* Plenty of room to grow, says CEO
* Opens new base in Naples, Italy
* Agrees seven-year deal with Gatwick airport (Adds CEO comments, background)
By Sarah Young
NAPLES, March 27 (Reuters) - British low-cost carrier easyJet threw down the gauntlet to Europe's traditional airlines, saying it would continue to grab market share for years to come, helped by expansion in Naples and a new deal with London's Gatwick airport.
Across Europe, so-called "legacy" carriers, which tend to be former state-owned entities and include names such as IAG , Lufthansa and Air France-KLM, are under pressure to cut costs to compete with budget rivals easyJet and Ryanair on short-haul flights.
"We're still competing with the legacy carriers in all our markets, so there's a lot of room for us to continue to grow," easyJet Chief Executive Carolyn McCall said in an interview on a flight bound for an opening ceremony in Naples, southern Italy.
"I think in five years' time, or in 10 years time, there's no question that Europe will be predominantly about low-fare airlines."
Over the past four years easyJet has increased its passenger numbers by 25 percent.
Its strategy of adding new flights on routes where others have retrenched while introducing more flights between top business destinations has been rewarded with a near-400 percent rise in its share price over those four years and entry into the FTSE 100 index of leading companies.
McCall was in Naples for Thursday's opening of a new base to boost growth in Italy, easyJet's third-biggest market by passenger numbers. McCall views struggling Alitalia as its main competitor in the country.
Earlier in the day, easyJet announced a seven-year deal with London's second-busiest airport Gatwick, giving the company certainty over charges at its biggest base.
As part of the arrangement, easyJet aims to operate from one terminal at Gatwick, a move that could result in legacy carrier British Airways moving out of the Gatwick's bigger North terminal. A consultation process is under way.
EasyJet's strategy to attract more business travellers helped to lift profits by 51 percent last year, eclipsing the performance at no-frills rival Ryanair, which cut its profit target twice in two months.
Following easyJet's lead, the Irish company, Europe's biggest budget airline, is also trying to appeal to more lucrative business travellers. It has introduced allocated seating, is planning a new business product and aims to fly to more convenient city airports.
McCall said that any fresh challenge from Ryanair is merely one of many.
"I think we have a whole range of competitors, there's not one," she said. "Everyone's a threat. We take all our competition seriously and we compete hard."
McCall, in the middle of a throng of photographers, cheered as the airline's expansion in Naples was marked by the arrival of a plane on the tarmac.
The mayor of Naples, known for his twitter rants complaining about the Italian media's lack of appreciation for his achievements in the city, said that easyJet's opening confirmed the city's importance for both tourists and business interests. (Editing by David Goodman)