Easyjet has proved again and again that when we enter a new market we open it up - bringing in competition and lower fares and enabling more people to travel on the route.”