Commercial Property News

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Monday, January 23, 2024

Inverness Airport buy-out deal secured

The Scottish Executive is funding Highland and Islands Airports Ltd (HIAL) to buy-out the contract from the PFI owners Inverness Airport Terminal Ltd (IATL). The buy-out price is £27.5 million if HIAL provide a tax guarantee to cover the estimated tax liability of up to £8.4 million. If the PFI contract had run its full term to 2024 the cost is projected to have been £73 million.

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 had 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 has fallen to the PFI operator under the terms of the contract.

The PFI structure was based on a volume-based per passenger charge and HIAL, with the assistance of their financial advisers and the Executive PFI Unit, concluded that the current structure of the deal was an active disincentive to the development of new services from Inverness.

The projected passenger total for the 12 months ending March 31, 2024 is circa 625,000 passengers and the projected total PFI charge for the same period would have been over £2 million.