(Adds background, analyst comment, share price)
LONDON, Oct 25 (Reuters) - The chief of BritishAirways-owner IAG welcomed Britain's commitment to capairline charges in its plans to build a new runway at Heathrow.
Britain on Tuesday gave Heathrow the green light to build anew $22 billion runway, ending 25 years of indecision. Under thegovernment's plans, the new runway will be open for flights from2025.
In choosing Heathrow, the government said that the Britishaviation regulator would work with the airport and the airlinesto ensure the new runway plan is affordable and keeps landingcharges per passenger that are paid by airlines close to currentlevels.
That condition was welcomed by IAG CEO Willie Walsh.
"The Government's directive to cap customer charges attoday's level is fundamental," Walsh said.
"We will be vigilant in ensuring that Heathrow does notraise charges to benefit its shareholders to the detriment ofthe travelling public."
British Airways is Heathrow Airport's biggest airline,accounting for more than 50 percent of the available take offand landing slots.
Walsh has long said that British Airways would look toexpand elsewhere if building a bigger Heathrow meant higher feesfor its customers.
IAG will face more competition at Heathrow when theadditional capacity becomes available, a development which RBCanalyst Damian Brewer said British Airways would need to adaptover the next ten years.
"For IAG's BA this will mean a need to orientate its costbase closer to market levels, that is reduce costs, and also dothis while at the same time becoming more competitive onperceived quality," the analyst, who rates IAG "underperform"said in a note.
Amongst those looking to gain a foothold at Heathrow once itis expanded is rival airline easyJet. Currently the pairmainly compete directly at Gatwick Airport, as easyJet does notfly from Heathrow.
easyJet on Tuesday repeated that it plans to operate from abigger Heathrow, which it said would mean lower fares for shorthaul passengers through increased competition.
Shares in IAG, for which British Airways makes upthree-quarters of its profit, closed down 0.7 percent at 401.8pence, lagging Britain's bluechip index which closed up 0.5percent.
Europe's biggest budget carrier Ryanair, hasmeanwhile called for London's three biggest airports, Heathrow,Gatwick and Stansted, to all be allowed to build new runways tomaximise competition and ensure lower fares.
(Reporting by Sarah Young; editing by Kate Holton and JaneMerriman)
easyJet (EZJ)