Aer Lingus and British Airways owner IAG is interested in the London Gatwick slots of failed airline Monarch after it collapsed last week, IAG CEO Willie Walsh said today.

Mr Walsh also said that the reduction of capacity was good for the industry. 

Monarch went bust on October 2, falling victim to intense competition in the sector and following Alitalia and Air Berlin into administration in what has been a tough year for Europe's smaller players. 

"With Monarch, I think everybody's interested in slots at Gatwick, and that would be principally our interest as well. If we can get more slots at Gatwick, we'll certainly be looking for more," Walsh said.

He made his comments on the sidelines of the CAPA centre for aviation global summit. 

Norwegian Air Shuttle's CEO said earlier this week that he was also interested in the slots, depending on the price and clarification over how the slots will be allocated. 

Monarch's collapse could reduce capacity in Europe's highly competitive airline sector. 

Willie Walsh said that while Monarch's flights from Gatwick would likely be replaced, slots at smaller airports such as Birmingham might stay vacant. 

With Ryanair cancelling flights over pilot rosters, and the issues at Air Berlin and Alitalia, the rest of the sector could benefit, Walsh said.

"What the whole combination does is it clearly means there will be less growth, less capacity going into the market, particularly through this winter, so from an industry point of view that's probably to be viewed as a positive," Walsh said. 

The IAG CEO also said that underlying demand was good, and supported a positive view of the market for the rest of 2017. 

"We had said earlier this year that we saw unit revenue being positive in the second half of the year," he said. "I've not seen anything at this stage to change that." 

Walsh said IAG's new long-haul, low-cost airline Level planned a fleet of up to 30 aircraft by 2022 and was looking at flying to Asia as well, particularly the secondary cities. 

Level currently flies A330 jets but the business plan includes A321LR jets, and Walsh said 787s were also an option. 

"We are not wedded to one particular aircraft. The 787 is more efficient from a fuel point of view, but the A330 ownership cost is a fraction of the 787," he said. 

IAG has just approved an eighth A321LR for Aer Lingus and could go as high as 12, Walsh said, adding that the plane was also of interest for British Airways and Iberia. 

"It's not a transatlantic aircraft, but it does have good range and could work for us in both Iberia and British Airways," he said.