BAA, the owner of Heathrow and Stanstead airports, has reported a rise of 3.4 per cent in passenger numbers in October, thanks to a recovery in the number of business travellers.

The company said that number of passengers passing through its six airports increased by 318,000 to 9.75 million last month, up from 9.44 million in the same month last year.

Passenger numbers at Heathrow Airport increased 7.2 per cent to 6.1 million in October, while cargo activity at Heathrow rose 14.7 per cent, outperforming BAA overall, which saw tonnage handled rise 12.5 per cent.

BAA said that a rise in travel in Europe was providing hope that the continent's economic recovery might be beginning to stabilise. The airline also cited the IMF, which last month said that the recovery in Europe was "continuing", predicting growth in Europe of 2.3 per cent this year and 2.2 per cent next year.

The company however warned that long haul flights to North America and the Far East may take a hit, despite rising in October, due to an increase in Air Passenger Duty, which kicked in in November. This, BAA said, could also lead passengers to make long haul journeys from other European hubs such as Paris, Frankfurt and Amsterdam.

Colin Matthews, Chief Executive of BAA, said, "Passenger growth is good for the economy with thousands of people across the country employed in aviation, international trade and tourism. We are continuing with our £5 billion Heathrow investment programme - the biggest private investment project in the UK - providing thousands of jobs as we modernise facilities to improve everyone's experience of the airport.

"The continued strength of Heathrow reflects an upturn in global economic activity. Low sterling and interest rates make the UK a competitive place to do business. However, government spending cuts, a sharp increase in air passenger duty and an imminent VAT rise are weakening the prospects for in-bound tourism and British leisure travel."