Airlines using Heathrow airport are facing a sharp rise in charges over the next five years, which they have warned could be passed on to passengers.

The Civil Aviation Authority (CAA) has approved an above-inflation rise in charges at Heathrow airport for the first time for five years.

It's difficult to see (how) airlines can avoid passing these cost increases on to passengers

Virgin Atlantic Airways

This means that the airport operator BAA can charge airlines up to 36% more for flying into Heathrow.

But BAA said the increases would be only just enough to meet its spending plans for a new fifth terminal at Heathrow.

It also criticised the CAA's proposed curb on security rebates during a period of heightened safety measures.

Price lift

A spokeswoman for BAA told BBC News Online that for the past five years airport charges at Heathrow, Gatwick and Stansted have been around 3% below inflation.

The charges bring us more in line with European airports like Charles de Gaulle and Frankfurt

BAA

But the airport operator said it now needed to raise �8.1bn ($12.6bn) to improve infrastructure at the airports, and to fund the Terminal 5 project at Heathrow.

It described the CAA proposals, due to come into effect in April 2003, as a "tough settlement" which would be "just enough" to fund its spending plans.

The CAA has proposed that charges should rise 6.5% above inflation at Heathrow, at the rate of inflation at Gatwick, and remain flat at Stansted.

The BAA spokeswoman said the only real increases would be seen at Heathrow, while at Stansted "the charges probably won't stand" because of increased competition for budget airlines using the airport.

"The charges bring us more in line with European airports like Charles de Gaulle and Frankfurt," said the spokeswoman.

'More than enough money'

But airlines have been quick to criticise the proposed increases.

Paul Moore, a spokesman for Virgin Atlantic, said: "It is difficult to see (how) airlines can avoid passing these cost increases on to passengers."

Mr Moore suggested that Terminal 5 at Heathrow could be completed without any increase in charges.

"BAA has got more than enough money for its investment programme.

"The airlines will get nothing out of this formula deal except that our costs will go up."

But the CAA said it did not think the proposals would lead to higher air fares.

Security pay

The CAA recommendations were first scrutinised by the Competition Commission.

But while the competition regulator recommended that BAA should recover 95% of the cost of meeting new security charges, the CAA reduced this to 75%.

BAA said it was "surprised and dismayed" by the decision.

The airport operator said it had recruited an extra 700 security staff in the last year and "we are working with the bare minimum of money".