A rival scheme to a costly third runway at Heathrow should become the preferred option to resolve the UK’s aviation capacity crisis, according to the boss of British Airways parent company.

Willie Walsh, chief executive of BA owner, International Airlines Group, has written to the Department for Transport in recent weeks to argue that Heathrow Hub – a scheme to extend the airport’s northern runway – should be given serious consideration, Sky News reported.

IAG, which has long been opposed to the estimated £23 billion total cost of a third runway is understood to have expressed its views in “forthright” language, a Whitehall insider was reported as saying.

Walsh’s latest intervention has emerged as the founder of Heathrow Hub – former Concorde pilot Jock Lowe – is seeking urgent talks with chancellor George Osborne to discuss the details of his proposal amid signs that it could be gaining renewed momentum.

In a letter to the chancellor, which Sky News says it has obtained, the promoter of the extended runway plan warns that a new third runway proposed by Heathrow “could require a government guarantee from HM Treasury”.

A section of Lowe’s correspondence headed ‘IAG, cost and phasing’ refers to “a letter sent by IAG to [transport secretary] Patrick McLoughlin on this subject” and argues that the entire Heathrow Hub project can be constructed for £9.7 billion.

“The emerging view of airlines and of the City is that: the third runway is prohibitively expensive; it cannot be phased; that Heathrow airport would struggle to raise the £4.2 billion-£8.4 billion equity component; and in extremis it could require a government guarantee from HM Treasury.”

Gatwick is also seeking the government’s go-ahead to build a new runway, and remains under consideration despite not being recommended last year by the Airports Commission.

The owners of Gatwick argue that it would be far more cost-effective and deliver additional capacity more quickly than a new third runway at Heathrow.

Sources said that depending upon the outcome of this week’s EU referendum, David Cameron may make an announcement about the location of new runway capacity in the south-east of England as soon as next month.