LONDON: Airport operator BAA is proposing to take over Gatwick railway station as the first move in a policy of diversification. It is talking to Railtrack, which now owns 2,500 former BR stations, about spending GBP3 million (about HK$35.88 million) to transform the 1960s station into a ''key terminus''. BAA was also believed to be prepared to invest in London's Paddington station, which will be the terminus of its GBP300 million Heathrow Express railway, due to open in 1997. BAA had rejected all invitations to take over any stations, but Gatwick and Paddington were regarded as essential to its core business. Sources close to Sir John Egan, BAA's chief executive, said the move did not herald a full-scale diversification drive. ''We are interested in the railway stations only to ensure there are no problems for our airport customers,'' said one official. BAA's ambitions were accidentally revealed in rail documents released last week by Glenda Jackson, Member of Parliament for Hampstead and Highgate. In an exchange of letters, the Office of Rail Franchising and the Rail Regulator discussed allegations of unfair practices by Gatwick Express, the principal train operator between Gatwick and Victoria station. At least three new rail companies operate on the route. Jonathan Swift, the rail regulator, was investigating whether Gatwick Express, the prime station operator at Gatwick, had breached its duty to sell tickets for all services impartially. Gatwick Express was angered by the allegations and emphasises that booking staff were BR employees who have nothing to gain by favouritism. It would like to operate the Gatwick station but would work with BAA. Its management is also planning some innovations, including selling rail tickets on board aircraft. BAA is also diversifying into factory shops, huge retail outlets that could replace duty-free sales in its terminals after 1999, when the duty-free system is to end. In partnership with the American firm McArthur Glen, BAA is to build two experimental stores at Chester and Trois in northern France. It recently acquired an interest in Tarmac Richardson's factory shops division, which gives it a stake in a 185,000 sq ft site in Swindon and another property near Alfreton, Derbyshire. BAA believes the British market for factory stores will be limited to about 10 superstores and it hoped to become involved in half of them.