BAA dominates the UK airports market

The CAA said Stansted, a major hub for budget carriers, does not require a price cap because it does not charge the maximum permitted fees anyway.

The CAA wants a fee limit at Heathrow of inflation plus 4%-8%, and cap at Gatwick of inflation plus or minus 2%.

Heathrow, Gatwick and Stansted are all owned by Spain's Grupo Ferrovial.

BA anger

The CAA's proposed new pricing formula, which will apply between 2008 and 2013, will first go out to consultation and then be reviewed by the Competition Commission.

At present, the maximum amount by which airport operator BAA - which was bought by Ferrovial earlier this year - can increase take-off and landing fees at Heathrow is inflation (RPI) plus 6.5%, while at Gatwick it is limited to just inflation.

The plans for Heathrow charges have already been criticised by British Airways.

"Airport charges will increase by 50% during the current five year charging period yet passengers have yet to see an improvement in facilities and service," said Paul Ellis, BA's general manager of airport policy.