Having been involved at interview, the addition of a photogragh ensures that the person you are interviewing - and the person you may subsequently wish to employ - are the same person. It is of course an excellent aide-de-memoire when discussing the candidates later.
Nowadays the vast majority of the interviews have HR personnel present to ensure that the UK law is strictly adhered to - if only to ensure that there is no subsequent come-back on the airline or the interviewers.
When you get into large volume recruitment - with interviews being conducted by several interviewers - the risk of impersonation increases. Interviewers need to know that they are all interviewing the same person.
The application forms are duplicated by admin staff so that each interviewer knows that they have the right person in front of them.
In the days of Yore, the ATPL and the CPL had a passport photograph in them and allowed the holder of a British licence access to the United Kingdom.
ReHeat
I think you are jumping the gun a bit
then it is clear to me that it is unlawful to ask for a photo without that valid reason.
You are originally quoting from the Council for Racial Equality Best Practice which is just that - 'best practice' in their view. To the best of my knowledge it is not UK law.
HWB