Business leaders have expressed their dismay after a High Court judge dealt a potentially fatal blow to Coventry Airport’s controversial expansion plans.

A judge upheld the Government’s decision to reject moves to build a new terminal to take up to two million passengers a year despite please from the local business community and council leaders who had expressed the belief that the airport’s future success was vital for the economic health and prestige of the region.

West Midlands International Airport Ltd had asked Mr Justice Forbes, sitting in London, to overturn a decision taken last April by Hazel Blears, Secretary of State for Communities and Local Government, blocking the project but the judge ruled that the minister’s decision was not legally flawed and refused to intervene.

The bid to expand the terminal building and attract more flights and passengers was backed by the Coventry & Warwickshire Chamber of Commerce and the city council.

Alan Durham, director of the chamber, said: “This is a big disappointment to the city and the region. We have felt all along that the development and controlled expansion of CoventryAirport’s passenger terminal was a factor in the growth and diversity of our economy.

“We will seek talks with the management at the airport to see what the implications are of this decision and what plans they might have.”

During a bitter public inquiry Coventry accused neighbouring Birmingham International Airport of “naked commercialism” in its attempts to halt the development of a rival hub after claiming that the close proximity had and would continue to cause delays to air traffic.

A spokesperson for BIA said it was now focused on ensuring it continued its own development plans.

The spokesperson added: “Birmingham Airport hasn’t been involved in the High Court Appeal, nor has it been officially told of the decision but if this indeed is the case, it confirms the the original inquiry verdict last year.

“The aviation white paper envisages Birmingham as the region’s premier global gateway, and the team here are concentrating their efforts on turning that vision into an even greater reality. We are currently investing £1 million a week to ensure that Birmingham remains the regional airport of choice”

Coventry airport’s chief executive, Chris Orphanou, said: “We have just been advised of the outcome of the High Court hearing and are naturally disappointed with the result.

“We will now take time to examine the full report and its implications.”

No indication was given as to whether there will be an attempt to appeal against the ruling.

During the legal battle, Mr Orphanou warned that if the passenger terminal was not allowed to grow it would be “devastating, not just for us but for the city and the surrounding community.”

The High Court case arose out of a Government inspector’s decision, following last year’s public inquiry, to refuse permission for expansion.

Opposition to the scheme was voiced by environment campaigners, residents and some MPs.

The judge rejected accusations that the Government planners had acted irrationally.