Shares in airlines easyJet PLC (LSE:EZJ), British Airways owner IAG (LSE:IAG) and Wizz Air Holdings PLC (AIM:WIZZ) were in the red despite Downing Street giving the green light for Gatwick Airport to build a second runway.
Transport Secretary Heidi Alexander and the Planning Inspectorate on Monday confirmed approval for the £2.2 billion plan that is designed to increase capacity by 100,000 flights a year for London's third-closest airport.
The plan is to move the existing emergency runway 12 metres away from its current location, so it will be able to be used for departures.
Gatwick says the extra capacity should add 14,000 jobs.
Government sources said flights could take off from the new full runway by 2029.
The Friends of the Earth warned that, with emissions from aviation rising, "it's a struggle to see how the government can conclude expansion at Gatwick is a wise move".
Alexander was reported as saying a second runway is a "no-brainer" for the economy, but the environmental campaign group's spokeswoman, Rosie Downes, said "the economic case for airport expansion is massively overstated".
"Any growth in air passengers leaving the country is likely to mean more UK tourists using their spending power overseas than anything we might gain from visitors".
She said the decision also "makes it much harder for the government to approve expansion at Heathrow", if the UK is to meet legally-binding climate targets.