As investigators try to find out what went wrong with both engines of a British Airways jet, causing it to make an emergency landing at Heathrow shortly after take-off, the incident sparked more controversy about airport capacity in south-east England.

Investigators were last night attempting to find out what went wrong with the engines of the jet, causing it to make the hasty landing at Heathrow shortly after take-off.

The Airbus A319, with 75 passengers and five crew aboard, took off at 8.16am bound for Oslo. Within minutes the pilots had encountered engine problems and asked for permission to return to Heathrow. Pictures taken by passengers show the serious damage to both engines. Normal practice is to dump fuel in order to reduce the landing weight, but evidently the crew wanted to land immediately.

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The aircraft followed the normal approach for the northern runway over London, passing about a mile south of the Houses of Parliament and Buckingham Palace. Residents of south-west London saw a plume of black smoke coming from the right engine.

Clive Cook, who lives beneath the Heathrow flight path in Battersea, told Sky News: “The right engine was on fire. It wasn’t smoking; it was actually on fire.”

The southern runway was temporarily closed as fire crews took up position ready for an emergency landing on the northern runway. The aircraft landed at 8.43am, and came to a halt on the runway facing into the wind – normal practice to reduce fire risks. The evacuation was carried out quickly and safely. Mark Freeman, the duty manager at Heathrow, praised the emergency services and BA “for their calm professionalism in assisting passengers and making the aircraft safe”.

The northern runway remained closed for almost two hours, causing widespread delays. More than 20 incoming flights were diverted to other UK airports – many to Gatwick, Luton or Stansted, but others to Cardiff, Bournemouth and Manston in Kent.

Around 200 flights to and from Heathrow were cancelled in the wake of the incident. All British Airways services to domestic and European destinations up to 4pm were axed, while Aer Lingus and Virgin Atlantic also cancelled flights.

A party of 100 schoolchildren from Newcastle planning to fly to Rome for a holiday last night returned by bus to Tyneside. Charlotte Wathey, a parent, said, “Shame on BA for cancelling completely rather than flying late to Rome. You would think that with a party of that size, BA would have made every effort to get them away late, rather than not at all.” BA told passengers: “These cancellations will help us to stabilise our schedule, allowing us to get as many customers away as possible in these difficult circumstances”.

Passengers on flights that did operate faced delays of up to four hours. Eurocontrol in Brussels tweeted that users of Heathrow should “expect heavy delays all today”. Disruption continued into the evening, with later services to Amsterdam, Brussels, Paris and Geneva cancelled.

The incident happened at the start of one of the busiest weekends of the year, the start of half-term for many families. British Airways had planned to carry close to half a million passengers between Friday and Monday, but many of the 128,000 expecting to travel yesterday saw their planes grounded. Passengers whose flights are cancelled go to the back of the queue to be re-booked on the next available flight. The emergency added impetus to the debate over airport capacity in South-east England, partly from those calling for extra capacity to reduce disruption.

Laurie Price, an advisor to the All-Party Aviation Group, said: “All BA short-haul services cancelled till 4pm due to one incident is absurd. Heathrow just has no resilience.”

One comment on The Independent’s website read: “London is one of the very few cities in the world that has its main flight paths over the city. A very serious accident is not a question of if, but when.”

In a separate incident, a Pakistan International flight from Lahore to Manchester was given an RAF fighter escort after two passengers were reported to have made threats to the purser. The Boeing 777, with 297 people on board, was diverted to Stansted – the airport designated for handling suspected terrorist incidents. The aircraft landed safely at the Essex airport, where two men were arrested.