Private investors will not fund new runways in the UK if they continue to make “unsustainable” returns on their investments, the boss of Heathrow warns today.

Chief executive Colin Matthews says international investors are “spooked” by proposals from the Civil Aviation Authority to further reduce the returns that can be made on capital injected into the airport.

He attacked the regulatory regime that dictates how much the airport can charge airlines to use its services and return to shareholders.

Writing in today’s Daily Telegraph, Matthews implies that the latest CAA pricing proposals could put at risk funding for major projects such as a third runway at Heathrow.

The airport will next month publish plans over where it could build additional runway capacity.

“The return on capital investment allowed by the regulator five years ago was 7.75%, and then it dropped to 6.2%,” Matthews says.

“Since then Heathrow has made a pre-tax loss in every year and shareholders have received less than 1% per annum return on their investment. That is unsustainable. Now the regulator is proposing to cut returns further to 5.35%.

“This has so spooked investors that some are reassessing not just investment in Heathrow but whether they would invest in other regulated industries in the UK too. It also throws into doubt the ability to privately finance new runway capacity in the UK.”

Heathrow wants to increase its charges by 5.9% above the RPI measure of inflation for the five years from April 2014 but was told by the regulator in April that price rises should be capped at 1.3% below RPI.