By Sarah Young

LONDON (Reuters) - Britain should consider building a new runway at one of London's two biggest airports - Heathrow and Gatwick - to address a capacity crunch that economists suggest could slow economic growth, a government advisory body said on Tuesday.

The recommendations, which are not binding and subject to further revision, are likely to stir up a political debate about how to deal with what will be one of the country's biggest infrastructure projects this century.

Lawmakers and business leaders agree that Britain needs new runways to remain economically competitive. But the idea of building extra capacity in London is unpopular with many voters who worry about aircraft noise, pollution and safety.

Passions ran high during Britain's last 2010 election over a possible expansion at Heathrow, with supporters of the Liberal Democrats and Conservatives in west London helping make sure the now ruling coalition dropped the plans.

With no Commission decision until after a general election in May next year, the Conservative-led coalition government has been careful not to favor any option and most politicians are keen to avoid being dragged into the emotive debate.

"The capacity challenge is not yet critical but it will become so if no action is taken soon, and our analysis clearly supports the provision of one net additional runway by 2030," the Airports Commission said in a statement.

In a report, the Commission shortlisted three proposals, two of which were to expand Britain's biggest airport, Heathrow. As well as building a new runway, the airport could also have one of its runways extended, the report said.

An idea to build a new airport on the Isle of Grain to the east of London should also remain an option, it said. But it did not formally add it to its shortlist, saying it would only decide whether to include it before the end of the year.

The Commission, led by Howard Davies, the former head of the Financial Services Authority, must make its final proposals on how and where to expand airport capacity by the summer of 2015.

Heathrow's strong showing on the list represents a turnaround from three years ago when the two-party coalition scrapped plans to expand the airport, overturning the previous government's decision to go ahead with a third runway there.

Colin Matthews, chief executive of Heathrow, said he was unsurprised by the change in the airport's fortunes, calling the case for his airport "strong", but cautioned that there was a long way to go for all of the expansion options.

"It'll need broad political support. As long as it's a party-defining issue it'll be very difficult to make it happen," he told the BBC in an interview.

London's high-profile mayor Boris Johnson, who has been tipped as a possible rival to Prime Minister David Cameron, is opposed to the expansion of Heathrow and supports the building of a new airport to the east of London.

One of his proposals, a new airport on an artificial island in the Thames Estuary, dubbed "Boris Island", failed to make the Commission's shortlist, as did a plan to expand London's third-busiest airport, Stansted.


Heathrow is the busiest airport in Europe, the third busiest globally and a hub for international flights. But its location near residential areas makes its expansion a toxic issue for local voters, green groups and the Conservatives' coalition partners, the Liberal Democrats.

Different expansion plans for airport capacity around London have been on and off the table since the 1970s, but with demand for air travel expected to double in Britain to 300 million passengers per year by 2030, the crunch is coming to a head.

"It is no longer acceptable to bury our heads in the sand on this," John Cridland, head of Britain's business association, the CBI, said in a statement, adding that urgent action was needed from the government when the Commission's final recommendations were made in 2015.

The group is one of many who say London's airport capacity must be increased to boost trade and routes to developing markets such as China to maintain London's lead over rival European airports as an international hub.

Paris's main airport has four runways, while Amsterdam's has five compared to Heathrow's two. The airport, which is west of London, is partially owned by Spain's Ferrovial.

"We've got Paris and Amsterdam, Frankfurt desperately trying to eat our lunch, they want to have the business that the UK benefits from today," Matthews said.

The Commission said that by 2050, the capital would need a second runway in addition to the one it will recommend be build, and said the Stansted proposal could be an option for that.

(Additional reporting by Chrissie Murray and William James, Editing by Andrew Osborn and Elizabeth Piper)