HC Deb 01 July 1963 vol 680 cc9-11W
76. Mr. Rankin

asked the Minister of Aviation if he will now make a statement on the terms of the agreement reached with Glasgow Corporation covering the construction, maintenance and operation of Abbotsinch Airport.

Mr. Amery

At its meeting on 27th June Glasgow Corporation agreed to take over and run the new airport at Abbotsinoh on its completion.

I welcome the Corporation's decision which enables us to press ahead with the project. The first tenders will be invited shortly, and I hope that construction work can start this year. We aim to transfer Glasgow's air services from Renfrew to the new airport by the summer of 1966. Following are the terms of the agreement: 1. On completion of the airport (estimated to be early 1966), Glasgow Corporation will take over ownership and responsibility for operation (apart from technical services, which the Ministry of Aviation will continue to provide). 2. The Corporation will pay the Ministry £2.15m. out of estimated total cost of development of £4.3m., together with the cost of acquiring Abbotsinch (estimated at £0.25m.) and of equipment etc. transferred from Renfrew (estimated at £0.08m.) the total sum due to be paid over not more than 30 years, with interest fixed for the term at the rate currently appropriate to local government borrowing. 3. The Ministry will bear any costs of initial development in excess of £4.3m., except additional costs resulting from requirements stated by the Corporation. 4. Subject to the voting of the necessary monies by Parliament, the Ministry will, until the end of the tenth full financial year of the Corporation following the date of transfer, underwrite operating losses to the following extent:—

  1. (a) If, due to a shortfall in traffic, landing fee revenue in any financial year falls short of the sum estimated by the Ministry at the time of the agreement for the transfer of Abbotsinch to the Corporation, and there is an overall deficit on the operation of the airport (after applying any accumulated surpluses in accordance with paragraph 5 below), then the Ministry will pay to the Corporation 75 per cent. of the amount by which the revenue falls short of the estimate, provided that in no case will the Ministry's payment exceed the total amount of the overall operating deficit;
  2. (b) in addition, if in any financial year the overall operating deficit (after taking credit for any amount payable by the Ministry under (a), and after applying any accumulated surpluses in accordance with paragraph 5 below) exceeds £100,000, then the Ministry will pay to the Corporation 50 per cent. of the amount by which the deficit exceeds £100,000.
  • Any sums paid by the Ministry to the Corporation under this paragraph are to be regarded as loans free of interest, repayable to the Ministry in accordance with paragraph 6 below.
5. Any surplus on the operation of the airport shall be applied first to set up and maintain a reserve fund of £200,000 against future losses: in the event of an operating deficit in any year this shall be charged in the first place against the reserve fund, and only if the balance in that fund is unsufficient to cover the whole deficit will any sum be payable by the Ministry under 4(a) or (b). 6. Once the reserve fund stands at £200,000, any further surplus arising in any year shall be apportioned between the Corporation and the Ministry by reference to the ratio between (i) the total of sums paid by the Ministry under paragraph 4 and not yet repaid to the Ministry, and (ii) the total of net deficits borne by the Corporation (that is deficits remaining after taking credit for any sums paid by the Ministry or charged against the reserve fund); provided that in the twelfth or subsequent financial years, before any sum shall be pay able to the Ministry, any surplus after any necessary transfer to the reserve fund shall first be applied to repay to the Corporation any not deficits incurred after the tenth full financial year. 7. The arrangements in paragraphs 5 and 6 shall cease to be binding upon the Corporation when either ten full financial years from the date of transfer have elapsed, or all sums paid by the Ministry to the Corporation under paragraph 4 have been repaid, whichever event is the later.