CEO of British Airways' owner warns UK over Heathrow expansion cost

LONDON, June 22 (Reuters) - The chief executive of airlines group IAG warned the government on Wednesday to keep down the cost of building any new runway at Heathrow or Gatwick or British Airways would opt to expand elsewhere.

"If there is expensive, inefficient airport expansion at Gatwick or Heathrow, then we will expand through other airports and hubs," Willie Walsh said in a speech.

Transport minister Patrick McLoughlin said in February that a government decision on building new capacity, at either Britain's main airport Heathrow or its second airport Gatwick, could come before the end of July, after Britain's vote on whether to stay in the EU or not on Thursday.

Heathrow, where British Airways is the largest airline and which operates at full capacity, has been campaigning for 25 years to be given the green light to build a third runway, but political wrangling due to objections from local residents and environmentalists continues to delay any expansion.

Walsh said the government should consider changes to Heathrow's 18 billion pound ($26 billion) expansion plan because the cost could lead to high charges for passengers, damaging the airport's ability to provide strong UK flight connections.

"In our view, any new runway development should be phased in to keep costs down. There is no need to build all the facilities at once," he said.

He also urged the government to consider a cheaper option to extend one of the current runways at Heathrow, known as the Heathrow Hub option.

Walsh said last year that IAG would not support a project that would increase its costs. He also used Wednesday's speech to say that he did not see a business case for expanding Gatwick. (Reporting by Sarah Young; editing by Stephen Addison)