A second runway cannot be built at London's second largest airport, which moves around 34 million passengers a year through its two terminals, before 2019 under a long-standing local agreement.

The airport's chief executive Stewart Wingate said Gatwick, which could be handling 40 million passengers a year by 2022 and 45 million by 2030, would likely need a second runway in the next decade.

"We need to anticipate that, in the long term, a second runway at Gatwick may be needed," he said.

"This means we will continue to work in partnership with our local authorities to safeguard land for future expansion because we believe it to be sensible business practice and it supports current government policy."

South-east of London, Gatwick is a point-to-point airport, mainly focused on the leisure market, whereas rival airport Heathrow operates as a hub with around a third of its customers being transfer passengers. Only about 10 percent of those using Gatwick are transfer passengers.

Building a second runway at Gatwick could transform it into an international hub.

Bosses at Gatwick, owned by Global Infrastructure Partners GIP.L - an investment fund founded by Credit Suisse and General Electric - plan to invest another 1 billion pounds in the airport to increase passengers numbers and create an extra 1,200 jobs.

In the last three years GIP has invested 750 million pounds modernising its two terminals and revamping its security, baggage and inter-terminal shuttle services.

Wingate told Reuters in April he believed that Gatwick will increase traffic by attracting long-haul carriers from emerging markets, taking advantage of capacity constraints at the capital's Heathrow hub.

BAA-operated Heathrow, the UK's busiest airport, is operating at almost full capacity after Britain's Conservative-led coalition government blocked development of a third runway when it came to power in 2010, as further expansion of the west London site would mean a huge increase in the number of planes flying directly over the capital.

Heathrow believes it is now falling behind other airports in the battle for lucrative routes to emerging markets because of constraints on growth. (Reporting by Rhys Jones, editing by William Hardy)

• A Permanent Economic Emergency