UK needs to expand airports - industry lobby

* Report warns ruling out new runways risks competitiveness

* Technological advances need to reduce emissions, ICE says * Recommends minimum carbon price be introduced

LONDON, July 14 (Reuters) - The government’s decision to rule out building further runways at airports in the southeast of England could seriously undermine Britain’s connectivity and competitiveness, according to a report published on Wednesday.

The coalition government which took office in May cancelled plans for a third runway at London’s Heathrow airport and said it would block runways at Stansted and Gatwick as part of a programme for a low-carbon economy. [ID:nLDE64B23L]

In its report “Rethinking Aviation”, the Institution of Civil Engineers (ICE) acknowledged the need to address the environmental impact of unrestrained growth in demand for air travel but said the government must consider long-term airport infrastructure needs. “Air transport and airport infrastructure are vital for the UK’s international connectivity and prosperity. As a trading island nation and popular tourist destination we depend on our ability to connect with the rest of the world,” said ICE aviation expert Simon Godfrey-Arnold.

“World class airport infrastructure helps attract inward investment, enables access to an international labour force and provides direct business and leisure links to growing economies around the world like China, Brazil and India.”

ICE -- whose members design and build bridges, roads, railways and large buildings -- warned that capacity constraints could result in international carriers abandoning Heathrow, Britain’s biggest airport, in favour of larger and more economically attractive northern European hubs.

BAA, a unit of Spanish builder Ferrovial FER1.MC, owns Heathrow and Stansted. Global Infrastructure Partners, founded by Credit Suisse CSGN.VX and General Electric GE.N, owns Gatwick.

While aircraft innovation must be stepped up so that in the long term the industry can contribute to emissions reductions, the government should initially look to make emissions cuts elsewhere, Godfrey-Arnold said.

The report said high-speed rail alone would not be enough to reduce demand for domestic flights as it would not always compete with air travel on price, flexibility and connectivity.

ICE’s recommendations include introducing a carbon price floor to curb demand for air travel by making flying more expensive. It suggested reducing emissions by encouraging more use of public transport to airports rather than private cars. (Editing by Michael Shields)