This item was published during the term of a previous administration that ended in April 2007
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Go ahead for Inverness Airport buy out
17/06/2005
A deal in principle to secure a buy out of the Inverness
Airport Terminal Private Finance Initiative contract has
been approved today.
Transport Minister Nicol Stephen's approval now allows
Highlands and Islands Airports Limited (HIAL) to finalise
the deal with the owner Infrastructure Investors (I2), the
parent company of Inverness Air Terminal Limited.
It is expected that the buy out will be completed within
the next few weeks. The Executive will fund the deal
through a grant to HIAL.
Mr Stephen said:
"This deal will have a major impact on the economy right
across the Highlands and Islands.
"Today's announcement will allow Inverness airport to
increase its competitiveness by attracting new airlines and
new routes. The current contract has clearly been holding
back the development of the airport and the economic
potential of the whole area.
"Major changes have occurred in the aviation market
since the PFI contract was signed in 1998. As a result of
the advent of low cost flights the costs of the contract
have significantly increased. Every additional passenger
made the current contract more expensive. This is why this
buy out deal will be good value for money."
The Inverness airport terminal facility is operated
under a PFI contract. The contract started on May 23, 1999
and expires May 22, 2024.
It was decided in 1995 to progress the financing of a
new terminal at Inverness airport under a Private Finance
Initiative. The contract was signed in February 1998 with
the original PFI owners, Noble Bank. The terminal cost £9
million with £3 million provided through European Regional
Development Funding. Inverness Airport Terminal Limited
became the terminal owner and provides and maintains
terminal facilities for use by HIAL in return for passenger
charges paid by HIAL and the right to concession income.
The capital cost of the terminal was £9,600,000 at May
1999.
At the time the deal was signed it was envisaged that
the costs of the passenger charges would be largely offset
by growth in landing charges. However, the advent of no
frills carriers has meant that all airport operators have
to accept little or no growth in landing charges and
instead look to increased growth in retail concession and
parking income arising for the operation of air terminals.
In the case of Inverness the car parking and retail income
falls to the PFI operator under the terms of the
contract.
I2 is owned by Barclays Bank and Societe Generale.