24 June 2005
The Scottish Executive has approved a buyout deal that will end a controversial £9.6m Private Finance Initiative contract to run an airport terminal in the Highlands.
Transport Minister Nicol Stephen has given Highlands and Islands Airports Ltd the go-ahead to finalise a deal with Infrastructure Investors, the parent company of Inverness Air Terminal Ltd. I2 is owned by Barclays Bank and Société Générale.
The Executive will fund the deal through the payment of a grant, understood to be around £25m. The contract, signed in 1998 with the original owner, Noble Bank, was due to run until 2024.
The PFI arrangement resulted in the building of a new terminal at Inverness airport. Inverness Air Terminal Ltd became the building's owners and was responsible for providing and maintaining terminal facilities for use by HIAL in return for passenger charges, paid by HIAL, and the right to concession income.
Stephen said the buyout would allow Inverness airport to increase its competitiveness by attracting new airlines and routes.
The minister added: '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. That is why this buyout deal will be good value for money.'
Fergus Ewing, the Scottish National Party transport spokesman, said: 'The terminal originally cost £9.6m. However, after only six years, the PFI repayments have almost equalled that and the PFI owners are expected to receive a lottery-style payout of more than £25m.'
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