CAA proposes charge rise at Heathrow

LONDON (Reuters) - The Civil Aviation Authority is considering allowing airport operator BAA to raise charges to airlines by 15.6 percent at Heathrow airport and by 8.2 percent at Gatwick for the next two years.

The CAA said on Tuesday it is also proposing an increase in penalties for BAA, a division of Spain's Ferrovial, should it fail to hit performance targets.

"Passengers and airlines deserve better than they have been provided with at Heathrow and Gatwick in recent years, but need to recognise that improvements have to be paid for," said the CAA's director of economic regulation Harry Bush.

The CAA is proposing setting the cap at 11.97 pounds per passenger at Heathrow for 2008/2009 and at 6.07 pounds at Gatwick.

Ferrovial said the price increases were not enough.

"...we do not believe these proposals yet recognise the scale of what is required and the risk involved," a statement from BAA said.

The proposals follow a report into pricing at airports

by the Competition Commission in September.

"The CAA recognises that the resulting increases in airport charges, particularly at Heathrow, are significant," it said.

"However, these increases reflect the increased costs of security operations, the cost of recent capital projects and allowances for significant additional capital expenditure," it added.

(Reporting by Pete Harrison; Editing by Elaine Hardcastle)