The authority said that the current rules fell "a long way short" of stimulating competition and providing support for new competing airlines. Christopher Chataway, chairman, said: "On most routes in Europe there are two airlines accustomed to co-operating rather than competing. What is needed is more third carriers."
He said that, contrary to expectations when the existing rules were introduced in 1993, there had been no great benefit for consumers.
Under European rules, half of all slots becoming available at airports are kept for new airlines that want to provide services not yet available. The CAA argues these are too often handed out in "penny packets" that do not allow the airline to buld up a viable service.
The rules also act against established airlines providing competition by taking on routes they do not already operate.
A report by the CAA shows that many "new entrants" applying for slots at Heathrow in 1994 received far fewer than they required, and at incovenient times. The result was that a large number of slots were returned. Only five of 14 prospective new entrants at Heathrow began passenger services last year and a similar number began serving Gatwick last summer.
The CAA believes that better targeting of the slots - related to the routes where competition is most needed - could help to resolve the issue. It does not advocate confiscating slots held by exisiting airlines or abolishing the traditional "grandfather rights" under which an airline can keep its slots from season to season as long as they are in use.
The CAA is submitting the document to the Government as part of a discussion leading to a review of the rules in 1996. The Government has already set up a working group to establish its position in the European debate.