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Passenger fees at Heathrow and Gatwick are set to rise as the Civil Aviation Authority raises price caps at the London airports.

BAA will now be able to charge airlines up to £12.80 - 23.5 per cent more - at Heathrow and up to £6.79 - 21 per cent more - at Gatwick per passenger compared to last year.

The Civil Aviation Authority (CAA) said the price rises reflected the extra investment BAA has ploughed into the airports, particularly at Heathrow where Terminal 5 has been built.

Extra security costs were also factored into the price controls, the CAA said.

In a statement, the regulator admitted the increases were "significant". But the CAA added "these higher airport charges are essentially paying for the modernisation of Heathrow and Gatwick, in terms of both facilities and service, for the direct benefit of the passenger".

Airlines will have to take on the extra costs. Paul Ellis, British Airways' general manager airport policy and infrastructure, criticised the decision.

"When BAA's new owners, Ferrovial, bought them, the CAA said they would not be influenced by Ferrovial's high debt levels," Mr Ellis said.

"In practice, they have ignored their own policy and caved in to intense pressure from BAA by setting excessive price increases. Heathrow passengers will pay, on average, 17 per cent more than the Competition Commission recommended in September 2007."

Dr Harry Bush, CAA group director of economic regulation, said: "Passengers and airlines deserve better than they have been provided with at Heathrow and Gatwick in recent years.

"However, the resulting improvements in airport facilities and service standards - some £5 billion of investment over the next five years and a halving of security queuing times - have to be paid for in increased charges."

The watchdog announced the higher prices would come with increased pressure to improve service.

If improvement projects are delayed, BAA could lose around four to five per cent of airport charge revenue in penalties, CAA said.