According to a CAA report, without extra runway capacity, passengers will face higher fares and reduced choice.
The government has said it is developing “a sustainable policy framework for aviation.”
The CAA argues that unless the UK expands capacity, airports may struggle to keep up with growth in aviation demand boosted by emerging markets such as China, India and South America.
"Aviation should be able to grow, but to do so, it must be able to play its part in delivering our environmental goals and protecting quality of life of local communities," the report said.
CAA chief executive Andrew Haines said consumers and the UK economy would benefit from extra capacity "so long as it is delivered in an environmentally sustainable way".
"However, as we haven't built a single runway in the south east of England capable of handling Boeing 747s and Airbus A380s for over 70 years, the difficulty of increasing capacity is obvious," he added.
"The challenge facing the Government is to create an aviation policy that stands the test of time - not a policy for five years, but one for thirty years."
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